A trust can be established by anyone in South Africa, rich or poor. They are important because they are a component of estate planning and a great tool for distributing assets to the rightful heirs.
Let’s take a look at what a trust is, how it works, what types of trusts are available in South Africa, and how to set one up.
A trust is a fiduciary relationship in which the trustor grants the trustee the right to hold title to assets on behalf of the beneficiaries. Trusts are created to provide legal protection for the trustor’s assets, allowing the trustor’s assets and properties to be distributed according to their wishes.
A trust can be registered in South Africa under the Trust Property Control Act No. 57 of 1988. According to the act, a trust is a legal arrangement in which control over property is transferred to a person or organization for the benefit of another.
A trust is a three-way relationship between a beneficiary, a trustor, and a trustee
Beneficiary: The person who receives a portion or sum of the trust’s property or assets.
Trustee: the organization or person in charge of administering the trust.
Trustor or Grantor: This is the person or entity that establishes the trust and places assets in it.
Because the trustor wishes to transfer property or assets to the beneficiaries through the trustee, a three-way relationship exists. As a result, the trustor enters into a fiduciary agreement with the trustee in order to transfer assets to the beneficiaries.
Since a trust is a legal establishment, the heirs won’t have to go through probate when the trustor dies. The information of the deceased estate won’t be made public.
In South Africa, there are two types of trusts that can be established: inter- vivos trusts and testamentary trusts. The two types of trusts are discussed further below.
An inter-vivos trust, also known as a living trust, is a trust established during the trustor’s lifetime. The trustor gets to enjoy the benefits of the trust during their lifetime. The transfer of assets will occur when the trustor dies and a trustee will foresee the transfer of the property and assets in the trust.
It is important to note that in South Africa, there are two types of inter – vivos trusts: vested trusts and discretionary trusts. A vested trust has all of the beneficiaries’ benefits written into the trust deed, whereas a discretionary trust gives the trustee complete discretion over how much each beneficiary receives.
A testamentary trust, also known as a will trust, is a trust that specifies how much an individual’s assets will be designated after death. In a nutshell, a testamentary trust is established in the will of the deceased person. A will specifies that a trust must be established upon the trustor’s death.
Now that you are aware of the various types of trusts available in South Africa, the next step is to learn how to register one. We’ll go over how to set up an inter vivos trust and a testamentary trust.
An inter – vivos trust can only be registered with the master whose jurisdiction includes the majority of the trust assets. The documents listed below are required for the master to register an inter vivos trust and issue letters of authority to the nominated trustees.
A trust is an excellent tool for determining what your beneficiaries will receive from your estate after your death. It is not as difficult to establish a trust, and anyone can register a Trust of their choice by following the application process in this article.