Beneficiaries within the 1st degree of consanguinity
We have always favoured defining the beneficiaries of a trust as the client, spouse and relations within the first degree of consanguinity and the descendents of any beneficiary. This has the advantage of being both dynamic (if more children are born) and avoiding having to provide details of all the beneficiaries and their guardians if minors.
However, we are finding that many people don’t understand consanguinity, so we decided to change our trust template to replace it with the spouse, parents, siblings and children of ….
While doing this, Helen, being her usual thorough self, Googled the definition of 1st degree of consanguinity, and found that it is defined as parents and children, and that siblings are 2nd degree of consanguinity.
Our first concern was that siblings were not, therefore, included as beneficiaries of most of the trusts that we have drafted. However, on reflection, as they are descendants of other beneficiaries (the parents), they are in fact included, so no problem there.
The next issue is that I studied consanguinity at University when working towards becoming a CA(SA) and I’m sure that siblings were included in the first degree, so then I Googled the same question. I found conflicting statements.
For example, I quote from the National Human Genome Research Institute:
“A first-degree relative is a family member who shares about half of their genetic information with specific other individuals in their family. First-degree relatives include an individual’s parents, siblings and offspring.”
Now, by my reckoning, siblings share about all their genetic information, so that would make them closer relations than parents.
SARS, on the other hand produced a diagram showing the siblings as 2nd degree relatives.
So, best stick to simple wording that everybody understands.
4 comments
Reply
What if you want to include your parents but not your siblings? how will you word that seeing as their descendant is your sibling?
Hi Reinard,
The ideal is to have some “spare beneficiaries” such as siblings because if a trust has no beneficiaries (as can happen after a catastrophic accident for instance), the High Court has to decide what happens to the trust assets and sometimes awards them to the State.
Because the trust is discretionary, the trustees have absolute discretion as to what they do with the trust income and trust assets as long as it’s for the benefit of a beneficiary or beneficiaries, so the beneficiaries have no claim whatsoever against the trust.
Having said that, it would be simple to change the wording to “X and Y, their descendents and their parents” if you really didn’t agree with my argument.
“Client, spouse and their descendants”
Common descendants or individual.
Ie. if either client or spouse have children outside of their partnership, are these children beneficiaries.
Are adopted children included?
What of children born thru surrogacy or involving a donor?
I think the wording needs to be more specific, regardless of whether the intent is to be more or less inclusive.
Hi David,
I agree with you, but I did not invent the wording.
But to answer your specific examples:
A relationship within any degree of consanguinity is a relation of one person, not of spouses.
Whether adopted children are included depends upon the wording of the document in question. It might define Child as including adopted children and it might exclude them. There was, however, a recent case which I read but cannot refer back to, where adopted children were deemed to be benficiaries of a trust
Same regarding donorship.
Now, with regard to intestate succession, it appears (MG Attorneys) that an adopted child can only inherit from the adoptive parents and not from its blood parents.
All very interesting.