Case Studies and Test Cases

21 April 2006 Rianet Whitehead

As part of the FAnews Groups, advisory scope we will providing you our valued readers with various industry case studies and extracts from Ombudsmans Report. We hope you are empowered by this information and that it provides you with a strong reference base and industry insight from which you can impart knowledge and offer a improved service to your clients.

Case Study 1 a beneficiary serving a prison sentence.

Mongezi is a single beneficiary. His father, a member of the Textile & Allied Workers Provident Fund, died in July 2003. Although Mongezi, at 23, was entitled to his share of the death benefit payment of approximately R151 000, the funds were placed into trust as he is serving a prison sentence. The initial instructions from the retirement fund trustees were for the funds to be re-invested and capital to be distributed upon request.

Mongezi is currently serving his sentence at a correctional services facility in Johannesburg. Generally, distributions would have been paid to a guardian but in this instance, no guardian was appointed as he was already a major. As his family had written him off there were no family members to receive capital on his behalf and funds could therefore not reach him. Mongezi therefore appealed for monthly payments and capital distributions to be made directly to him. In a groundbreaking development, Fairheads liaised with the social worker dealing with Mongezi who has arranged for him to have access to an ATM for the purposes of withdrawing cash for toiletries and phone cards to correspond with UNISA, thus allowing him to proceed with his studies. The trustees felt that Mongezi had already been ostracised by his family and society and did not need any further alienation in his life. The social worker reports back on his progress to the trustees every six months. Upon completion of the prison sentence in 2007, Mongezi will be entitled to the funds.

Value of the trust at May 2005: approximately R156 000

Case Study 2 trust funds used to benefit a 5-year-old HIV positive orphan.

A five-year-old HIV-positive child in Khayelitsha, Cape Town was orphaned. Her grandmother refused to care for her on the grounds of her HIV status, so the childs great aunt was appointed as the guardian. The lump-sum benefit in trust is relatively small, at approximately R35 000. At the recommendation of the administrator, the trustees took a decision to allocate a certain amount of capital per annum to assist with the beneficiarys expenses over and above the basic educational requirements, on the basis that the life expectancy is not high and the childs quality of life should be improved.

Case Study 3 - sensible use of trust funds to educate three beneficiaries.

The Jacobs family lives in Mitchells Plain, Cape Town. The father of three children, a member of Sabat Battery Provident Fund, died in 1999. A lump-sum benefit of approximately R65 000 was placed into trust on behalf of his three minor children and has been used by the widow, an employee at a Pick n Pay store, to educate them. Mrs Jacobs requests have always been reasonable and the family has a good understanding of how this trust operates. The oldest child has reached majority and had her share paid out to her, the second is at university (UWC) and the third still at school.

Value of the trust at May 2005: approximately R38,000.00.

These case studies were provided by Fairheads Umbrella Trust Company. Please note the names of beneficiaries have been changed for reasons of confidentiality.

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