We strive to protect and grow the assets and wealth of our clients in the unfortunate event of death. We will continue to protect and grow the inheritance of our clients' loved ones thereby ensuring the wealth and legacy of the next generation.
- Management of testamentary trusts by Will as nominated trustee, co-trustee or agent for the trustee.
- General information and advice relating to testamentary trusts.
- Acting as agent under special power of attorney for persons incapable of managing their own affairs due to old age and/or medical conditions.
- Management in trust of pension fund, retirement fund and/or group life assurance lump sum benefits payable upon death of the member for the benefit of his/her dependents.
What is a trust?
A trust is a legal entity with its own identity. It may acquire, hold and sell property, shares and other assets.
A trust is an arrangement under which assets are set aside by an individual and administered by a trustee for the benefit of another person.
Why should I create a trust?
The purpose of a trust is to protect your assets.
A typical reason for creating a testamentary trust is for the protection of the interest of minors or dependents who are unable to take care of themselves.
- A testamentary trust is created in terms of a Will of a deceased person, usually for the benefit of minor and/or vulnerable heirs. The trust will own the assets until *termination of the trust (which is a specific date chosen by the testator/testatrix, i.e. until minor beneficiary attains the age of 18/21/25/until a beneficiary had completed his/her studies, etc).
- The Will, in the case of a testamentary trust, will be the trust deed and the testator/testatrix will be the founder. A testamentary trust’s inception date is the date of death of the testator/testatrix. Specific instructions to the trustees regarding the administration of the trust will be included in the trust clauses in the Will.
What are the benefits of a trust?
- In the event of your death, any inheritance payable to a *minor heir, where no testamentary trust is in place, will be paid to the *Guardian’s Fund to be administered until the heir attains the age of 18. In most cases, all the assets will be converted to cash. Only in extreme cases (and with extreme measures) will the Guardian’s Fund accept the transfer of a fixed asset.
- In the event where there are major children from a previous marriage, it allows for the income of the trust to be utilised for the maintenance of a spouse (known as the *income beneficiary) from a second marriage, while protecting the capital of the trust for the ultimate beneficiaries (known as the *capital beneficiaries).
- A testamentary trust can be utilised to protect the inheritance of a vulnerable spouse or heir.
- A testamentary trust will qualify to be registered as a special trust with SA Revenue Services if:
- Special Trust A: The trust is created solely for the benefit of a person who suffers from any illness as defined in Section 1 of the Mental Health Act or any serious physical disability, where such illness or disability incapacitates such a person from earning sufficient income for the maintenance of such a person.
- Special Trust B: The trust is created solely for the benefit of beneficiaries who are relatives in relation to the deceased person and who are alive on the date of death of the deceased person (including any beneficiary who has been conceived but not yet born) and where the youngest of those beneficiaries are, on the last day of the tax year, under the age of 18.
Special trusts qualify for tax advantages (income tax and capital gains tax) as these trusts are mostly taxed at the rates applicable to individuals (exceptions do occur).
EFBOE in general no longer cater for inter vivos trusts and will only consider the creation and administration of inter vivos trusts on a case by case basis.
- Minor heir – in terms of current legislation any heir under the age of 18 is considered a minor.
- Guardian’s Fund – The Guardian’s Fund falls under the administration of the Master of the High Court. It is a fund created to hold and administer funds on behalf of various persons, including minors, unborn heirs, missing or absent persons, etc.
- Income beneficiary – person who will benefit from the income of the trust.
- Capital beneficiary – person who will ultimately inherit the capital of the trust.
- Termination – A testamentary trust’s termination date is a specific date chosen by the testator/testatrix whereupon the trust must be terminated and the assets duly made over and/or paid to the capital beneficiary/ies.
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A trust is a legal entity that may own assets. A testamentary trust is a trust created in terms of a Will of a deceased person, usually for the benefit of minor heirs. The trust will own the assets until a/the beneficiary/ies attain a certain age.
An inter vivos trust, is also known as a living trust. This type of trust is usually registered to protect one’s assets from creditors. If an asset duly vests in an inter vivos trust, this asset will not form part of the estate of any of the trustee/s or any of the beneficiaries and can therefore be protected from creditors (there are some exceptions).
A trustee is the fiduciary put in charge of overseeing property owned by a trust. A trustee can either be an individual or an institution such as a bank or a trust company.
If you do not create a trust in your Will, the assets in your estate will be sold and the cash will be paid over to the Guardian’s Fund. The heirs will receive the cash when they become of age. As the Guardian’s Fund only accepts cash, ALL the assets will be sold.
No, most of the payments will be made directly to the institutions, i.e. school fees will be paid directly to the school and university fees will be paid directly to the university, etc. The only payments directly to the guardian will be monthly maintenance and, in some cases, a clothing allowance.
Yes, when a guardian applies for monthly maintenance, the guardian will be expected to submit supporting documentation so the trustees can confirm the guardian’s income and expenditure. They will then, in consultation with the guardian, decide on an amount payable for the monthly maintenance of the beneficiary. Once the trustees have decided on this amount, the guardian will not be expected to submit monthly receipts for this allowance. All other requests must be confirmed with a quotation. If the trustees accept the quotation, the guardian can pay the costs and provide the trustees with the receipt in order for a refund to be affected or the costs can be paid directly to the institution.
All expenditure (except monthly maintenance) in the financial statement must be supported by a receipt or a quotation/invoice.
The trustees, subject to the provisions of the conditions of the Will. Once the maintenance requirements for the beneficiary/ies have been determined, the trustees, in consultation with the guardians of the beneficiaries, will decide on the how much, where and with which institution the capital of the trust will be invested. As the responsibility of the performance of the investments ultimately rests with the trustees, they will always have the final say in choosing of the investment platform.