A reader with a fixed property in a trust wants to nominate his children as its beneficiaries, but he wants to know if the marital status of one of the children will cause complications.
He has two children, one of whom is married in community of property, and is concerned about this situation, in particular with regard to the fixed property.
See the reader’s question here.
A marriage in community of property is the natural consequence of the spouses not concluding and registering an antenuptial contract, with or without the accrual system.
This creates the legal position where the spouses share a joint estate, each owning an undivided half share and each being able to bind the communal estate.
While this may be idyllic for some, the regime may have disastrous consequences for one spouse.
Examples of this are where the estate is exposed to creditors or where an opportunistic spouse marries with plans of a quick and profitable divorce.
If the reader’s trust was created in a standard family trust set-up, it is possible that the child in question is already a nominated beneficiary as children of one or more named beneficiaries, such as himself, often form a class of beneficiaries.
The provisions of the trust deed should be examined in this regard.
Assuming that the trust is of a discretionary nature, where the trust assets do not vest in a beneficiary until it is decided to do so, the beneficiaries may never hold any interest in the trust assets other than what is known as a spes – something akin to a hope or a wish.
The beneficiaries may be permitted to use the trust assets in a manner permitted by the trustees from time to time.
This allows for use of an asset without ownership by the user thereof, this being one of the aspects or benefits of a properly administered trust.
There are certain instances in which property may be excluded from the joint estate under the Matrimonial Property Act or the Deeds Registries Act.
It is quite popular for a testator to bequeath property to a beneficiary, subject to the stipulation that such property is to be excluded from any community of property.
In the Supreme Court of Appeal matter of Du Plessis v Pienaar 2003, the court considered whether any such property was protected from the grasp of a creditor.
The court recognised that, while there may be a separation of assets between the spouses themselves, no such distinction existed insofar as creditors were concerned.
The acknowledgement in the Matrimonial Property Act of a separate estate in certain instances was not confirmation of a general separate estate.
This judgment may be of particular interest to the reader in respect of the movable assets and investments he intends leaving to his children.
The court also considered whether such property should be left to the trust administering the fixed property.
A better solution may be for the reader to consider bequeathing the property to a testamentary trust for the benefit of the affected child.
This could be done to ensure that only that child benefits from the property in question rather than permitting it to become part of the general trust, which could be used by the trustees for the benefit of any or all beneficiaries.
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