How to Set Up a Testamentary Trust in South Africa

A testamentary trust is a valuable tool in estate planning, often used to ensure the financial security of dependents or minor children. This type of trust comes into effect upon the death of the testator, as outlined in their will. 

Setting up a testamentary trust involves the following steps:

  1. Draft a Valid Will: The testamentary trust must be specified in your will. It should clearly state your intention to establish the trust, identify the beneficiaries, and outline the terms and conditions under which the trust will operate.
  2. Appoint Trustees: In your will, appoint trustees who will manage the trust on behalf of the beneficiaries. Trustees should be individuals or entities you trust to act in the best interests of the beneficiaries.
  3. Define the Trust Terms: The will should include details about:
    • The purpose of the trust.
    • The assets to be placed in the trust.
    • Distribution of income and capital to the beneficiaries.
    • Any specific conditions or instructions.
  4. Execute and Safeguard the Will: Ensure the will is signed in the presence of witnesses and stored safely, preferably with your attorney or a trusted institution.
  5. Administer the Trust After Death: After your death, the executor of your estate will facilitate the establishment of the trust. The Master of the High Court oversees the registration process.

Requirements to Register a Testamentary Trust in South Africa

The registration of a testamentary trust involves meeting certain legal requirements:

  1. Drafted in a Will: The trust must be explicitly stated in the will, with clear terms.
  2. Master’s Office Registration: The trust must be registered with the Master of the High Court in the region where the deceased resided. Documents required include:
    • A certified copy of the will.
    • Death certificate of the testator.
    • Letters of Authority issued by the Master of the High Court.
  3. Trustees’ Acceptance: Trustees must formally accept their appointment by signing the necessary documentation.
  4. Compliance with Trust Property Control Act: Trustees are required to adhere to the provisions of the Trust Property Control Act, 1988.

How Much Does a Testamentary Trust Cost in South Africa?

The cost of setting up and managing a testamentary trust includes the following:

  1. Drafting the Will: Legal fees for drafting a will that includes a testamentary trust typically range from R1,500 to R5,000, depending on complexity.
  2. Executor Fees: The executor of the estate charges fees for their services, usually 3.5% (plus VAT) of the estate’s gross value.
  3. Trustee Fees: If professional trustees are appointed, annual fees can range from R5,000 to R25,000 or more, depending on the trust’s complexity and value.
  4. Administrative Costs: These include registration with the Master of the High Court and ongoing costs such as accounting and auditing services.

Benefits of a Testamentary Trust

A testamentary trust offers several advantages, including:

  • Financial Security: Ensures that minor children or dependents are financially provided for.
  • Asset Management: Trustees manage assets professionally, reducing risks of mismanagement.
  • Estate Duty Savings: Properly structured trusts can help reduce estate duty liabilities.
  • Flexibility: Allows for tailored conditions and terms to suit the needs of beneficiaries.

Setting up a testamentary trust in South Africa is a prudent step in safeguarding your loved ones’ future. By including clear provisions in your will, appointing reliable trustees, and adhering to legal requirements, you can ensure that your estate is managed effectively. Burger Huyser Attorneys is here to guide you through the process, from drafting your will to establishing the trust. Contact us for professional assistance in securing your family’s legacy.

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