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Nelson Mandela Trust Fight Raises Legal Issues

By Betty Wang, JD on June 27, 2013 | Last updated on March 21, 2019

The recent Nelson Mandela trust fight involves him (his trust, at least) and his two daughters, who want to remove two appointed trustees. It also shows what can go wrong when setting up a trust.

The Mandela Trust dispute centers on who ultimately will control the trust, The New York Times reports. His daughters reportedly want to distribute much of the trust's $1.3 million in assets, against the trustees' (and Mandela's) wishes. Mandela, 94, has been hospitalized for the past 20 days.

So what can we learn from this dispute over Nelson Mandela's trust? Here are five legal issues that come to mind:

1. Trustees and Beneficiaries Are Not the Same.

It may sound confusing, but trustees and beneficiaries are not the same. A grantor gives a trustee (or grantee) responsibility to take care of the trust. That person will man the trust and ensure that its purposes and intents are satisfied. He will then also be responsible for dispersing the assets in the trust to the beneficiaries. The beneficiaries, therefore, are the parties listed in the trust who are meant to benefit (i.e., receive assets) from the trust.

2. Make Sure You Trust Your Trustee.

This is especially crucial. Your trustee is essentially going to be the person responsible for your trust, ensuring that it is carried out the way you want it to, all without expecting to be rewarded with the contents of the trust. If the trustee fails to live up to his duties, the beneficiaries can take steps to get him removed.

3. Testamentary or Living Trust?

Trusts fall into two categories -- testamentary or living. A testamentary trust means that the assets of the trust are transferred to the beneficiary after the death of the grantor. Such a trust is usually specified in a will, so it typically must go through probate. By comparison, a living trust, which may or may not spill over after death, starts during the life of the grantor. Living trusts can be used to avoid probate, if all assets are transferred into the trust before the grantor dies.

4. What Type of Trust Do You Need?

Aside from trusts being either testamentary or living, there are also various types of trusts aside from that. For example, an irrevocable trust can't be altered or modified after it's been created, while a revocable one can be. Also charitable trusts are trusts that are meant to benefit a specific charity or just has a charitable purpose in its creation. It's best to know what exactly you want out of your trust before you create one.

5. How Does a Trust End?

Trusts can end in a number of ways -- the first and most obvious one is when the trust property has run out or has been exhausted. Either the beneficiary has cashed out, or the funds have all been used.

Other times, if the grantor has specified a certain date for the trust to end, the trustee will then with the beneficiary in dispersing the remaining property, if any. Usually, the grantor will have laid out specific instructions as to how this is done. If not, the trustee will determine the fairest and most ideal way, based on the grantor's intentions, to do so.

Of course, these are just a few of the legal concerns that may arise when you set up a trust. Because each person's situation is unique, it's wise to consult an experienced trusts attorney when planning your estate.

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