Chapter 11 - Content of wills : trusts Flashcards
Summary of the definition of a testamentary trust
In a testamentary trust, the testator bequeaths ownership in property to either a trustee(s) or to the trust beneficiaries. In the first instance, the trustee owns and controls (administers) the property. In the second instance, the trustee merely controls the property.
Trustee
- Control or ownership separated from enjoyment - trustee only has administrative interest unless he or she happens to a beneficiary.
- Occupies a quasi-public office
- Court and Master supervise proper administration or trusts.
- If the trust fails, the trustee is not beneficially entitled.
- Trust will not fail for want of a trustee
Fiduciary (in a fideicommissum)
- Owner beneficially entitled to the fruits and use of property
- Occupies no office
- Observance of fideicommissum left to fideicommissaries
- If fideicommissum fails, fiduciary takes the property free of the burden
- Fideicommissum fails in absence of fiduciary
Requirements for the creation of a valid trust
- the creator must have the intention to create a trust.
- the intention must be expressed in such a way that a binding obligation for establishing the trust is created.
- the trust document must comply with the formalities of a will
- the trust property must be determined or determinable
- the trust object must be clear
- the trust object must be lawful
cy pres doctrine
The cy pres doctrine is a doctrine that a court may apply in the case of the failure of a charitable trust to order that the trust assets may be applied for a purpose as near as possible to the original purpose of the trust in order to serve the original purpose of the creation of the trust. Cy pres literally means as near as possible.
Core elements of a trust
- The fiduciary position of a trustee
- The separate estates
- The principle of real subrogation
- Trusteeship as an office
- Joint action by co-trustees
Power of assumption
The authority given by the trust founder to a trust’s serving trustees to appoint additional trustees to fill vacancies in the trust office.
Duties of a trustee
- The trustee must see to the lodgement of the will, payment of Master’s fees and notice of address.
- A trustee must as soon as possible acquaint himself or herself with the trust instructions and determine the nature and extent of his or her powers and duties
- A soon as possible after the issue of the letters of authority, a trustee must obtain effective control over the trust property.
- The trustee must act independently and must administer the trust in accordance with the law and the provisions contained in the trust instrument.
- In the performance of his or her duties and the exercise of his or her powers, a trustee must act with care, diligence and skill which can reasonably be expected of a person who manages the affairs of another.
- Whenever a trustee receives money in his or her capacity as trustee, he or she must deposit such money in a separate trust account at a banking institution.
- A trustee has important duties relating to the identification of trust property.
- A trustee must, at the written request of the Master, give an account to the Master for his or her administration of the trust property.
- The trustee must act in good faith and must always avoid a conflict between his or her personal interests and his or her official and fiduciary duties.
Termination of trusteeship
Trusteeship ends on the death or resignation of a trustee or when the trust comes to an end. A trustee can also be removed by the Master of the court.
Termination of a trust
- the realisation of the trust objective
- the destruction of the trust assets without fault on the part of the trustee
- the failure of the trust for some or other reason
- the acceleration of rights to the capital beneficiary
- a court order in terms of section 13 of the Trust Property Act
- the sequestration of the trust
