A recent Supreme Court of Appeal (SCA) decision illustrates once again how essential it is, before getting married, to have your lawyer structure your antenuptial contract (ANC) correctly, and with as much detail as is needed for certainty.
A multi-million Rand fight over trust assets
The outcome, the law, and the lessons to be learned
The SCA held that none of the trusts’ assets were to be taken into account in determining accrual in the husband’s estate –
Lesson 1 therefore is this – if you want a wide exclusion of a particular class of assets from the accrual process, say so clearly in your ANC.
She was able to convince the Court that he had “administered the trusts with very little regard for his fiduciary duties as a trustee and without proper regard for the essential dichotomy of control and enjoyment essential to the nature of a trust and … such conduct may have justified his removal as a trustee, or the appointment by the Master of an independent co-trustee…”
What she had failed to prove was any “abuse of the trust form” nor that “the trust form [was] used in a dishonest or unconscionable manner to evade a liability, or avoid an obligation.”
Firstly, the husband’s use of separate trusts for each new business venture was a “legitimate business activity” given his “overall business strategy”.
Secondly, there was no proof that the husband “transferred personal assets to these trusts and dealt with them as if they were assets of these trusts, with the fraudulent or dishonest purpose of avoiding his obligation to properly account to the respondent for the accrual of his estate. In addition it was not established that the transfer of assets to these trusts by the appellant was simulated with the object of cloaking them with the form and appearance of assets of the trusts, whilst in reality retaining ownership.”
Lesson 2 therefore is that if you want to attack your spouse’s use of trusts to hold assets you will need to prove more than just misconduct in the administration of the trusts. You will also have to prove a fraudulent or dishonest attempt to avoid the consequences of accrual.
This article is for general information purposes and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us At DKVG Attorneys for specific and detailed advice.
For more information, contact our Wills, Estates & Trusts department
© DotNews, 2005-2017. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)