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Trusts and Estate Planning

Probably not. Why?

Because the trust deed almost certainly states that the trust was founded by a donation of R100 from the founder to the trustees, on behalf of the trust. It is not formed by the process of registration at the Master’s Office.

Let’s see what happened to the R100 in your case. The Trust Properties Control Act states that whenever the trustees receive money, they must open a bank account in the name of the trust and deposit the money into it.

And there’s the problem. Can you produce a bank statement showing that deposit of R100? If not, then your trust was never formed.

And that raises some interesting questions.

If the trust does not exist, what of any contracts that the trustees signed on its behalf? Did they actually sign on their own behalf? I think that’s what the courts would find.

If there is property registered in its name, who owns the property? In law, Title Deeds are absolute proof of ownership, but clearly, they cannot create a trust that doesn’t exist.

And, of course, if the founder’s creditors want the trust assets, they’re up for grabs, because the trust cannot be their owner.

I am amazed that when attorneys try to attack a trust, they always use the Badenhorst vs. Badenhorst case (which is the only trust case they studied at university) to try to prove that the trust is a sham. They usually fail, and they deserve to.

Why don’t they just ask for the bank statement? “Oh, I never thought of that!”  They would win the case.


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