“Not worth the paper it is written on”
I have said it many times that most Non-Treoc trusts in South Africa are not worth the paper it is written on.
Ryno Venter, MD of Treoc’s partner, Treasury Trust Services, brought the following article under my attention. It is an article about a judgement handed down on 20 July 2011 in the High Court. This case is a must read for all people with trusts and for people knowing people who have trusts.
You will see that if a trust is not properly managed and administered, it is in fact not a trust. Not even if it is properly founded and registered.
One of Treoc’s other partners, Topaz Trust Accounting, confirmed to me that as at end of September 2011, they administered 3388 trust and that since the founding of Topaz in 2006 only 6 trusts ever were liquidated. This is only 0.18% of the trusts under their management and I think this is the best proof that they know how to administer trusts.
Anyway, read this article below and see for yourself what it is about!
Article by: Creamer Media Reporter on www.polity.org.za
The recent judgment of the North Gauteng High Court in First National Bank (“FNB”) v Stefanus Britz (“Mr Britz”) and 6 others (handed down on 20 July 2011) (“FNB Case”) demonstrate at least two main instances where a trust may be exposed to be not what it is purported to be. These instances are: (i) where, in divorce proceedings, one of the divorcing parties alleges that assets that are purported to be owned by a trust are actually owned by the other party to the divorce proceedings and (ii) where the creditors of a person are looking for assets to attach to satisfy a judgment against such person. The FNB Case, concerns the later instance.
In the FNB Case, FNB provided the Izani Trust (of which Mr Britz and Mrs Britz (Mr Britz’s wife) were the only co-trustees) with an overdraft facility. Mr and Mrs Britz entered into a suretyship agreement with FNB binding themselves as sureties and co-principal debtors with the Izani Trust in respect of the said overdraft facility. The Izani Trust could not service its debt in respect of the overdraft facility until an amount of about R 5 63 363.46, plus interest (“Outstanding Amount”) became due and payable by the Izani Trust to FNB. In the case which was a precursor to the FNB Case, judgment was granted in favour of FNB for repayment of the Outstanding Amounts by the Izani Trust and Mr and Mrs Britz (as sureties). The warrant of execution was subsequently issued against Mr and Mrs Britz in their personal capacities and in their capacities as trustees of the Izani Trust.
When the Sheriff went to the house where Mr and Mrs Britz resided to execute the judgment, he could not find sufficient disposable assets to satisfy the warrant of execution.
The seemingly tangled web of trusts started to unravel. Mr Britz and Mrs Britz said that they had donated the house furniture and all of their movable assets to the 14 Ackermannstraat Trust (of which Mr and Mrs Britz were the only trustees). Therefore, the Sheriff could not attach the movable assets because they belonged to the 14 Ackermannstraat Trust and not Mr Britz and Mrs Britz in their personal capacities.
It appeared from the trust deed of the 14 Ackermannstraat Trust, among other things, that (i) the Brizelle Trust was the sole beneficiary of the 14 Ackermannstraat Trust, (ii) the Brizelle Trust had power to remove and replace any trustee of the 14 Ackermannstraat Trust and (iii) the 14 Ackermannstraat Trust will exist until it is terminated by the trustees (Mr and Mrs Britz).
It further transpired that (i) the house where Mr and Mrs Britz resided was registered in the name of the Brizelle Trust (the occupation of the trust property by Mr and Mrs Britz family was expressly allowed in terms of the trust deed of the Brizelle Trust), (ii) Mr and Mrs Britz were the only trustees of the Brizelle Trust, .........................
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