Can a beneficiary disrupt a trust?

A RECENT real-life case demonstrated the importance of estate planners and trustees staying alert.

- PHIA VAN DER SPUY

Essentially, the founder's (the estate planner) daughter reached maturity, and her new attorney boyfriend influenced her so significantly that she believed she could claim her fair portion from the trust. In a knee-jerk reaction, the parents want to remove her as a beneficiary from the trust in an attempt to protect the assets held in trust as a generational wealth protection vehicle. Is that the right decision?

What was the intention of the founder?

When a crisis hits, people often lose sight of why they established trusts. The estate planner should revisit these reasons. The founder’s intention must be clearly stipulated in the trust deed. Additionally, the purpose of setting up the trust should be explained to and documented for both the first and subsequent trustees, especially when the founder is no longer present. Unfortunately, this clarification usually does not occur, leading to an unclear man-date for the trustees, which may result in future misuse of trust assets.

What does the trust deed say?

Many people establish trusts without thinking critically. Trust practitioners also share this fault, failing to apply their knowledge or adequately guide their clients.

Many rely on a standard trust instrument template, merely changing the trust’s name, the founder’s name, and the trustees’ names, while also using a conventional list of beneficiar-ies. Establishing a trust and selecting beneficiaries necessitates a thorough understanding of trusts along with careful consideration of one’s personal circumstances. There is no one-size-fits-all solution!