When considering the creation of a Trust, the common law and The Trust Property Control Act 57 of 1988 will be applicable. Various forms and documents need to be drafted and submitted to the Master of the High Court for a Trust to be established and Letters of Authority to be issued confirming the appointment of Trustees. Only when Letters of Authority are issued can the Trustees begin administering the Trust and its assets and liabilities.
There are two main types of Trusts – the Testamentary (mortis causa) Trust and the inter vivos Trust. A Testamentary Trust is created upon the death of a person in terms of a Will, whereas an inter vivos Trust is created during the lifetime of a person in terms of a Trust Deed. Both Trusts need a founder and representation in the form of Trustees.
Even though the popularity of Trusts has waned over the years they are still an important tool, especially when considering estate planning. The following is a list of some benefits of having a Trust:
- Protect and administer assets to the benefit of certain beneficiaries only (these can be minors/incapacitated individuals who are likely to have to rely on you financially for an extended period of time);
- Safeguard assets and control the spending of funds by others;
- Trust assets can include local and foreign assets and can continue to be administered indefinitely;
- Trusts will not be “frozen” on the founder’s death; and
- There can be potential savings on estate taxes depending on your asset portfolio and personal circumstances.
People may think that Trusts are formed for purposes of tax avoidance schemes but this is certainly not the case. They are effective tools only when they are set up legally and correctly.
It is advisable that a person seeks professional advice and guidance before creating a Trust, administering a Trust, changing Trustees, and transacting with Trust assets.
Our team of Attorneys, Conveyancers and Notaries Public have extensive experience dealing with Trusts and Estate Planning. Call us today.