We believe that such transactions are not as simple as they are often made out to be for some of the under mentioned reasons. The transaction involves the amendment of the trust deed by substituting the existing trustees and beneficiaries for new trustees and beneficiaries. There is no difficulty in the assumption of new trustees and the resignation of the original trustees but variation of the trust deed to replace beneficiaries may be an entirely different matter. This is based on the premise that an inter vivos trust is in effect a contract for the benefit of third persons, the beneficiaries. Should the benefits have been accepted, it may be possible to circumvent this problem by obtaining the consent of the beneficiaries.
Further problems arise, however, if any of the beneficiaries happen to be minors.
In this event it would be necessary to obtain the consent of the Master or even of the High Court on behalf of the minor concerned but this consent may be withheld. It is incumbent on the parties to carefully scrutinise the trust deed in order to ensure that it is a discretionary trust and to establish what the rights of the potential or actual beneficiaries are. It goes without saying that this type of transaction would not work in the case of a trust established in terms of a will as it is legally impossible for a will to be amended by agreement. It remains an individual commercial decision as to which route to take and as to whether a trust is the appropriate vehicle for your purpose. No 61 of 1973 where the purchaser needs to borrow the purchase price and secure it by way of a mortgage bond over the property.