Study unit 10:

Content of wills:
TESTAMENTARY TRUSTS

PRACTICAL EXERCISES: 10 MAY 2024

 06/05 – 10/05 Wednesday 08/05
14:30–15:45: Memo discussion – Assessment 2

Friday 10/05 Study unit 10

11:00–12:45: Practical exercises: Study unit 10 • Work through the prescribed material for study unit 10
• Complete activities 106–110.

13/05 – 17/05 Wednesday 15/05 Study unit 11

14:30–15:45: Practical exercises: Study unit 11 • Work through the prescribed material for study unit 11.
• Complete activities 111–116.

Friday 17/05: ASSESSMENT 3

• Type: Sit–down, invigilated, closed-book multiple-choice test
• Time: 11:00–12:30
• PC venue: PC-J06_G01 (Weet & Sweet)
• Marks: 50 marks
• Scope: Study units 9–11
• Remember: HB pencil & eraser for multiple-choice card

20/05 – 24/05 Wednesday 22/05 Study unit 12

14:30–15:45: Practical exercises: Study unit 12 • Work through the prescribed material for study unit 12.
• Complete activities 117–121.

Friday 24/05
11:00–12:45: Q&A session

28 May – 20 June 2024: First examination opportunity

21 June – 4 July 2024: Second examination opportunity

 Mortis causa trust
Trustees
Testator Will

This is Trust assets

1 a valid
will

Clause to create a trust and appoints

(or not), trustee/s and beneficiaries 3
and stipulates the trust assets (or not). Beneficiaries
 DEFINITION
• Various forms of trusts – see figure 11.1 in J&R.
• We will focus on the trust in the “narrow sense” as provided for in the Trust Property Control Act 57 of
1988:

Act 57 of 1988

Inter vivos Mortis causa

Ownership trust Bewind trust

In Law of Succession we only look at the
Mortis causa trust

Discretionary Non-discretionary
 The Testamentary Trust
1. How is a trust defined in the Trust Property Control Act?
The act defines a trust as the arrangement through which the ownership in property of one person
is, by virtue of a trust instrument, made over or bequeathed:
(a) to another person, the trustee, in whole or in part, to be administered or disposed of according
to the provisions of the trust instrument for the benefit of the person or class of persons
designated in the trust instrument or for the achievement of the object stated in the trust
instrument; or (Ownership trust)
(b) to the beneficiaries designated in the trust instrument, which property is placed under the
control of another person, the trustee, to be administered or disposed of according to the
provisions of the trust instrument for the benefit of the person or class of persons designated in
the trust instrument or for the achievement of the object stated in the trust instrument, but does
not include the case where the property of another is to be administered by any person as
executor, tutor or curator in terms of the provisions of the Administration of Estates Act. (Bewind
trust)
 The Testamentary Trust
For example:
Ownership trust
“I bequeath the residue of my estate to my trustee, Mr Khumalo, in trust. My wife is the
income beneficiary and the children born from our marriage are the capital beneficiaries in
equal shares.”
• Discretionary: The trustee has the discretionary power to nominate the income and/or the capital
beneficiaries of the trust from a certain group of persons (usually also the ratio of the awards)
• Non-discretionary/Vesting trust: The beneficiaries and their respective benefits are predetermined
and fixed in the trust instrument (the will). The trustee has no discretion in this regard.
Bewind trust
“I bequeath my assets to my child Archie. The assets must, however, be held in trust and be
administered for Archie’s benefit by my trustee, Mr Harrison, in terms of the provisions of clause
10.”
 The Testamentary Trust
2. Why create a testamentary trust?
• Beneficiary has a disability
• Beneficiary is a minor
• Beneficiary is a spendthrift (need possible protection from themselves)
• Grandchildren or a subsequent generation as ultimate beneficiaries
• Provision for an heir’s education
• Asset protection
 The Testamentary Trust
3. How is the testamentary trust created?
• In the will itself
• Can be a separate document which is mentioned in the will + read together with the
will.
• Almost like an attachment to the will.
• Must comply with the formalities of a valid will.

4. What if the will is not valid wherein the testamentary trust is created?
If the will is invalid for some reason, the testamentary trust will not be valid. The Master of the High
Court has the authority to declare a will trust invalid, unlike an inter-vivos trust, where the Master of
the High Court has no such power.
 The Testamentary Trust
5. Difference between a trustee and a fiduciary:
• See comparison in table 11.1 in Jamneck J and Rautenbach C The Law of Succession in South Africa 4th ed
(Oxford University Press Cape Town 2023):
TRUSTEE FIDUCIARY

Control (bewind trust) or ownership (ownership trust) separated
from enjoyment – the trustee only has an administrative interest
(unless he/she is also a trust beneficiary)
Quasi-public office
Court and Master supervise the proper administration of trusts
Owner beneficially entitled to the fruits and use of the property
No office
Observance of fideicommissum left to the fideicommissaries

If the trust should fail, trustees are not beneficially entitled If the fideicommissum should fail, the fiduciary takes the property
free of the burden
Trust may continue for an indefinite period Immovable property: Limited to two successive fideicommissaries

Trust will not fail for want of trustee Fideicommissum fails in the absence of fiduciary
 Class exercise 1
Clause in a will:
“My estate shall devolve on my trustee, Mr T, in trust for the benefit of my wife and
children. My wife, Y, will be the income beneficiary until her death. My children X and Z,
will be the capital beneficiaries.”

What type of trust will be created out of this clause?

1.) Mortis causa trust?
2.) Ownership trust OR bewind trust? Validly
3.) Non-discretionary > Why?
executed
will.
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
 Class exercise 2
Clause in a will:
“I bequeath R500 000 to my trustee, Mr X, in trust to combat child abuse. Mr X hereby
have the power to decide in which cities rallies can be help for the cause.”

What type of trust will be created out of this clause?

1.) Mortis causa trust?
2.) Ownership trust OR bewind trust?
3.) Non-discretionary OR discretionary > Why?
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
 Class exercise 3
Clause in a will:
“I bequeath all my assets to my child Ben. The assets must, however, be held in trust and
be administered for Ben’s benefit by my trustee, Mr H, until the times comes when Ben
turns 21, in terms of the provisions of Annexure A to my will.”

What type of trust will be created out of this clause?

1.) Mortis causa trust?
2.) Ownership trust OR bewind trust?
3.) Non-discretionary OR discretionary > Why?
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
 Class exercise 4
Clause in a will:
“I bequeath all my assets to my child Ben. The assets must, however, be held in trust and be administered for
Ben’s benefit by my trustee, Mr H, until the times comes when Ben turns 21, in terms of the provisions of
Annexure A to my will. Mr H are hereby exempted from any liability regarding the administration of the trust
as well as exempted from giving security to the Master of the High Court.”
What type of trust will be created out of this clause?
1.) Mortis causa trust?
2.) Ownership trust OR bewind trust?
3.) Non-discretionary OR discretionary > Why?
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
7.) Mr H’s exemption from liability?
8.) Mr H’s exemption from giving security to the Master?
9.) Can the Master still ask for security if a Trustee is exempted in a clause of a will?
 Class exercise 5
Clause in a will:
“I bequeath all my assets to Mr T, to be held in trust. All of the assets must be liquidated and thereafter Mr T
must use this asset to benefit students wanting to study LLB at NWU. All applicants must be between the
ages of 18-20, and each applicant, if they qualify, will be given assistance in the amount of R40 000.00
which will be divided up in 4 equal payments over a maximum of 4 years. 20 Years after my death all the
money which is left in the trust must be donated to NWU to buy new textbooks for the library. The
qualification process is attached to this will as Annexure A.”

What type of trust will be created out of this clause?

1.) Mortis causa trust?
2.) Ownership trust OR bewind trust?
3.) Non-discretionary OR discretionary > Why?
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
 Class exercise 6
Clause in a will:
“I bequeath all my assets to Mr T, to be held in trust. All of the assets must be liquidated and thereafter Mr T
must use this asset to benefit students wanting to study LLB at NWU. All applicants must be between the
ages of 18-20 and of Asian descent, and each applicant, if they qualify, will be given assistance in the
amount of R40 000.00, which will be divided up into 4 equal payments over a maximum of 4 years. 20 Years
after my death, all the money which is left in the trust must be donated to NWU to buy new textbooks for
the library. The qualification process is attached to this will as Annexure A.”
What type of trust will be created out of this clause?
1.) Mortis causa trust?
2.) Ownership trust OR bewind trust?
3.) Non-discretionary OR discretionary > Why?
4.) When will the trust come to an end?
5.) Who is which beneficiaries? Why?
6.) Objective of the trust?
7.) Will still valid? Trust still valid?
8.) Allowed? Why? What will happen?
 Class exercise 6 (continue)
Clause in a will:
“I bequeath all my assets to Mr T, to be held in trust. All of the assets must be liquidated and thereafter Mr T
must use this asset to benefit students wanting to study LLB at NWU. All applicants must be between the
ages of 18-20 and of Asian decent, and each applicant, if they qualify, will be given assistance in the amount
of R40 000.00 which will be divided up in 4 equal payments over a maximum of 4 years. 20 Years after my
death all the money which is left in the trust must be donated to NWU to buy new textbooks for the library.
The qualification process is attached to this will as Annexure A.”

How will the clause look after a successful application to court?

“I bequeath all my assets to Mr T, to be held in trust. All of the assets must be liquidated and thereafter Mr T
must use this asset to benefit students wanting to study LLB at NWU. All applicants must be between the
ages of 18-20 and of Asian decent, and each applicant, if they qualify, will be given assistance in the amount
of R40 000.00 which will be divided up in 4 equal payments over a maximum of 4 years. 20 Years after my
death all the money which is left in the trust must be donated to NWU to buy new textbooks for the library.
The qualification process is attached to this will as Annexure A.”

Annexure A?
 Class exercise 7
Clause in a will:
“My estate shall devolve on my trustee, Mr T, in trust for the benefit of my 2 children, A
and B. R5 000.00 must be made available for each of my children by Mr T, and Mr T must
buy each of them a new house with the stipulated amount.”

What type of trust will be created out of this clause?

• This will was
1.) Mortis causa trust? drafted in
2.) Ownership trust OR bewind trust? 1927.
3.) Non-discretionary > Why? • The will was
validly
4.) When will the trust come to an end? executed
5.) Who is which beneficiaries? Why? • Testator.
passed away
6.) Objective of the trust?
in 2023 at the
7.) Do we have a possible problem? age 0f 96.
8.) What can be done?
 Class exercise 8
Clause in a will:
“My estate shall devolve on my trustee, Mr T, in trust for the benefit of my 2 children, A
and B. R7 500 000.00 must be made available for each of my children by Mr T, and Mr T
must buy each of them a new house with the stipulated amount.”
What type of trust will be created out of this clause? 1. The will
was not
1.) Mortis causa trust? validly
2.) Ownership trust OR bewind trust? executed
2. Sec 2(3)
3.) Non-discretionary > Why? Does any of these cannot be
4.) When will the trust come to an end? questions matter? applied.
5.) Who is which beneficiaries? Why? Why?
6.) Objective of the trust?
7.) Do we have a possible problem? What
now?????
 06/05 – 10/05 Wednesday 08/05
14:30–15:45: Memo discussion – Assessment 2

Friday 10/05 Study unit 10

11:00–12:45: Practical exercises: Study unit 10 • Work through the prescribed material for study unit 10
• Complete activities 106–110.

13/05 – 17/05 Wednesday 15/05 Study unit 11

14:30–15:45: Practical exercises: Study unit 11 • Work through the prescribed material for study unit 11.
• Complete activities 111–116.

Friday 17/05: ASSESSMENT 3

• Type: Sit–down, invigilated, closed-book multiple-choice test
• Time: 11:00–12:30
• Venues: To be confirmed
• Marks: 50 marks
• Scope: Study units 9–11
• Remember: HB pencil & eraser for multiple-choice card

20/05 – 24/05 Wednesday 22/05 Study unit 12

14:30–15:45: Practical exercises: Study unit 12 • Work through the prescribed material for study unit 12.
• Complete activities 117–121.

Friday 24/05
11:00–12:45: Q&A session

28 May – 20 June 2024: First examination opportunity

21 June – 4 July 2024: Second examination opportunity