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Trusts: do I have funds due to me as a beneficiary?

Sign a letter of authority and send it to all investment providers to ascertain if there are any investments in your name.

When I was young, I remember my father taking out four unit trusts or education trusts that I would receive funds from when I turned 21, 25, 30 and 35. I had seen them on a system at a registered place but never signed for any funds, nor have I ever received funds from them. Is this legal to do this? Can it be taken to court and investigated? How do I find out what funds are due to me and that my father contributed towards?

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Based on the information provided, it is very difficult to answer your questions accurately.

Many factors have bearing on how this matter is to be resolved such as:

  1. In whose name were the investments entered into?
  2. Who had signing power on the investments?
  3. How long ago were the investments taken out?
  4. What type on investment was taken out and with which company?
  5. Is your father still alive?

Below we go into more detail on the above questions.

Most or nearly all service providers today will only pay out funds into a bank account in the name of the investor. This is legally disclosed in most terms and conditions. The reason behind this is to prevent fraud and money laundering.

Previously legislation allowed for monies to be paid into any account, provided the relevant supporting document could be provided. Nowadays this is a more daunting task and investment companies will advise you to open a bank account in the investor’s name before any monies are paid out.

In 2007 the Children’s Act No 38 of 2005 was amended, making the age of majority 18; previously it was 21 under section 17 of the act. What this means is that from the age of 18 you would no longer be considered a minor. Minors are not allowed to enter into any contractual agreements without the assistance of a guardian. There are a few exceptions whereby the consent of a guardian is not required.

Under section 87 of the Bank Act 94 of 1990, a minor from the age of 16 can transact on a bank account without the consent of a legal guardian. While this point might be diverting from the questions posed, the significance in it would arise when answering the question of how long ago the investments were taken out. The investments could have been cancelled or redeemed while you were still a minor and therefore you would not have any entitlement to the funds invested for your benefit.

It is also crucial to know what type of investment was entered. A basic unit trust investment can be redeemed at any time without any restrictions. Again, in whose name the investment was in is crucial, as discussed above. Education policies could have been in the form of an endowment, which has a fixed investment period and will only be paid out at maturity. They do also allow for a once-off withdrawal or a loan, however there are further restrictions which would apply, such as only being allowed to take out 95% of the market value. Endowments could also be surrendered subject to applicable penalties. Some life companies offered additional benefits to the endowments, which are like risk policies, such as: your education would have been paid for if your father became critically ill, disabled or passed away.

It is also important to know which company the investments were through. The reason being is that some companies have been taken over by other companies, or the company could have gone into liquidation or could have permanently shut down and ran away with the investors’ money. This would make it very difficult to source the funds and could be a long and complicated process.

If your father has passed away the value of these investments may have been paid to his estate and distributed in accordance to his will.

Without knowing the circumstances related to your query it is very difficult to guide you in the right direction. One should bear in mind that legal fees could prove to be very costly and the legal process could be long and daunting. A good starting point would be to sign a letter of authority, which could be sent through to all investment providers to ascertain if there are any investments in your name. If the investment is in your name you would be able to request additional information such as:

  • The start date of the investment
  • When the funds were redeemed
  • Who submitted the request to redeem the funds
  • The growth/performance of the investment
  • Into which bank account the funds were paid, etc.

In addition, one should also remember that if the investments were not in your name, your father could have already redeemed these investments to fund his expenses in your upbringing, such as your tertiary education, your first car, wedding, etc.

If the investments were/are in the form of a policy (endowment/education policy) then we would need to see who the owner is and who the beneficiary of this policy(ies) is/were.

Best of luck in locating the funds.

  

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