It’s necessary to review your regularly

WHEN you have a will drafted or a trust registered, it is done given specific circumstances and at a point in time in your life. These circumstances do change. You could (and should) therefore review your will and trust deed regularly, but at least once a year, to ensure that its terms are still relevant and it represents your current circumstances. For example, you may have got divorced or married, a particular family member may become more reliant on financial support from you than others, children or other family members may have emigrated, which may introduce resultant tax complications for them as heirs and/or beneficiaries. Laws may also have changed, which may warrant an amendment of the trust deed. The beginning of the year is a good time to review your will and trust deed.

Your will

Most people delay addressing their wills because it is an emotional document to prepare. However, proper estate planning includes the drafting of a will, which complements your estate plan. Your will should always be up to date and reflect your current wishes in terms of how you would like your assets to be distributed upon your death. It is critical to comply with all the requirements to draft a valid will, failing which it may be open to attack. People who believe they should inherit – but do not – will try to find a loophole to invalidate the will.

It is wise to draw up wills for trust beneficiaries (even as young as 16 years) to whom the trustees make distributions without actually making

LOCAL FUNDS

These are funds of South African management companies that invest both locally and offshore and are denominated in rands.

36One BCI Equity Fund

36One BCI Flexible Opportunity Fund Absa Bond Fund

Absa Global Multi Asset Feeder Fund Absa Global Property Feeder Fund Absa Property Equity Fund

Absa Smart Alpha Defensive Fund Amplify SCI Wealth Protector Fund Anchor BCI Global Equity Feeder Fund Aylett Balanced Prescient Fund Bateleur Flexible Prescient Fund

Blue Quadrant Worldwide Flexible Prescient Fund

BlueAlpha BCI Global Equity Fund Catalyst SCI Flexible Property Fund Centaur BCI Flexible Fund

Citadel SA Bond H4 Fund

Cohesive Capital Worldwide Flexible Prescient Fund

Cordatus Worldwide Flexible Prescient Fund

Coronation Global Capital Plus [ZAR] Feeder Fund

Coronation Resources Fund Coronation Smaller Companies Fund Counterpoint SCI Value Fund

Deton Prime Global Flexible Fund of Funds

Discovery Moderate Dynamic Asset Optimiser Fund of Funds

Emperor IP Balanced Fund

Emperor IP Global Equity Fund payment. Without a will, the beneficiary will die intestate, resulting in the money potentially landing in the hands of unintended people.

Ensure your will complements a relevant trust deed. If, for example, the trust deed allows trustees (typically the estate planner and his or her family) to appoint follow-up trustees, ensure that this has been attended to in your will.

Do not deal with trust assets in your will, as these assets no longer belong to you. (We often find that trust assets are still mentioned in wills.) Similarly, resist instructions in your will to trustees of the trust directing them how to deal with trust assets. You will be treading on thin ice, likely to have the trust disregarded by the South African Revenue Service (Sars), and as a result have the assets included in your estate for estate duty purposes.

Trust deed

A good starting point is to review the definition of, and further terms dealing with, beneficiaries in the trust deed.

Fairtree Balanced Prescient Fund Financial Fitness IP Stable Fund of Funds

Global IP Opportunity Fund

Gryphon Flexible Fund

Gryphon Prudential Fund

Harvard House BCI Property Fund Kagiso Islamic Balanced Fund

Kagiso Islamic Equity Fund

Long Beach Managed Prescient Fund M&G Global Inflation Plus Feeder Fund Matrix SCI Stable Income Fund

Mi-Plan IP Enhanced Income Fund Mi-Plan IP Global Macro Fund

Naviga BCI Worldwide Flexible Fund Nedgroup Investments Core Bond Fund

Nedgroup Investments Core Global Feeder Fund

Nedgroup Investments Opportunity Fund

Ninety One Cautious Managed Fund Ninety One Commodity Fund

Ninety One Emerging Companies Fund Ninety One Global Strategic Managed

Have circumstances changed that warrant a review of the beneficiaries? If you want a specific beneficiary to be favoured over others in a discretionary trust, say so in the trust deed, otherwise beneficiaries may put pressure on trustees to treat them equally. The trust deed in the instance of a discretionary trust should also clearly state that beneficiaries ought not to be treated equally, if that is what you intend. It is perfectly acceptable for a trust deed to provide that a beneficiary shall not receive a benefit until the happening of some event, such as reaching a certain age of 1977).

A trust deed can also provide that a beneficiary will only receive a benefit from a trust for a limited period. The beneficiary may then have an

Feeder Fund

Ninety One Value Fund

Northstar SCI Global Flexible Fund Portfoliometrix BCI Global Property Fund of Funds

Portfoliometrix BCI SA Bond Fund PortfolioMetrix BCI SA Property Fund PSG Income Fund

PSG Wealth Global Flexible Feeder Fund

PSG Wealth Global Flexible Fund of unconditional vested right for that limited period only, and such a right will, during that time, form part of the beneficiary’s insolvent estate or his or her assets during a divorce. You cannot vest income or capital in a beneficiary in a trust deed, but you can revoke the vested right in the event of the beneficiary’s insolvency or divorce. A trust deed cannot restrict a beneficiary, for example, by prohibiting the beneficiary from marrying. However, a beneficiary can cede both a vested and discretionary right to another person or entity, and one may well want to prohibit such a cession expressly in terms of the trust deed.

Be mindful how you define “income” in the trust deed, as it may include all “fruits” from assets, such as the occupation of a property, or it can narrowly only refer to actual revenue received, such as rental income. The term “net income” should also be clearly defined – gross income less expenses – and the trust deed should allow trustees to distribute both income and net income. This may be advantageous from a tax perspective when the conduit principle is used to distribute net income to beneficiaries, who will pay income tax on the net income, and not on the (gross) income.

Income should also be clearly distinguished from capital in the trust deed, especially if some people are income beneficiaries and others capital beneficiaries.

Capital beneficiaries can benefit from the distribution of an actual trust asset or from a gain made on the disposal of trust assets. The treatment

The annual Raging Bull Awards will be broadcast by video stream on Tuesday, February 1 at 7pm. The awards recognise the best actively managed unit trust funds on straight performance over three years and on risk-adjusted performance over five years to the end of 2021. There are also awards for the top South African and offshore management companies. The event is hosted by Personal Finance and Business Report, and the main sponsors for this year’s event are the JSE and Sanlam. PlexCrown Fund Ratings, part of the Profile Group, has supplied the data on which the awards are determined. Below are all the funds nominated

for either a Raging Bull Certificate or a Raging Bull Trophy for performance to the end of last year.

Funds

RCI BCI Worldwide Flexible Growth Fund

Reitway BCI Global Property Feeder Fund

Saffron SCI Active Bond Fund

Sarasin IE Multi Asset - Strategic (USD) Sasfin BCI Balanced Fund

Sasfin BCI Flexible Income Fund

Select BCI Worldwide Flexible Fund Sanlam Investment Management Enhanced Yield Fund

Sanlam Investment Management Resources Fund

Sanlam Investment Management Small Cap Fund

Southern Charter BCI Balanced Fund of Funds

Southern Charter BCI Defensive Fund of Funds

Stanlib Global Balanced Cautious Fund Stanlib Global Balanced Feeder Fund Stanlib Global Equity Feeder Fund Sygnia FAANG Plus Equity Fund

Truffle SCI Income Plus Fund of unallocated income should also be defined to reflect the founder’s intention – whether it will form part of trust capital at the end of a financial year, if unallocated, or whether it will keep its nature as income. If the trust deed is silent, it may be assumed that income and capital will always retain their nature.

If the trust deed is dated before October 2001 (when capital gains tax was introduced), you should have it amended, as the trust deed has to recognise this concept throughout, and it will be required to enable trustees to distribute a capital gain to beneficiaries using the conduit principle.

Conclusion

Read your will and trust deed to ensure they reflect your current circumstances, with the assistance of a professional specialising in this field. This is certainly not something you want to have done “for free”. Otherwise you may very well fall within the category of people the judge referred to in the case of 2012: “It is a never-ending source of amazement that so many people rely on untrained advisers when preparing their wills, one of the most important documents they are ever likely to sign.”

Phia van der Spuy is a Chartered Accountant with a Master’s degree in tax. She is a registered Fiduciary Practitioner of South Africa, a Master Tax Practitioner (SA), a Trust and Estate Practitioner and the founder of Trusteeze, the provider of a digital trust solution.

OFFSHORE FUNDS

These are funds of management companies based in foreign jurisdictions and denominated in foreign currencies, which are registered with the Financial Sector Conduct Authority to be marketed in South Africa.

Aberdeen Global-European Equity

Fund

Allan Gray Africa Bond Fund

Anchor Global Equity Fund

Baillie Gifford Worldwide Long Term Global Growth Fund

BMI Investment Funds Limited High Income Fund

Dodge & Cox Global Bond Fund Franklin US Opportunities Fund PineBridge Asia ex Japan Small Cap Equity Fund

Reitway Enhanced Global Property Fund (MLT) USD

Reitway Global Property Fund (MLT) USD

Reitway Global Property Portfolio AUD Schroder International Selection Fund All China Equity

SIIP India Opportunities Fund

Stanlib European Equity Fund

T Rowe Price European Equity Fund T Rowe Price Global Focused Growth Equity Fund

T Rowe Price US Blue Chip Equity Fund T Rowe Price US Smaller Companies Equity Fund