A Will Cannot Override a Trust Deed
If assets have been transferred into a trust, your will cannot determine what happens to them. Only the trust deed can.
This principle was recently reinforced by the Supreme Court of Appeal in the case of Janse De Wit & Others v Toerien De Wit NO & Others, a judgment that serves as an important reminder for founders, trustees and beneficiaries alike.
What does this mean for you?
For founders, the message is straightforward. If your objectives for a trust change over time, those changes should be formally incorporated into the trust deed during your lifetime. A will cannot be used to rewrite the trust after your death.
For trustees, the judgment reinforces the importance of administering the trust in accordance with the deed. Courts are generally reluctant to interfere where trustees are acting within the powers granted to them.
For beneficiaries, it is important to understand that trust assets and estate assets are governed by different legal instruments. Expectations based on a founder’s later wishes or provisions contained in a will may not be enforceable if they conflict with the trust deed.
The Story Behind the Case
The dispute arose after the death of a trust founder who had, during his later years, expressed wishes about how he wanted trust assets to be distributed among family members. These wishes were communicated in conversations, emails and other correspondence. However, despite expressing these intentions, he never formally amended the trust deed.
Following his death, disagreements developed between beneficiaries and trustees regarding the future of the trust and the distribution of its assets. Some beneficiaries sought to have the trust terminated and its assets distributed, arguing that this would give effect to the founder’s later wishes.
The Court disagreed.
The Supreme Court of Appeal confirmed that a founder’s legally binding intentions are found in the trust deed itself. Informal discussions, family meetings, emails and even provisions contained in a will cannot alter the terms of an existing trust unless the trust deed is formally amended in accordance with its provisions.
The judgment also reaffirmed another important principle: trust assets do not belong to the founder once they have been transferred into the trust. As a result, those assets do not form part of the founder’s deceased estate and cannot be distributed according to the founder’s will.
The Court further confirmed that trustees must exercise their powers in accordance with the trust deed. Where a trust deed grants trustees discretion regarding distributions or termination of the trust, beneficiaries cannot simply demand that assets be distributed because they would prefer a different outcome.
We can help you
This case serves as a timely reminder that a trust deed is far more than an administrative document. It is the foundation upon which the trust operates, and it remains the primary source of authority long after the trust has been established.
At CA Trust Company, we assist founders, trustees and beneficiaries in ensuring that trusts remain properly structured, administered and aligned with their intended objectives.