Testamentary trust provisions must be constitutional

Freedom of testation is a fundamental principle of our law of succession (also enshrined in section 25 of the Constitution). However, when property is bequeathed to a testamentary trust, the testator should ensure that it’s provisions are constitutional.

During a person’s lifetime, he may donate his property in favour of whoever he deems fit. Furthermore, should he decide to make a will, it is his right to leave property to a person or class of persons of his choice. It is a right which our courts are not willing to easily interfere with.

However, as soon as a person makes a will and decides to leave property to a testamentary trust, matters may become more complicated. When a testator prescribes how his property should be dealt with by the trustees after his death, care should be taken that such provisions are in fact constitutional.

It is a well-known fact that the trustees of a trust have to act within their mandate, otherwise they may be held personally liable by the beneficiaries of that trust. But what should trustees do if they believe that their mandate may be unconstitutional? This is exactly what happened in a recent Supreme Court of Appeal case [The Curators ad litem to certain potential beneficiaries of the Emma Smith Educational Fund (Applicant) and the University of KwaZulu-Natal (Respondent) 2010 (6) SA 518 (SCA)].

The court case revolved around the provisions of a will. More than seven decades ago, on 21 July 1938, Sir Charles George Smith created a charitable trust in his will and named it after his mother. It was called the Emma Smith Educational Fund (herinafter the Fund) and was to be administered by the University of KwaZulu-Natal. The will provided that the benefits of the Fund be reserved solely for white South African women who need financial support for a tertiary education.

The question to be decided by the Supreme Court of Appeal (SCA) was whether this bequest was racially exclusive and thus unconstitutional.

Section 13 of the Trust Property Control Act provides that a court may, on application of the trustee or any person who in the opinion of the court has a sufficient interest in the trust property, delete or vary any trust provision or make any order which such court deems just, should the provisions of the trust be in conflict with the public interest.

The SCA pointed out that guidance must be found in “the founding constitutional values of human dignity, the achievement of equality and the advancement of human rights and freedoms, non-racialism and non-sexism”. The curators argued that the judicial amendment of a public charitable trust’s provisions would have a chilling effect upon future private educational bequests, but the SCA did not agree.

The SCA confirmed the decision of the court a qou and found that the fact that the benefits were restricted to white bursars was racially restrictive and thus in conflict with public policy.

Testators should ensure that their instructions to the trustees of a testamentary public benefit trust are constitutional. The court left open the question as to whether private testamentary dispositions to a religious community, a club or a school might also fall foul of the law.

For more information, contact Sonja Frank, Exceed Trust, on tel. 021 852 0382 or e-mail sonja@exceed.co.za