Approval for growth assets

The Pretoria High Court has granted relief to the curator acting for two people living with Alzheimer’s Disease by allowing the curator to invest their money in growth assets rather than cash, thereby protecting their investments from the damaging effects of inflation.

Fund administration firm Maitland, the curator for the couple, applied to the court for an order allowing it to manage the couple’s investment assets in a trust controlled by a trustee appointed under the provisions of the Trust Property Control Act, rather than the outdated Administration of Estates Act.

Louis van Vuuren, a senior manager of private clients at Maitland, says the current Administration of Estates Act “practically compels” curators to invest the liquid assets of their clients in cash or cash-like instruments.

In addition, the curator’s fees are limited to a percentage of the income that arises from these investments.

Van Vuuren says this pits the curator’s and the client’s interests against each other if the client needs inflation-beating capital growth and the two restrictions have damaged the wealth of clients over many years.

Accepted investment practice is to allocate a portion of the investment funds to cash and cash-like assets for short- and medium-term stability and to allocate the remainder of the investment to inflationbeating equity and property investments, he says.

Curators can ask the Master of the High Court for permission to allocate some funds into “risky investments”, but this means an official at the Master’s Office has to make an investment call and this has resulted in approval of such requests being difficult to obtain.

In the Pretoria High Court case, the court agreed that Maitland could invest the couple’s funds in a prudent manner in line with accepted investment principles, and that the remuneration of the trustee would not be limited to the income, but could be based on a percentage of the capital value of the investments.