Cap. 16 Art. 958MLimitation on rightsofenjoyment of benefit.

(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 full or for the excess in accordance with this article:

Provided that in case of members of monastic orders or religious corporations of regulars the provisions of article 611 shall apply to trusts in favour of such persons mutatis mutandis.

(2) Subject to the provisions of article 6B of the Trusts and

Trustees Act, except in cases where the trustee exercises a power of variation or otherwise acts so as to be in conformity with the provisions of this Code, trust settlements shall be reduced to the portion permitted by law if at the time of the opening of succession 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 the 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 enjoyment of fruits for the lifetime of such spouse and subject to the terms of the trust, thereafter for the heirs 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, shall be observed with regard to the reduction of trust settlements, subject 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 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 commercial 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.

(6) No reduction of settlements can take place until the value of all the property disposed of under any will has been exhausted and when such reduction takes place, it shall be made commencing with the last settlement and so on successively, from the last to the 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 property 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 reduction has been brought within the year, otherwise from the day of the demand. In the case referred to in article 958A(4), the claimant shall be entitled to interest on the value retained for his benefit 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 receipt of proceeds by the trustee whichever is the later.

(9) Saving the provisions of the Trusts and Trustees Act, unless the terms of the trust expressly 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 and enjoyment of property and the enjoyment of fruits therefrom or a life annuity and it appears that the value of the trust fund exceeds the disposable portion of the estate of the settlor, the persons 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 after the death of the said beneficiary and notwithstanding any terms of the trust, an amount equal to the said reserved portion and 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 contemplated in the preceding sub-article, the beneficiary is subject to a mental or physical disability which renders him incapable of sustaining himself, if it appears to the trustee that the trust property is not susceptible of division, sale or reduction to fulfil the claims of a person entitled to the reserved portion in terms of sub-article (10)( ) without materially a prejudicing the interests of the said beneficiary, the trustee may apply to the Court and the Court may order that the property not be sold, divided or reduced until the death of the said beneficiary. 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 unless 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 executors of the estate.

(13) The action for reduction, whether against trustees or against third parties, shall be barred by the prescription on the lapse of five years to be reckoned from the day of the opening of the succession. 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 of law relating to the reserved portion of any person if the trust is to hold property:

(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 from a mental or physical disability in terms of sub-article (11).