REGISTRATION OF TRUSTS IN SOUTH AFRICA
The South African legal system acknowledges various Trusts, each of which possesses a specific legal structure and poses individualistic consequences to the founders’ needs, ensuring strict enforcement and protection of such needs.
Types of Trusts to Register in South Africa
-
Intervivos Discretionary Trust
An Intervivos Trust is a trust registered during the lifetime of the founder thereof (intervivos) in which the trustees have a discretion as to their dealings with the trust assets and – income for the sole purpose of advancing the interests of the beneficiaries of the Trust.
-
Testamentary Trust
Also known as a Mortis Causa Trust, a Testamentary Trust is a trust which comes into operation after the passing of the founder thereof. The prescriptions of a Testamentary Trust shall be recorded in the last Will and Testament of the founder. This trust is beneficial to heirs of a deceased estate under the age of 18 years, and shall the trustees pursue the protection of such assets until the heirs turn 18 years of age, or such age determined by the founder in the Will.
-
Special Trust
A Special Trust is registered if the intended beneficiary is mentally or physically disabled, alternatively where the beneficiary is a minor child. Often a Testamentary Trust also constitutes a Special Trust.
-
Ownership Trust
In terms of an Ownership Trust, the founder transfers ownership of the assets to the trustees (only in their capacity as such) for the sole benefit of the beneficiaries. An Ownership Trust is also known as an Ordinary Trust.
-
Bewind Trust
A Bewind Trust is a trust whereby ownership of the assets is transferred to the beneficiaries; however, the administrative duties and responsibilities of such assets vest in the trustees.
REGISTRATION OF TRUSTS IN SOUTH AFRICA
All trusts in South Africa must be registered with SARS (South African Revue Service) for purposes of Income Tax and must be registered with the relevant Master of the High Court. The location of the greater part of the trust assets shall determine the Master of the High Court with whom the trust must be registered.
It is vital to note that the Trust Property Control Act 57 of 1988 and the Companies Act 71 of 2008 govern the conduct of trustees and the administration of a trust.
![REGISTRATION OF TRUSTS Registration of trusts](https://www.burgerhuyserattorneys.co.za/wp-content/uploads/2023/02/REGISTRATION-OF-TRUSTS.jpg)
It is of vital importance to choose the correct trust for your specific needs. Speak to one of our specialist trust attorneys today to ensure that your trust adheres to all the legal requirements and that your trust deed is drafted in accordance with your specific wishes and requirements.
THE LEGAL REQUIREMENTS TO CREATE A TRUST IN SOUTH AFRICA
The court set out 5 requirements to create a valid trust:
- The founder of the trust must have the intention to create a trust.
- The founder must express his intention to create a trust in a way that will create a legal obligation, for example, a written agreement, a will, or a court order.
- There needs to be a reasonably certain definition of what will constitute the trust property.
- There needs to be a reasonably certain definition of the trust object. It is important to differentiate between a trust object and a trust purpose. The trust object is usually specified in the trust instrument and all the parties involved in the trust usually have knowledge of this object. A trust purpose is what the trust seeks to achieve in its daily workings.
- The trust object needs to be lawful. If the trust object be illegal, contrary to public policy or contra boni mores it will be invalid.
It is of vital importance to choose the correct trust for your specific needs. Speak to one of our specialist trust attorneys today to ensure that your trust adheres to all the legal requirements and that your trust deed is drafted in accordance with your specific wishes and requirements.
Frequently Asked Questions
A trust is a legal arrangement in which a person (the “founder”) transfers assets to a trustee, who then manages and administers these assets for the benefit of specified beneficiaries. In South Africa, trusts are governed by the Trust Property Control Act, 1988. The trust itself is not a legal person but is managed by trustees according to the trust deed. Trusts are often used for estate planning, protecting assets, and managing wealth for future generations.
In South Africa, the main types of trusts are:
- Inter Vivos Trust (Living Trust): Established during the founder’s lifetime and comes into effect immediately. Commonly used for asset protection and estate planning.
- Testamentary Trust: Created through a will and only takes effect after the death of the founder. Often used to manage assets for minor beneficiaries or dependent family members.
- Special Trust: Created specifically to benefit individuals with disabilities or vulnerable family members. Special trusts may also receive certain tax benefits.
A trust is a legal structure where a founder transfers assets to trustees to manage and administer on behalf of beneficiaries. Trustees are legally obligated to act in the best interests of the beneficiaries and manage the trust according to the terms laid out in the trust deed. The trust can own property, invest funds, and distribute assets to beneficiaries as specified. It can also offer certain tax and estate planning benefits.
The best type of trust depends on your specific needs and objectives. For example:
- Inter Vivos Trusts are best for ongoing wealth protection and estate planning.
- Testamentary Trusts are ideal for ensuring assets are managed for minor or dependent beneficiaries after your death.
- Special Trusts are suitable for providing for the needs of individuals with disabilities or other vulnerable beneficiaries.
Consulting with a legal expert can help identify the most appropriate trust type for your unique circumstances.
- Advantages:
- Asset Protection: Trusts can protect assets from creditors and are shielded from personal claims.
- Estate Planning Benefits: Trusts allow for smoother estate management and transfer of assets, often minimizing estate duty and probate delays.
- Tax Efficiency: Certain trusts, especially special trusts, offer tax benefits, which may reduce tax liabilities.
- Control Over Asset Distribution: Trusts allow you to control how and when assets are distributed to beneficiaries, even after your death.
- Disadvantages:
- Costs: Establishing and maintaining a trust requires legal fees, administrative costs, and potential tax implications.
- Complexity: Trusts can be complex to set up and may require ongoing management and legal oversight.
- Loss of Ownership: Once assets are placed in a trust, you no longer have direct ownership over them, as they are controlled by the trustees.
NEED TO CONSULT WITH SPECIALIST TRUST LAWYERS IN SOUTH AFRICA?
CONTACT OUR TRUST ATTORNEYS TODAY.
Choose Burger Huyser Trust Attorneys as we have gained vast experience in the application of trusts in South Africa over the years. Lean on our specialist knowledge in trusts to achieve your personal estate planning needs.
For your convenience, our service offering also includes Trust Lawyers In Alberton, Trust Lawyers In Randburg, Trust Lawyers In Sandton, Trust Lawyers In Roodepoort, Trust Lawyers In Bedfordview, Trust Lawyers In Centurion & Trust Lawyers In Lynnwood Pretoria.
CONTACT DETAILS
![logo130 registration of trusts](https://www.burgerhuyserattorneys.co.za/wp-content/uploads/2021/10/logo130.png)