AMENDMENTS TO TRUST DEEDS
Chapter 8: Amendment of Trust Deeds
This chapter examines when trust deeds can be amended and the methods for doing so, focusing on statutory provisions (Section 13) and common law principles.
8.1 Introduction
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Amendments depend on:1. The trust’s nature (inter vivos or testamentary).2. Provisions within the trust deed.3. The involvement of founders, trustees, and beneficiaries.4. Court intervention under Section 13 of the Trust Property Control Act.
8.2 Section 13: Court’s Power to Amend
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A court can amend or delete trust provisions if:
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The founder did not foresee the consequences.
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The provision:
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Hinders the trust’s purpose.
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Prejudices beneficiaries.
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Conflicts with public interest.
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Courts may also terminate the trust or substitute trust property.
8.3 Amendment of Inter Vivos Trusts
1. Amendments During Founder’s Lifetime:
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Require the agreement of the founder, trustees, and consenting beneficiaries.
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The common law prevails over conflicting provisions in trust deeds.2. Amendments After Founder’s Death:
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Depend on trust deed clauses or require court intervention under Section 13.
8.4 Amendment of Testamentary Trusts
1. Where the Trust Deed Provides for Amendments:
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Trustees or designated individuals can amend under specified conditions.2. Where the Trust Deed is Silent:
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Amendments require a court order under Section 13.
8.5 Public Policy and Constitutionality
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Discriminatory clauses in trust deeds can be challenged under the Constitution.
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Courts weigh freedom of testation against constitutional principles like equality and non-discrimination.
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Landmark cases:
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Emma Smith Educational Fund Case: Racist clauses in an educational trust were removed as unconstitutional.
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BOE Trust Case: Courts upheld freedom of testation where discriminatory clauses were foreseeable by the founder, and alternative provisions were in place.
8.6 Role of Trustees
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Trustees must act in the best interests of all beneficiaries.
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They can refuse proposed amendments if they conflict with fiduciary duties.
8.7 Role of Beneficiaries
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Beneficiaries must consent to amendments impacting their rights unless explicitly allowed otherwise by the trust deed.
8.8 Trust Protectors
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Trusts may appoint protectors with veto powers over amendments, adding a layer of oversight.
Key Takeaways
1. Trustees must strictly adhere to trust deeds and statutory requirements to avoid invalid transactions.
2. Courts have broad powers to amend trust deeds under Section 13, balancing founders’ intentions with public policy and constitutional values.
3. Both trustees and third parties must exercise due diligence when entering contracts or considering amendments to trust deeds.
4. Discriminatory or unconstitutional clauses in trust deeds are subject to judicial scrutiny and potential amendment or removal.
This document serves as a practical guide for trustees, beneficiaries, and legal practitioners, providing clarity on trust administration, contracting, and amendment processes in South African law.