Trisa Naidu examines the law established in WT & others v KT, the recent judgment handed down by the Supreme Court of Appeal regarded the issue of whether assets of a discretionary family trust form part of the joint estate of parties married in community of property.
The brief facts:
WT [plaintiff], who was married in community of property to KT [defendant], instituted divorce proceedings in the Gauteng Local Division in January 2010.
KT did not oppose the divorce proceedings neither the ancillary relief sought by her husband.
KT did however file a counterclaim, contending that the assets of the trust, established prior to the marriage and in which her husband acted in his capacity as a trustee, formed part of their joint estate, subsequently being entitled to a 50% share in their matrimonial home.
The contention that the assets of the trust formed part of the joint estate were based on the following reasons:
On the basis of deceit and misrepresentation:
The Supreme Court of Appeal found that there was no evidence which suggested that WT had deceived and misrepresented to KT that she would be a beneficiary to the trust or be a beneficial owner of the property, particularly as the trust was established and the property was registered prior to the parties being married or occupying the property.
On the basis of the alter ego – looking behind the veneer of the trust:
The Supreme Court of Appeal found that KT had no standing to challenge the control of the trust by WT in the circumstances as she was neither a beneficiary of the trust nor a third party who transacted with the trust at any point in time.
It was further found that there was no factual or legal basis for the finding of the high court that the trust formed part of the joint matrimonial estate of the parties. This was substantiated by the court recognising section 12 of the Trust Property Control Act 57 of 1988 which provides that trust property does not form part of the personal estate of the trustee.
Setting aside the declaratory order of the court a quo, the Supreme Court of Appeal declared that the assets of the trust do not form part of the joint estate of the parties. In addition, KT bears both the costs of WT and the costs of the trust.