You may be a very kind and generous person but do you know that your entire family (uncles, aunts, nephews, nieces, cousins) as well as all the in laws (especially those who can turn out laws on you) can easily qualify to receive benefits from your personal family trusts. Far fetching?  No just go and check your trust deed. Surely this may not be what you or your dad or your mom had in mind when the trust was created. But this is what is happening in more than 50% of trust deeds in the RSA where the beneficiaries of trusts are defined as such. What is even worse is that in the older trusts of this kind, where the founders are ageing and grandpa or grandma already passed on, this acute attack of generosity in the trust deed when founded cannot be rectified or changed anymore or it may cost an arm and a leg to change it. The race against time is on.....

To be more specific, the trusts referred to, define the term “beneficiary/ies” to include both income and capital beneficiaries, while the capital beneficiaries are then referred to by name as viz William and Mary Shakespeare and/ or their children and the income beneficiaries are merely referred to as the capital beneficiaries as well as those persons related to them by blood or affinity (Afrikaans:“bloed- of aanverwante”) Related by blood means what it says namely everybody where the bloodline forms a connection as indicated above in the form of the uncles and aunts etc and related by affinity means where there is a marriage or similar relationship causing the connection such as the in laws. Keeping in mind the fact that trusts are very much about the future (near or far) and all its uncertainties these wide definitions of the beneficiaries may have benefits due to the fact that should any of these relatives fall into some unforeseen form of need in future they can then be validly benefitted  from this kind of trust. This can possibly also result in some valid tax benefits. 

Unfortunately this story of goodwill also has a dark side. These trust deeds also contain an amendment clause, which, in most cases, provide for an amendment by agreement between the founder and the trustees during the founder’s lifetime and after his/her demise by an agreement between the trustees and the beneficiaries (with no distinction between income and capital beneficiaries which is of course not good drafting). 

The many trust deeds countrywide containing these clauses as well as their founders are ageing and grandparent founders are beginning to die on the trustees.  This is leaving the trustees with the awkward dilemma to trace all the relatives of “blood and affinity” wherever they are and make them a party to often very necessary amendments. Without these extended family beneficiaries the trust deed cannot be amended. While prevention is always better (and cheaper) than cure,  a quick DIY check of your trust deed/s for the term “those related by blood or affinity” while the founder/s are still alive, will not only save you costs but will also perhaps  bring reality to your generosity and clarity as to who the real beneficiaries of your family trust are intended to be.