What is the Concept of an Inter Vivos (Living) Trust?
Among the various types of trusts available in South Africa, the inter vivos trust is a popular choice. Understanding this concept and its applications can help individuals and families make informed decisions about their financial futures.
An inter vivos trust, often referred to as a living trust, is a legal arrangement created during the lifetime of the founder. The founder transfers assets into the trust for the benefit of designated beneficiaries. The trust is managed by trustees, who are tasked with ensuring that the assets are used and distributed according to the trust deed—the legal document that outlines the terms and conditions of the trust.
The primary purpose of an inter vivos trust is to safeguard and manage assets while providing financial benefits to beneficiaries. It can also serve to minimize estate duty and ensure the seamless transfer of wealth.
What Does the Term “Inter Vivos” Mean?
The term “inter vivos” is derived from Latin, meaning “between the living.” In the context of trusts, it signifies that the trust is established and operational while the founder is still alive, distinguishing it from testamentary trusts, which come into effect only after the death of the founder as per the instructions in their will.
What is an Inter Vivos Trust in South Africa?
In South Africa, an inter vivos trust is recognized as a flexible and powerful tool for managing wealth. It allows individuals to:
- Protect Assets: By transferring assets into an inter vivos trust, individuals can shield them from personal liabilities, ensuring that the assets remain intact for future generations.
- Plan for Estate Duty: South African estate duty can significantly reduce the inheritance passed on to beneficiaries. Assets placed in an inter vivos trust are not considered part of the founder’s estate, potentially reducing estate duty liability.
- Ensure Financial Security: The trust can be structured to provide income or support to beneficiaries, such as children or dependents, according to specific terms set out in the trust deed.
- Facilitate Wealth Preservation: By stipulating how and when assets are distributed, the trust ensures that wealth is preserved and distributed responsibly.
How Does an Inter Vivos Trust Work?
- Creation: The founder (or settlor) establishes the trust by drafting a trust deed and transferring assets into the trust.
- Trustees: Trustees, who may include the founder, family members, or independent professionals, are appointed to manage the trust and its assets.
- Beneficiaries: The beneficiaries can be individuals or entities who benefit from the trust as per the terms outlined in the trust deed.
- Management: The trust’s assets are managed and distributed by the trustees to ensure the objectives of the trust are met, whether that involves providing income, safeguarding assets, or achieving other goals.
Is an Inter Vivos Trust Right for You?
While an inter vivos trust offers numerous advantages, it’s essential to weigh its benefits against its costs and administrative requirements. Setting up and maintaining a trust involves legal and administrative fees, and trustees are required to act diligently to comply with the trust’s terms and South African law.
Consulting with experienced attorneys, such as those at Burger Huyser Attorneys, can provide clarity on whether an inter vivos trust aligns with your personal and financial goals. We specialize in estate planning and can guide you through the process of establishing and managing a trust that meets your unique needs.
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
