INTERVIVOS DISCRETIONARY TRUSTS

An intervivos discretionary trust is a South African trust created by a living founder (the “donor”) during their lifetime, in which appointed trustees — not the donor or the beneficiaries — hold legal title to the trust assets and exercise their own discretion over whether, when, and to whom income and capital are paid out among the beneficiaries named in the trust deed. The structure is governed by the Trust Property Control Act 57 of 1988 and, for income tax, by section 25B read with section 25BA of the Income Tax Act 58 of 1962, and the trust deed must be lodged with the Master of the High Court in whose area of jurisdiction the donor resides before any trustee is authorised to act. It is most commonly used for inter-generational wealth transfer, day-to-day asset protection, and structuring the family estate outside the donor’s deceased estate, though it carries real limitations — including the risk that a court will set aside asset transfers designed to defeat creditors.

What “Intervivos Discretionary Trust” Actually Means

The name unpacks into three working parts, and each one changes what the trust actually does.

• Inter vivos — Latin for “between the living”: the trust is created and (typically) funded by the donor during their lifetime, as opposed to a testamentary trust created by will and only taking effect on death.
• Discretionary — the trustees are not obliged to distribute anything; they have full discretion over whether, when, how much, and to which of the named beneficiaries each distribution is made, subject to the trust deed and their fiduciary duties.
• South African domicile — the trust is governed by the Trust Property Control Act 57 of 1988 and registered at the Master of the High Court in the donor’s area of residence.

The contrast that matters most is with a vested trust, where beneficiaries have a defined entitlement to income or capital at fixed events. In a vested trust, the beneficiaries can demand their share; in a discretionary trust, they can only ask the trustees to consider distributing. The combination — “intervivos” + “discretionary” + South African domicile — is the most common family-trust structure used in SA private wealth planning, because it gives trustees the flexibility to manage distributions across a family that changes over time.

The Legal Framework: The Trust Property Control Act 57 of 1988

The Trust Property Control Act 57 of 1988 is the single national statute that governs how trusts operate in South Africa. A handful of points carry most of the practical weight.

• A trust is not a separate legal person, but the trust property is held by the trustees as a separate estate under section 2 of the Act.
• Trustees must be authorised by the Master of the High Court under section 6 before they can lawfully act — without that letters of authority, no deed or transaction by the trustees is valid against third parties.
• Trustees owe fiduciary duties (act jointly, with care, in the beneficiaries’ interests) and must keep proper records and accounts.
• The trust deed is the constitution of the trust and binds trustees and beneficiaries; the Master reviews the deed on lodgement but does not rewrite it.
• The Master’s Office in whose area the donor resides on signing is the controlling office for registration — Johannesburg or Pretoria for Gauteng donors.

That last point is the one most often overlooked by first-time founders: a trust deed that has been signed and funded but never lodged — or lodged but not yet authorised — is not yet functional, and no third party dealing with the trustees is bound by it. The Master does not “approve” the deed on its merits; it reviews the paperwork for compliance, the identity and fitness of the trustees, and the validity of the donation, then issues letters of authority.

The Parties to an Intervivos Discretionary Trust

Party	Role	Notes
Donor (founder)	Creates and funds the trust; signs the trust deed.	Often also a beneficiary, but gives up control over the assets once the trust is funded.
Trustees	Hold and manage the trust property; decide distributions.	Usually two to three individuals; can include the donor; cannot be the sole trustee if the donor is the sole beneficiary.
Beneficiaries	Persons named in the trust deed who may receive distributions under the trustees’ discretion.	Often split between “income” and “capital” beneficiaries, with the trustees allocating between them.
Master of the High Court	Authorises trustees under section 6 of the Act and supervises the trust at a registry level.	Independent of the donor and trustees.

Setting Up an Intervivos Discretionary Trust, Step by Step

Setting one up is a defined sequence of legal and administrative steps. The order matters — earlier steps feed the documents needed later.

1. The donor decides on the purpose (estate planning, asset protection, succession, business holding) and who the trustees and beneficiaries will be.
2. An attorney drafts the trust deed. Tailor-made deeds are the norm; off-the-shelf templates carry real risk because they rarely fit the family’s specific structure.
3. The donor signs the trust deed and vests the initial assets in the trustees (the “founder’s contribution”).
4. The trust deed and supporting documents are lodged with the Master of the High Court nearest the donor’s residence, together with the prescribed forms and fees.
5. The Master reviews the paperwork and, if in order, issues letters of authority under section 6 authorising the named trustees to act.
6. The trustees open a trust bank account (typically requires the letters of authority), transfer the assets into the trust’s name, and start managing them.
7. Tax registration with SARS follows — the trust gets its own income tax reference and the trustees are responsible for the trust’s tax returns.

What Goes Into the Trust Deed (Key Clauses)

The trust deed is the document that gives the trust its identity. The clauses that matter most fall into a few recurring categories.

• Identification of the parties. Donor, trustees, and beneficiaries — including any unborn or future beneficiaries — must be identifiable, either directly or by a clear class description.
• Trustees’ powers. Investment, business, borrowing, and distribution powers are usually drafted broadly to avoid the deed needing amendment for routine decisions.
• The discretion framework. How trustees decide distributions, what they must consider, and whether they must consult with an independent party or protector before certain decisions.
• Income vs capital split. Important for tax and for who can receive what.
• Replacement, amendment, and termination. Provisions for replacing trustees, amending the deed, and ultimately terminating the trust.
• Fiduciary clauses. What trustees must and must not do, including the duty to act in the beneficiaries’ interests.

Common Reasons People Set One Up

Most intervivos discretionary trusts are set up for one or more of four overlapping reasons. None of them is a silver bullet on its own.

• Estate planning and succession. Assets held in trust do not form part of the donor’s deceased estate and therefore do not have to go through the Master’s estate process, executors’ fees, or estate duty calculation in the same way.
• Generational wealth transfer. Assets can be ring-fenced for children, grandchildren, or future generations under the trustees’ management.
• Asset protection. Claims against the donor personally do not reach assets that have validly been transferred into the trust, provided the transfer was not made to defeat a creditor already in sight.
• Business and shareholding. Used to hold operating businesses, farms, or share portfolios so that succession and dividends are managed centrally rather than fragmented across heirs.

For founders in Gauteng weighing these reasons against the cost of drafting a bespoke deed, Burger Huyser Attorneys’ Trusts practice runs the matter centrally from its Linden/Randburg head office, with intake available at every Gauteng branch. That makes it straightforward to start the conversation at whichever branch is closest to where the founder lives or works.

Tax Treatment: How SARS Treats an Intervivos Discretionary Trust

Tax is the area where expectations and reality most often diverge. The headline points below reflect the position under the Income Tax Act 58 of 1962 as it stands, with the rate restructuring taking effect for years of assessment on or after 1 March 2026.

Tax	Treatment	Key provision
Income tax (trust)	The trust is a separate taxpayer; income is taxed in its own name at the trust rate, currently 45% on taxable income.	Section 25B, Income Tax Act 58 of 1962.
Anti-avoidance attribution	Section 25BA attributes income back to the donor where the trust has been used as an income-shifting vehicle. Triggered by donations of assets to the trust, with limited exceptions for donations of R100,000 or less per year.	Section 25BA, Income Tax Act 58 of 1962.
Capital gains tax	Disposals by the trust are taxed in the trust’s hands, with attribution rules potentially pulling the gain back to the donor under section 25BA.	Section 25BA read with the Eighth Schedule, Income Tax Act 58 of 1962.
Donations tax	20% on the value of assets donated into the trust up to R30 million, then 25% above, with a R100,000 annual exemption per donor.	Part V, Income Tax Act 58 of 1962 (sections 54 to 64).
Registration	The trust needs its own SARS income tax registration and its own annual return from the trustees, separate from the donor’s personal return.	Section 67A, Income Tax Act 58 of 1962.

Two practical points are easy to miss. First, expert advice before funding is essential — donations tax is due on the value of what is moved into the trust, not on what the trust later earns, and the rate changes sharply at the R30 million mark. Second, the trust is taxed at the highest marginal rate from the outset, which is why the structure is rarely the right answer if tax minimisation alone is the goal.

Comparing Intervivos Discretionary to the Other Common Trust Types

Discretionary intervivos trusts sit alongside several other common structures. The table below sets out the typical uses and distribution mechanics that distinguish them.

Trust type	When created	Distribution mechanic	Typical use
Intervivos discretionary	Donor’s lifetime	Trustees’ discretion over income and capital	Family wealth, asset protection, business holding
Intervivos vested	Donor’s lifetime	Beneficiaries’ entitlements are fixed in the deed	Where fixed entitlements are wanted
Testamentary (vested or discretionary)	On death, by will	Either fixed (vested) or discretionary	Deferring certain assets to heirs without lifetime transfer
Special / ad hoc trusts	For a specific purpose (for example for a minor, or a bequest with conditions)	Varied	Often created in a will or by court order

Risks, Limits, and Common Traps

A trust is a legal structure, not a magic wand. The following limits and traps are worth flagging before any founder signs a deed.

• A trust is only as strong as its separation between donor and assets — courts will set aside transfers made to defeat creditors already in sight under the “conduit” arguments and section 21 of the Insolvency Act 24 of 1936.
• A founder who remains the sole trustee and sole beneficiary has given up nothing — and the trust will not survive scrutiny.
• Badly drafted trust deeds (off-the-shelf templates, missing fiduciary clauses, unclear beneficiary classes) produce disputes that cost more than the original legal fee saved.
• A discretionary trust does not avoid estate duty on assets held in it on the founder’s death — those assets are aggregated for the section 4 deceased estate duty calculation under “property deemed to be property of the deceased.”
• Removing or replacing a trustee who is uncooperative can require a court application under section 20 of the Act.
• Trustees are personally liable for tax if they distribute to a beneficiary who cannot pay the resulting tax — sign-off on distributions is more than a formality.

Master’s Office Filing and Trustee Authorisation

An intervivos discretionary trust is administered under the Trust Property Control Act 57 of 1988 — the same statute no matter which province the donor lives in — but the trustee authorisation that brings the trust to life is regional. Letters of authority under section 6 are issued by the Master of the High Court in the area of jurisdiction where the donor ordinarily resides at the date of founding. Gauteng donors accordingly file at either the Johannesburg Master’s Office (sitting at the Johannesburg seat of the Gauteng Division) or the Pretoria Master’s Office (Pretoria seat), depending on the donor’s residential address.

The Master does not “approve” the trust deed on its merits; it reviews the documentation for compliance, the identity and fitness of the trustees, and the validity of the donation, then issues letters of authority authorising the named trustees to act. A trust deed signed and funded but never lodged with the Master — or lodged but not yet authorised — is not yet functional, and no third party dealing with the trustees is bound by it.

Burger Huyser Attorneys maintains a Trusts practice within its Wills & Estates work and runs the matter from its Linden/Randburg head office with intake available at every Gauteng branch. Founders living in Johannesburg, Randburg, Sandton, Roodepoort, Bedfordview, Centurion, Pretoria, Midrand, or Alberton can instruct through their nearest branch; the deed is drafted centrally and lodged through the Master’s Office appropriate to the donor’s address. The firm is a member of the Johannesburg Attorneys Association, the relevant local professional-body tie for routine trust-administration matters in the Johannesburg Master’s region.

Frequently Asked Questions

What is the difference between an intervivos trust and a testamentary trust?

An intervivos trust is created and funded during the donor’s lifetime by a trust deed, while a testamentary trust only comes into existence on the donor’s death, when it is created by a clause in the will. Intervivos trusts are typically used for ongoing family wealth and asset structuring; testamentary trusts are typically used to manage assets that should only become available to heirs after the testator’s death.

Who controls a discretionary trust — the trustees or the beneficiaries?

The trustees. Beneficiaries of a discretionary trust have no fixed entitlement to income or capital — only the right to be considered by the trustees, who exercise their discretion in terms of the trust deed and their fiduciary duties. Beneficiaries can, in some circumstances, compel the trustees to act, but they cannot dictate distributions.

How is an intervivos discretionary trust taxed in South Africa?

The trust is taxed as a separate taxpayer in its own name at the trust rate, currently 45% on taxable income under section 25B of the Income Tax Act 58 of 1962, with restructuring applying for years of assessment on or after 1 March 2026. Where the donor has donated assets to the trust, section 25BA may attribute the income back to the donor as anti-avoidance. Donations into the trust are also subject to donations tax at 20% (rising to 25% above R30 million), with the usual R100,000 annual exemption.

Can the founder of an intervivos trust also be a beneficiary?

Yes — it is common for the founder to be named as a beneficiary as well — but if the founder is the sole trustee and sole beneficiary, the trust has no real separation of ownership and control, and a court is likely to treat it as the founder’s alter ego. The structure requires at least one independent trustee (or an independent co-trustee) to be defensible.

Does a discretionary trust protect assets from creditors?

Assets that have been genuinely and timeously transferred into a properly constituted discretionary trust are generally out of the reach of the founder’s personal creditors — but the protection is not absolute. Transfers made with the dominant purpose of defeating a creditor already in sight can be set aside (under section 21 of the Insolvency Act 24 of 1936 and common-law conduit arguments), and tax claims against trustees personally can attach in certain circumstances.

When is an intervivos discretionary trust the right structure?

When the family has assets that should outlast the founder, when succession should happen gradually under trustee discretion rather than in one transfer, when a family business needs central management, or when asset protection from future liability is a real concern. It is rarely the right structure for tax minimisation alone — the income is taxed at the highest marginal rate and attribution rules will apply to most donor-funded income.

Considering setting up an intervivos discretionary trust, or reviewing one that is already in place? Burger Huyser Attorneys’ Trusts team drafts the trust deed, lodges it with the Master of the High Court nearest the founder’s residence, and handles ongoing administration from the firm’s Linden/Randburg head office. Initial consultations can be booked through the head office on 011 888 0246 (after-hours 061 516 6878) at 49 First Avenue, Linden, Randburg, 2194, or via any of the firm’s Gauteng branches. The firm carries a 4.8/5 average across 250+ Google reviews (Trustindex verified, “Top Rated Law Firm in South Africa”) and is a member of the Johannesburg Attorneys Association.