We all have read and heard somewhere in our lives of the importance of a Will. However, we have not heard the reasons as to why we need to make provision for a testamentary trust in our Wills. As we are celebrating Youth Month in June, we are now more aware than ever before that we as parents must do everything in our power to protect them.
A testamentary trust is created in a Will and this forms part of the process of estate planning. The main reason to have a testamentary trust is to protect assets and to ensure that any minor’s needs (or surviving spouse’s) are taken care of. This is governed by the Trust Property Control Act 57 of 1988.
An example of the provision for a testamentary trust in a Will would read as follows: “Jack provided in his Will that an amount of money must be kept in a trust on behalf of his minor child, X, and that his mother and two brothers should be the Trustees who will be responsible to manage that amount of money.”
It is important to note that the testamentary trust will however only be registered after the death of that person at the Master of the High Court and will thus only come into force after such registration.
In the event that there is a Will but no provision has been made for the establishment of a testamentary trust, the inheritance due to the minor will be paid into the Guardian’s Fund of the Master of the High Court. This is a government entity.
The Guardian’s Fund is administered by the Master of the High Court, each Master has its own Guardian’s Fund. The fund is created to hold and administer funds which are bequeathed to a minor in a Will which does not have any testamentary trust or any other provisions.