What Are the Different Types of Trusts for Estate Planning?

South African estate planning uses four principal trust structures: inter vivos (living) trusts, testamentary (will-based) trusts, bewind trusts, and special trusts under section 7 of the Income Tax Act (split into Type A for minors whose parent is deceased and Type B for beneficiaries with a severe mental or physical disability). Each type is governed nationally by the Trust Property Control Act 57 of 1988, which requires Master’s Office authorisation and trustee letters of authority, and the section 7 special trusts are the only category that attracts income-tax treatment materially better than ordinary trusts. Choosing between them turns on three estate-planning questions: when the trust is created (during lifetime or on death), who holds the vesting rights (the beneficiary outright or only at trustee discretion), and whether the beneficiary profile qualifies for a special trust tax rate.

The Legal Framework: Trusts Under South African Law

The Trust Property Control Act 57 of 1988 is the single national statute that governs the creation, registration, and administration of all trusts in South Africa. A trust itself is not a separate legal person — the trustees acting collectively are the legal actors and must be registered with the Master of the High Court. Two consequences flow from this:

1. Every trust must lodge its trust deed with the Master of the High Court in the seat that has jurisdiction over the trust. In Gauteng, that is either the Pretoria seat (Master’s Office, Pretoria) or the Johannesburg seat (Master’s Office, Johannesburg), depending on where the founder ordinarily resides or where the trust’s principal assets are held.
2. Trustees require letters of authority issued by the Master before they may lawfully act. A trust with cash or property but no Master’s appointment cannot legally open a bank account, sign contracts, or administer assets — the Master may refuse to issue letters where the deed is non-compliant or trustee documentation is incomplete.

The second statute that shapes every trust is the Income Tax Act 58 of 1962, which determines how trust income and capital gains are taxed. By default, a trust (other than a special trust falling within section 7) is taxed at the top rate applicable to individuals, currently 45% on income retained in the trust, and capital gains are taxed at the trust’s own rate of 36% (an effective rate derived from the 80% inclusion rate that applies to trusts). SARS itself recognises a separate category of trusts for tax purposes — the “special trusts” defined in section 7 — and confirms that the trust classifications are not mutually exclusive: a testamentary trust can also be a Type A special trust, and an inter vivos trust can be a bewind trust if structured that way.

Inter Vivos Trust (Living Trust)

An inter vivos trust is created and funded by the founder during their lifetime and is the most common structure used in South African family estate planning. The founder signs a trust deed, transfers assets into the trust (by donation, sale, or loan), and the trustees take ownership of those assets on behalf of the beneficiaries named in the deed.

Inter vivos trusts are used for three estate-planning purposes:

• Asset protection — once assets are properly transferred into the trust, they sit outside the founder’s personal estate and are shielded from the founder’s creditors (subject to the section 7 anti-avoidance rules discussed below).
• Continuation of family wealth — assets can be held in the trust across generations, allowing the founder’s children and grandchildren to benefit without liquidating or re-transferring the underlying assets on each inheritance event.
• Management control — where beneficiaries are minors, financially inexperienced, or otherwise unable to administer assets directly, the trustees manage the assets and distribute income or capital at their discretion (or as the trust deed directs).

The tax cost of an inter vivos trust is significant. Income retained in the trust is taxed at the flat 45% rate, and capital gains are taxed at the trust’s 36% effective rate. The Income Tax Act also contains anti-avoidance rules in sections 7(2) to 7(5): amounts vested in or distributed to the founder, the founder’s spouse, or a minor child of the founder can be taxed back in the founder’s hands, which is why a public-template trust deed is risky and why a specialist attorney is the safer route. From a registration standpoint, the trust deed is lodged with the Master, the trustees are appointed with letters of authority, and the trust is registered with SARS for income tax and (where relevant) donations tax.

Testamentary Trust (Will Trust)

A testamentary trust is created by a clause in the founder’s last will and only takes effect on the death of the testator. The will itself is the founding instrument — the trust deed is incorporated by reference into the will, and the nominated trustees apply to the Master for letters of authority after the testator dies.

The dominant estate-planning triggers are:

• Minor children inheriting — a minor cannot inherit directly without a guardian of property, so a trust provides a clean mechanism for managing the inheritance until the child reaches the age stipulated in the trust deed (typically 18, but can be older).
• Delayed vesting — the testator can specify that beneficiaries receive capital only at defined ages, on defined milestones, or on defined events.
• Continuation across generations — assets can be held for the benefit of the deceased’s children and grandchildren in succession.

Income tax treatment is the same as for inter vivos trusts at the default rate, but a testamentary trust frequently qualifies as a special trust — typically Type A, where the beneficiaries are minor children and at least one parent of those minors is deceased (the testator, in the common case). This makes the testamentary trust the more common vehicle for a Type A special trust, although inter vivos Type A trusts are also possible in principle.

Bewind Trust

A bewind trust is a distinct South African structure in which the beneficiary holds the vested ownership of the trust property but a trustee controls the administration — the income and the right to deal with the capital — until a defined condition is met. The beneficiary owns, but cannot yet do what owners usually do with the asset; the trustee manages in the meantime.

Bewind trusts are used where the founder wants the beneficiary to be the eventual owner of the asset but to be shielded from mismanagement during a defined period — typically until the beneficiary reaches a certain age, demonstrates financial responsibility, or meets another trigger written into the trust deed. They are common in family estate planning where the heir is intended to eventually own outright rather than to receive discretionary distributions at the trustees’ whim.

The bewind trust is distinct from a vesting trust: in a vesting trust, the beneficiary’s right to the capital is contingent on a future event; in a bewind trust, vesting has already occurred — the beneficiary is the owner — but the trustee’s administration controls the use of the asset until the condition is met. A bewind trust can be created either inter vivos or testamentarily, depending on the founder’s choice, and is taxed at the default trust rate on the trust’s administration. SARS specifically recognises the bewind trust alongside the ownership trust as one of the two core structures under the Trust Property Control Act.

Special Trusts Under Section 7 of the Income Tax Act

Section 7 of the Income Tax Act 58 of 1962 creates two categories of “special trust” that are taxed on a sliding scale similar to natural persons (rather than at the flat 45% trust rate), subject to the trust’s qualifying at all times during the year of assessment. These are the only trust categories that deliver a meaningful income-tax benefit in South African estate planning — the other trust types deliver asset protection, continuity, and administrative benefits, not tax relief.

Type A — minor beneficiaries with a deceased parent

A Type A special trust is established solely for the benefit of a minor child, where that child’s parent is deceased. Provided every beneficiary is a minor and at least one has a deceased parent, the trust’s taxable income is assessed on the sliding scale that applies to natural persons rather than at the flat 45% trust rate. The trust does not qualify for the Section 6 rebates that individuals receive, so the benefit is the lower rate bracket, not the rebate itself.

Type B — beneficiary with a severe mental or physical disability

A Type B special trust is established solely for the benefit of a person whose mental or physical disability renders them unable to manage their own affairs. The qualifying threshold is strict: the disability must be severe enough to prevent the beneficiary from managing their own financial affairs, and the trust must be supported by medical evidence and ongoing disclosure to SARS. The same favourable sliding scale applies, again without the Section 6 rebates.

Both Type A and Type B status are time-limited by their conditions. A Type A trust loses its special status once the youngest beneficiary turns 18 (or otherwise ceases to be a minor). A Type B trust loses its status if the qualifying beneficiary no longer meets the disability threshold, or if the trust admits a beneficiary who does not qualify. On losing that status, the trust reverts to the default 45% flat rate on income and the trust’s 36% effective rate on capital gains. For estates with a disabled beneficiary who will need lifetime support, structuring the trust correctly at the outset — and keeping the documentation current — is the difference between ongoing tax relief and an unexpected rate-jump on assessment.

How the Trust Types Compare

Trust Type	Created	Estate-Planning Trigger	Income Tax Treatment	Capital Gains Tax Treatment	When to Use
Inter vivos	During the founder’s lifetime, by trust deed	Asset protection; continuation across generations; shielding minors	Default trust rate (income 45%)	Trust rate (CGT effective 36% on the 80% inclusion)	Founder wants to give up direct ownership while alive
Testamentary	On death, via the will	Inheritance for minors; delayed vesting	Default trust rate (45%); can qualify as Type A special trust	Trust rate (CGT effective 36%); Type A may claim CGT relief on classification	Founder wants the trust only to take effect on death
Bewind	Either inter vivos or testamentary, as a structural choice	Beneficiary owns eventually but is shielded from mismanagement in the meantime	Default trust rate on the trust’s administration (45%)	Trust rate (CGT effective 36%)	Founder wants the heir to eventually own outright under trustee oversight
Special — Type A	Either; commonly testamentary	Minor children with a deceased parent	Favourable sliding scale from low bracket (no Section 6 rebates)	Trust rate (CGT effective 36%); may qualify for CGT relief	Minor beneficiaries who would otherwise pay top rate on trust income
Special — Type B	Either	Beneficiary with severe mental or physical disability	Favourable sliding scale from low bracket (no Section 6 rebates)	Trust rate (CGT effective 36%)	Estate planning around a disabled beneficiary

Other Trust Structures (Briefly)

Beyond the four estate-planning structures, three additional trust types surface regularly in practice but solve a different problem from inheritance planning:

• Business / trading trusts — the trust holds the operating assets of a business (commonly the holding structure for professional practices). The estate-planning trigger is business succession rather than inheritance.
• Collateral security trusts — used to ring-fence an asset as security for a specific obligation (typically a loan). Not primarily an estate-planning tool.
• Offshore / foreign trusts — relevant where a South African founder has foreign beneficiaries or assets. The Trust Property Control Act applies locally, but the offshore dimension interacts with section 7 and the Exchange Control Regulations administered by the South African Reserve Bank, and requires separate advice.

Setting Up a Trust in South Africa: The Practical Pathway

Setting up a trust follows a defined sequence. Each step is necessary; skipping any one of them typically surfaces as a problem later.

1. Draft the trust deed with a specialist attorney. A public template is not advisable, particularly for inter vivos trusts: section 7 anti-avoidance rules require specific donor/donee and loan-account mechanics drafted to current SARS practice, and errors in the deed are difficult to cure after the trust has been settled.
2. Settle the trust. The founder signs the deed and either makes the initial donation or cedes a loan account into the trust. Without settlement, there is no trust.
3. Lodge the trust deed and supporting documentation with the Master of the High Court. For a Gauteng-based founder, the relevant Master’s Office is typically the Pretoria seat (Gauteng Division, Pretoria) or the Johannesburg seat (Gauteng Division, Johannesburg), depending on where the founder resides or where the trust’s principal assets are held. There is no separate Master’s Office for Centurion, Sandton, Roodepoort, or other Gauteng suburbs — they fall under one of those two seats.
4. The Master issues letters of authority. These authorise the named trustees to act. Trusts operating without Master’s appointment are not lawfully operating, regardless of how the deed is drafted.
5. Open a bank account under the trust name. Major South African banks have a dedicated trust-onboarding process; expect the bank to require certified copies of the letters of authority, the trust deed, and the IDs of the trustees.
6. Register the trust with SARS. An income tax reference number is required, and (where the trust receives donations) the trust should register as a donor for donations tax purposes. SARS also offers a classification process for trusts claiming special trust status under section 7 — completing that classification is the route to the favourable tax rates.
7. File ongoing returns. Annual fiduciary returns go to the Master; annual income tax returns go to SARS. Trustees who fail to file can attract personal liability, which is one of the operational costs of running a trust that founders should weigh before settling.

Master’s Office Jurisdiction in Gauteng

Trust registration in South Africa happens at the Master’s Office of the High Court. For a founder based anywhere in Gauteng, the relevant Master’s Office is the one with jurisdiction over the trust’s registered address at the point the trustees are appointed — typically the Pretoria seat of the Gauteng Division of the High Court or the Johannesburg seat of the same division, depending on where the founder resides and where the trust’s principal assets are held. There is no separate Master’s Office for Centurion, Sandton, Roodepoort, Bedfordview, Alberton, Midrand, or other Gauteng suburbs — clients in those areas file at the broader Pretoria or Johannesburg seat of the Gauteng Division. The Master confirms the correct seat based on the trust’s documentation, and the registration fee (payable to the Master) is set by the Department of Justice and Constitutional Development from time to time. Confirm the current fee, the correct seat, and the supporting documents required before lodging — Master’s Office practice notes are updated periodically.

Frequently Asked Questions

Which trust is best for estate planning in South Africa?

It depends on what the estate plan is trying to do. Inter vivos and testamentary trusts are the structural choices for the bulk of family estate plans; the two special trusts under section 7 of the Income Tax Act (Type A for minors whose parent is deceased and Type B for persons with a severe mental or physical disability) are the only trust types that deliver a meaningful income-tax benefit. There is no single “best” trust — each type solves a different problem and the right choice turns on the founder’s assets, the beneficiaries, and the timing.

Do I need a trust to do estate planning in South Africa?

No — a valid will, beneficiary nominations on policies and retirement funds, and (where relevant) an antenuptial contract can cover much of what most people need. A trust is one estate-planning tool, not a requirement. The decision should turn on whether the family has assets large enough to justify the cost and ongoing administrative burden of running a trust, and whether there is a specific trigger (a minor beneficiary, a disabled beneficiary, family businesses, or a desire to ring-fence assets) that a trust handles better than the alternatives.

How long does it take to set up a trust?

From instructed attorney to Master’s Office letters of authority is typically six to ten weeks, provided the trust deed, founding documents, and trustee details are complete. Funds may flow through the trust once the bank account is opened, which is usually a further two to four weeks after the Master’s appointment. Testamentary trusts are different — they only come into existence on the testator’s death, and the Master’s process then runs from that date.

Are trusts taxed differently in South Africa?

Most trusts pay income tax at the top rate applicable to individuals (currently 45%) and capital gains tax at the trust’s effective rate (currently 36% on the 80% inclusion). The special trusts under section 7 of the Income Tax Act — Type A (for minors whose parent is deceased) and Type B (for persons with severe mental or physical disability) — qualify for a sliding income-tax scale starting lower than the default trust rate, provided the trust’s only beneficiaries qualify at all times. A trust that loses its Type A or Type B status reverts to the default trust rate.

Can I set up a trust without a lawyer?

It is not advisable. The Trust Property Control Act 57 of 1988 requires a properly drafted trust deed, Master’s Office registration, and trustee letters of authority — drafting errors in an inter vivos trust in particular can trigger section 7 anti-avoidance rules and undermine the very protection the founder was trying to create. The Master may also refuse to issue letters of authority where the deed is non-compliant or where trustee documentation is incomplete.

What happens to a trust when the founder dies?

Depends on the type. An inter vivos trust continues independently because the trustee’s role does not terminate on the founder’s death — the founder was never a beneficiary in a meaningful sense after settling the trust. A testamentary trust only comes into existence when the founder dies, after which the nominated trustees apply for letters of authority and administer the trust in terms of the will. Either way, the trust’s administration continues and the trustees have an ongoing duty to file fiduciary and tax returns.

If you are weighing up an inter vivos, testamentary, bewind, or special (Type A / Type B) trust as part of your estate plan, Burger Huyser Attorneys’ Wills & Estates and Trusts teams can help you work through which structure fits your circumstances and what the ongoing administrative burden actually looks like. The firm drafts and administers trusts from its head office in Linden (Randburg) and across its Gauteng branches; reach the head office on 011 888 0246 (after-hours 061 516 6878) to schedule a first conversation and confirm current costs up front. Burger Huyser carries a 4.8/5 average across 250+ Google reviews (Trustindex verified — “Top Rated Law Firm in South Africa”) and was named Best Family Law Firm 2024 (Lawyers Monthly) and Best Criminal & Family Law Specialists 2025 (MEA Business Awards) — relevant here because trust formation and estate planning sits squarely alongside its family-law and wills-and-estates practice areas. Director Anna-Mi Nel heads the Family Law Department and specialises in deceased estates alongside divorce and custody work, which is why trust and estate planning naturally falls within the firm’s broader family-law and litigation bench.