Civil Code (Cap. 16), article 958L

958L. (1) Property under trusts shall be regulated by the special law on trusts and to the extent applicable, the rules of this C ode relating to trusts. Transactions relating to property in trusts. (2) ( a) Transactions relating to property including - (i) the settlement of property under trusts, even when effected by unila teral declaration or resulting from a judgeme nt or order of a court; (ii) the distribution, application, or advancement of property by a trust ee to a beneficiary; (iii) the reversion of property to a settlor or his estate when a trust fails or is terminated; (iv) the assignment, vesting or transfer of property under trusts from a trustee to another trustee under the same trusts, shall be subject to the special laws relating to trusts and their effects when suc h transactions arise by operation of law or are car ried out in the form and manner required by applicable law. (b) When such transactions are intended to transfer the ownership or other rights to or in property from one person to another, such transactions shall comply with all applicable requirements for the transfer of ownership of such property, including the provisions of article 996 when appli cable, and when so carried out shall - (i) be effective modes of t ransfer of ownership or other rights to or in such property; (ii) result in the creation or termination of legally enforceable interests in or to such property in favour of such persons as provided by the special laws relating to trusts; and (iii) be operative ag ainst third parties. (c) The sole consideration for the validity of such transactions may be the imposition or assumption, the performance, or the termination, as the case may be, of legally enforceable obligati ons on or by a trustee in relation to such property. Disposition by trustees of property. Amended by: XIII.2007.3. (3) A trustee may validly dispose of and transfer trust property to third parties notwithstanding any right of reserved portion arising out of the application of articles 615 to 653 and the o ther provisions of this Code relating to reduction of trust property . CIVIL CODE [CAP. 16. 223 Statutory trust in favour of the person entitled to the reserved portion making claim. Amended by: XIII.2007.3. (4) In any case where, after the death of the settlor, the trust ee is formally notified of a clai m for the reserved portion in circumstances where trust property is to be sold, the trustee s hall hold on trust for the benefit of any claimant of such right a s um in money based on the net transfer value of the property at the ti me of transfer until the claim for the reserved portion is determined or otherwise lapses. (5) If trust property subject to a claim for the reserved portio n or, where it has been sold, the proceeds thereof, have already been distributed to any beneficiary, the person entitled to the rese rved portion claim may be made against such beneficiary as though he were an heir, legatee or donee as the case may be, and if there remains any property under such trusts, proportionately between the trust property and the beneficiary. Trustee to hold for the person entitled to the reserved portion for five years. Amended by: XIII.2007.3. (6) The trustee’s obligation to ret ain the value as stated in su b- article (4) shall operate for a peremptory period of five years from the date of death of the decujus . This shall not prejudice the right of any claimant with respect to other property forming part of the inheritance but not settled in trust. Limitation on rights of enjoyment of benefit. Added by: XIII.2004.39. Amended by: XIII.2007.7. Re-numbered by: XVI.2015.5. 958M . (1) Trusts for the benefit of a person who is not capable of receiving property, whether by testamentary disposition or donation, under the provisions of this Code, absolutely or more than as permitted by this Code, are subject to reduction in ful l or for the excess in accordan ce with this article: Provided that in case of members of monastic orders or religious corporations of regul ars the provisions of article 61 1 shall apply to trusts in favour of such persons mutatis mutandis . Reduction of settlements. Cap. 331. (2) Subject to the provisions of article 6B of the Trusts and Trustees Act , except in cases where the t rustee exercises a power of variation or otherwise acts so as to be in conformity with the provisions of this Code, trust se ttlements shall be reduced to the portion permitted by law if at th e time of the opening of succe ssion of the settlor they are found to exceed the disposable portion of his estate: Provided that when trust property is reduced, the excess property shall be held by the trustee absolutely for the heirs of the settlor or for the benefit of the person entitled thereto as th e case may be. (3) When the beneficiary entitled to property which is in excess of what is permissible at law is a spouse of the settlor, such excess property shall be held under separate trust for use and enjoyme nt of fruits for the lifetime of such spouse and subject to the terms of the trust, thereafter for the heir s of the settlor absolutely. (4) The rules laid down in article 621 and in articles 647 to 653, relating to the reduction of testamentary dispositions, sh all be observed with regard to the reduction of trust settlements, sub ject to the provisions of this Title. (5) The reduction of a settlement can only be demanded by those for whose benefit the law has reserved a portion of the 224 [CAP. 16. CIVIL CODE property of the deceased, and by their heirs or other persons claiming under them and - (a) saving article 1240, such persons cannot waive such right during the lifetime of the settlor, whether by an express declaration or by consenting to such settlements; (b) donees, legatees or creditors of the deceased cannot demand the reduction of settlements or benefit by it; (c) trusts forming part of a co mmercial transaction cannot be reduced in any manner until the completion of the commercial transaction, after which the residual property shall be subject to the rules stated in this article. Benefit of discussion of other property. (6) No reduction of settlements can take place until the value o f all the property disposed of und er any will has been exhausted and when such reduction takes place, it shall be made commencing wi th the last settlement and so on successively, from the last to th e previous settlements. (7) The right arising upon a reduction of trust property is to receive value and there shall be no right to restitution of pro perty in kind. (8) To the extent not already distributed prior to notice of a claim, the trustee shall restore the fruits of such part of the settlement which exceeds the disposable portion from the day of the opening of succession of the settlor if the action for redu ction has been brought within the year, otherwise from the day of the demand. In the case referred to in article 958A(4), the claiman t shall be entitled to interest on the value retained for his ben efit at the rate paid by banks on savings accounts from the date of the notification of his claim on the trustee or from the date of re ceipt of proceeds by the t rustee whichever is the later. Effects of claim for the reserved portion. Amended by: XIII.2007.3, 7. Cap. 331. (9) Saving the provisions of the Trusts and Trustees Act , unless the terms of the trust expr essly exclude such effects: (a) a person claiming the reserved portion from a trustee, the heirs or any other person, in relation to property settled in trust, shall lose any benefit under the trust; and (b) the provisions of article 620(4) shall apply in relation to any gains received under the terms of the trust. (10) Where the benefit to the beneficiary consists in the use an d enjoyment of property and the enjoyment of fruits therefrom or a life annuity and it appears that the value of the trust fund ex ceeds the disposable portion of the est ate of the settlor, the person s entitled to the reserved portion may claim either - (a) the reserved portion and lose all benefits under the trust and any will, if any; or (b) receive from the trustee af ter the death of the said beneficiary and notwithstanding any terms of the trust, an amount equal to the said reserved portion and CIVIL CODE [CAP. 16. 225 interest at 5% per annum, without compounding, up to the value of the trust property remaining on such event and in such case shall not be entitled to any benefits under the will or the trust. Any further remainder of trust property shall thereafter be applied according to the terms of the trust; or (c) opt not to claim and enjoy all benefits under any trust and any will. (11) When, in the case contem plated in the preceding sub- article, the beneficiary is subject to a mental or physical dis ability which renders him incapable of sustaining himself, if it appear s to the trustee that the t rust property is not susceptible of divis ion, sale or reduction to fulfil the claims of a person entitled to the r eserved portion in terms of sub-article (10)( a) without materially prejudicing the interests of the said beneficiary, the trustee may apply to the Court and the Court may order that the property no t be sold, divided or reduced until t he death of the said beneficiar y. Furthermore, and in such case - (a) the beneficiary shall not be entitled to demand the reduction of the trust settled in his favour and claim the reserved portion from the trustee or from the heirs or any other person except that if the property settled in trust is not equal to or more than the reserved portion, such person may request against any person other than the trustee that the sum due to him by way of reserved portion be placed under the trust settled in his favour; and (b) any other person entitled to the reserved portion shall be entitled to apply sub-article (10)( b) at the time of death of the beneficiary unl ess he had opted as stated in sub-article (10)( c) within five years of the death of the settlor; and (c) the trustee shall be deemed to have the power and legal interest to pursue any claim for the reserved portion due to the beneficiary against any other person and to receive any sum due into the trust established for the purposes of this sub-article. (12) The persons entitled to the reserved portion may choose any of the above options by notice in writing to the trustee and to the other heirs or execu tors of the estate. Prescription.(13) The action for reduction, whe ther against trustees or again st third parties, shall be barred by the prescription on the lapse of five years to be reckoned from the d ay of the opening of the success ion. The aforesaid time shall also run against minors and persons interdicted and shall not be capable of suspension or interruption by judicial act or otherwise. (14) The settlement and holding of property under trusts shall not be considered to be in breach of the mandatory provisions o f law relating to the reserved portion of any person if the trust is to hold property: 226 [CAP. 16. CIVIL CODE (a) temporarily and unconditionally for a person entitled thereto under fixed trusts; or (b) until a calculation is made to establish the reserved portion and thereafter to hold the same under fixed trust for or to distribute the said reserved portion to the person entitled thereto; or (c) for a person who suffers f r o m a m e n t a l o r p h y s i c a l disability in terms of sub-article (11). Persons unworthy of receiving under trusts. Added by: XIII.2004.39. Re-numbered by: XVI.2015.5.