What Types of Trusts are Available to Register?

Trusts are an essential financial and legal tool in South Africa, offering a range of benefits for estate planning, asset protection, and wealth management. 

In South Africa, trusts are governed by the Trust Property Control Act, 1988. The two primary types of trusts are inter vivos trusts and testamentary trusts. Below, we detail these and other common types of trusts:

1. Inter Vivos Trusts (Living Trusts)

These are trusts created during the lifetime of the founder. Inter vivos trusts are commonly used for asset protection, estate planning, and tax benefits. They are further divided into:

  • Discretionary Trusts: The trustees have discretion over the distribution of income and capital among the beneficiaries.
  • Vesting Trusts: Beneficiaries’ rights to the income and/or capital are fixed and predetermined.

2. Testamentary Trusts

These trusts are established in terms of a will and come into effect after the death of the testator. Testamentary trusts are often used to provide for minor children or dependents.

3. Charitable Trusts

Charitable trusts are set up to support public benefit causes, such as education, healthcare, or environmental conservation. These trusts may qualify for tax exemptions.

4. Special Trusts

Special trusts are designed for specific purposes, such as:

  • Type A Special Trusts: Created for the benefit of a person with a disability as defined in the Income Tax Act.
  • Type B Special Trusts: Created for the benefit of beneficiaries who are relatives of the founder and are under the age of 18.

5. Business Trusts

These are used to conduct business activities. While less common than companies or close corporations, business trusts can be effective for asset protection and tax planning.

How Much Money Do You Need for a Trust Fund in South Africa?

The cost of setting up a trust in South Africa depends on several factors, including the complexity of the trust deed and professional fees. Typical costs include:

  1. Trust Formation Fees: Drafting a trust deed and registering the trust with the Master of the High Court usually costs between R5,000 and R15,000.
  2. Trustee Fees: If you appoint a professional trustee, annual fees can range from R5,000 to R25,000 or more, depending on the trust’s complexity.
  3. Initial Funding: There is no legal minimum amount required to set up a trust. However, the trust must be adequately funded to achieve its intended purpose. Practically, many trusts start with assets or cash valued at R100,000 or more.

It’s crucial to consult with legal and financial professionals to determine the appropriate funding for your trust.

List of Common Trusts in South Africa

Here is a summary of the trusts most commonly used in South Africa:

  1. Discretionary Trusts: Flexible and widely used for family estate planning.
  2. Vesting Trusts: Suitable for predetermined distributions.
  3. Testamentary Trusts: Ideal for managing inheritance for minors or dependents.
  4. Charitable Trusts: Focused on philanthropic goals.
  5. Special Trusts: Designed for disabled individuals or minor beneficiaries.
  6. Business Trusts: Structured for entrepreneurial ventures.

Trusts offer significant benefits for asset protection, tax efficiency, and ensuring the long-term well-being of your beneficiaries. Whether you are considering a discretionary trust for estate planning or a special trust for a dependent, understanding the types of trusts available in South Africa is the first step. Consult Burger Huyser Attorneys for expert advice tailored to your specific needs and goals.

Contact Burger Huyser Attorneys, and book a consultation.

To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:

Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358;  Pretoria call 064 548 4838;

Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223

DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE