Trusts: Can a testamentary trust be amended?
A testamentary trust is then formed upon his or her death and the terms of the last will and testament form the terms of the trust.
Unlike an inter vivos trust, which is a contract that the contracting parties (the founder, the trustees and potentially the beneficiaries) can amend in terms of our law, the trustees cannot amend the trust instrument of a testamentary trust on their own, as one of the contracting parties - the founder - is no longer around.
In South Africa, the legal principles applicable to a testamentary trust are to be found in the law of testation, unlike that of inter vivos trusts, which are to be found in the law of contracts (Crookes v Watson case of 1956 and the Braun v Blann & Botha case of 1984).
An individual, therefore, has the right to determine the heir(s) to his or her property upon his or her death as he or she wishes (called “freedom of testation”), even if such a bequest is unpopular, as long as the person making the bequest is of sound mind. An aggrieved beneficiary can therefore not have the trust instrument (the last will and testament) amended to include him or her.
Each person in South Africa also has a right to exercise his or her testamentary power. A delegation of testamentary power is not allowed in South African law and any clauses in the last will and testament that are regarded as amounting to a delegation of testamentary power will be invalid. That will typically be the case where the testator or testatrix allows trustees to act as they wish and allow them too wide discretion (Braun v Blann & Botha case of 1984).
Trustees in a testamentary trust should merely be allowed to exercise the instructions of the testator or testatrix as provided for in his or her last will and testament.
A court can, generally speaking, also not vary the terms of a testamentary trust. Section 13 of the Trust Property Control Act, however, allows a trustee or any other interested person (beneficiary) to apply to court to have a testamentary trust amended in specific circumstances.
Any applicant will, however, have a hard time to explain what the intention of the founder - the testator or testatrix - was, or what he or she foresaw outside of what the trust instrument - the last will and testament - stipulates.
Circumstances would probably have to change materially before anyone would be able to convince a court that there are consequences, which the deceased did not contemplate or foresee, which now negatively impacts the beneficiary/ies.
The Master of the High Court also confirmed in a directive issued in March 2017 that a testamentary trust cannot be amended by the trustees and beneficiaries of the trust, although beneficiaries may renounce their rights. This may cause the trust to collapse and defeat the objective of setting up the trust.
It may be better for the beneficiary/ies to renounce their rights and gain control over assets rather than having a trustee decide over these assets as planned by the testator or testatrix. The testator or testatrix should keep this in mind when drafting his or her last will and testament.
Phia van der Spuy is a registered Fiduciary Practitioner of South Africa®, a Master Tax Practitioner (SA), a Trust and Estate Practitioner (TEP) and the founder of Trusteeze®, a professional trust practitioner.