Trusts

Are you in need of a Trust? We can register a Trust for you in South Africa through our alliance between consultants, accountants and lawyers. 

There are mainly two types of trusts known in South Africa, the Intervivos Trust (created between living persons during the lifetime of the founder) and Testamentary Trusts (created in a will)

The two main types of trusts

Testamentary TrustRegisteratrust1

  • Is created in a will & becomes active upon death
  • Is mostly created to hold assets on behalf of minor children as they can’t receive their inheritance before the age of 18 in terms of RSA law
  • Changes to the trust can be made before death by amending the current will or creating a new will

Intervivos Trust

  • The trust deed determines the capital and income beneficiaries and the benefits they may receive
  • Ownership of the property vests in the Trust and ownership only passes to the beneficiaries upon termination of the Trust or during the Trust if the Trustees so decide in terms of the Trust Deed
  • The main objectives are to provide income for the beneficiaries, to protect the assets from marital regimes of the beneficiaries and creditors of the beneficiaries

The benefits of setting up a trust

  1. To administer and protect assets that are reserved for beneficiaries or minor children
  2. The trust assets do not form part of your personal estate and are therefore not assets taken into account for the purpose of estate duty
  3. The assets in the trust are protected from creditors & possible effects should you become insolvent in your personal capacity
  4. There is continuity in a trust, the concept does not die. The trust assets are unaffected should one of the trustees pass away
  5. To manage & pay income benefits to beneficiaries (your dependents)
  6. To do proper estate planning by saving on capital gains & donations tax

Aspects to consider when setting up a trust

  • It is recommended that there should be at least 3 trustees of which one acts as an independent Trustee, usually a professional like an Accountant, Attorney or Auditor (as part of the services we render, we can act as independent Trustee)
  • The Trust may need Annual Financial statements compiled by a registered accountant or accounting officer. In addition tax returns would need to be filed to SARS.
  • Minutes or resolutions needs to be kept upon any decision made in a trust.
  • The trust would need a bank account to account for transactions by the trust.

Want to register a Trust; or draft a Will?

Feel free to contact us for assistance. 

There are several established living trust structures:

The vesting or discretionary family trust

The founder and trustees agree to set up the trust, and the founder’s assets are sold or donated to the trust, creating a loan account. If assets are donated, the trust is subject to donation tax implications. The trust may also acquire other assets through purchase or inheritance

The business trust

The private business trust can be a discretionary trust or a bewind structure, which means that the trust capital holds vesting rights. In this case, the business trust is used primarily to carry on a business with the intention of making a profit.

The charitable trust

Under the terms of the Income Tax Act, charitable trusts are not required to pay tax.

Special trusts

A special trust may only be set up to protect the interests of someone who is described in the Mental Illness Act 18 of 1973 as mentally ill or who has a serious physical deformity.

Benefits of trusts

As a trust’s assets are protected, they cannot be attached if you or a trustee becomes insolvent.

The assets are also protected if you are a trustee and you have signed surety on any of the assets.

The trust protects the financial well-being of your dependents, who may be minor children, handicapped individuals or dependents with special needs; or dependents who have questionable spending habits.

Trusts help to simplify your estate administration when you are no longer able to do so yourself, and also minimise your tax obligations.

If you are thinking about setting up a trust, there are various aspects to consider:

  • It is important to know and understand the duties under the Common Law and the Trust Property Control Act
  • The appointed trustees must be independent and must be involved in all trust decisions
  • The tax considerations of setting up a trust
  • Remember that in a trust, your assets are separated from you so you no longer own the assets.

Want to register a Trust; or draft a Will?

Feel free to contact us for assistance.