When the executor opened the file of a well-known sugarcane farmer, the first surprise was not a missing signature but a note that the family trust named in the will no longer existed. The story was recounted by Dudu Ramela on the Moneyweb podcast, with Old Mutual fiduciary specialist Nevetha Maharaj explaining how a forgotten clause turned a smooth succession plan into a legal maze.
What went wrong
The farmer’s most recent will instructed that the residue of his estate, the portion left after specific gifts, should pass to his family trust. What the will did not anticipate was a limiting clause in the trust deed that set a fixed expiry date. The clause had never been extended by the trustees, so the trust legally ceased to exist years before the farmer died. Because the trust was no longer a legal entity, the will’s residuary gift could not be honoured.
Under South African law, when a beneficiary named in a will cannot inherit, that part of the estate falls under the Intestate Succession Act. In plain terms, the residue will be distributed as if the deceased had died without a will for that portion. This triggers a statutory process to identify the rightful heirs, often involving the Master of the High Court, and can add months of delay to the final settlement.
Consequences for the heirs
Because the trust was defunct, the estate now faces two practical problems. First, the distribution will be delayed while the intestate process determines who inherits. Second, the estate will attract tax consequences that would not have applied if the trust had been operational. Maharaj noted that the tax impact can be material, affecting both capital gains and estate duty calculations.
In addition, the lack of an independent trustee meant there were gaps in governance. Without a trustee to oversee the trust’s assets, the estate’s assets were left in limbo, increasing the risk of mismanagement or disputes among family members.
Who is responsible?
Maharaj placed the responsibility on two professionals: the attorney who drafted the will and the financial planner who advised the client. Both should have checked whether the trust deed was still fit for purpose before naming it as the residuary beneficiary. A prudent practice is to ask, “When was the trust deed last reviewed?” and “Do the will and the trust still work together?”
In this case, a simple review would have revealed that the trust had expired, prompting the drafter to either update the trust or choose a different residuary beneficiary. The oversight illustrates how the division of labour between legal and financial advisers can leave a blind spot if they do not communicate effectively.
Why regular reviews matter
Family trusts remain a popular vehicle for wealth protection in South Africa, but many contain expiry clauses that require renewal. Recent changes to trust law now require a beneficial register, a public record of who benefits from a trust, making it easier to verify a trust’s status. This regulatory shift underscores the need for annual or biennial reviews of trust deeds, especially when a will is being updated.
For small business owners and entrepreneurs, the lesson is clear: the structures that hold your wealth are only as strong as the last check you performed. A routine audit of your trust, combined with a coordinated review of your will, can prevent a costly re-opening of the estate after death.
In practice, owners should ask their attorney or fiduciary specialist to confirm three points: the trust’s expiry date, the presence of an independent trustee, and whether the trust’s governance complies with current legislation. By doing so, they keep the legal and financial pieces of their succession plan in sync, avoiding the kind of limbo that befell the sugarcane farmer’s family.
