Trusts

  1. There are two types of trusts
    -an inter-vivos trust and
    -a testamentary trust;
  1. An inter-vivos trust is created during the lifetime of the Founder;
  2. A testamentary trust is created in the will of the testator and comes into effect upon the death of the testator;
  3. A trust deed is concluded for both an  inter vivos and a testamentary trust and stipulates  how the trust is to operate;
  4. Assets are transferred into the trust and may include moveable, immoveable assets or interests in property;
  5. Trustees appointed in terms of the trust deed are responsible for the administration of the assets in terms of the provisions of the trust deed;
  6. Beneficiaries nominated in the trust deed will be entitled to the entitled to receive income and/or capital from the trust;
  7. Ownership of the trust assets vests in the Trustees BUT, it does not form part of their personal estates.
  8. Trust Debts are recovered from the Trust itself and not from the Trustees;
  9. A letter of authority is issued by the Master of the High Court appointing the Trustees in terms of the Trust Deed.

Inter Vivos Trust

An inter-vivos trust is created in terms of a trust deed, whereby the Founder, during his lifetime, transfers certain assets to the trustee.

Testamentary Trust

A testamentary trust is created when the testator bequeaths certain assets to a trustee in his will to be administered in favour of nominated beneficiaries.

Advantages of a Trust Essentials of Trust
  • Estate duty payable on the Founder’s personal Estate will be less- assets transferred into the trust;
  • Similarly, founder’s income tax liability is reduced;
  • No donations Tax is payable on the value of the asset donated to the trust;
  • Inheritances by minors are managed and administered;
  • Transfer Duty is payable at 8%.
  • The Founder must have an INTENTION to create the Trust;
  • A binding obligation must be created in the Trust Deed;
  • The Trustees must accept the Trusteeship;
  • Trust Property to be clearly defined;
  • The trust must be created for a purpose.

 

Documents to be submitted to the Master in Creating a Trust

  • A completed Acceptance of Trusteeship application form for each trustee (to be completed by the trustee);
  • A completed Bond of Security if required by the Master for each trustee;
  • The original trust deed or a copy thereof, certified by a Notary;
  • proof of payment of R100 fee;
  • An undertaking by an auditor, if applicable.