Does a trust require an independent trustee?

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In the context of estate planning, a trust can be described as a legal relationship, which has been created by a person (known as the founder or donor), through placing assets under the control of another person (known as the trustee) during the founder’s lifetime (an inter-vivos trust), or on the founder’s death (will trust, testamentary trust or trust mortis causa), for the benefit of third persons (the beneficiaries). A trust, generally speaking, is an arrangement that allows a person to hold assets (without owning them) for the benefit of the trust beneficiaries.

What does it mean that trustees of a trust have to act jointly?

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I met a trustee of a trust last week, who was confident that he could manage “his” trust alone, as a result of a resolution which he got signed by all trustees, which empowers him to do as he wishes with the trust’s assets. Such a red flag was raised, as many people are of the opinion that they can retain control over trust assets and act alone, without really involving other trustees in trust decisions. They were obviously not educated that such actions may have serious repercussions for the trustees, as well as the trusts’ assets.

Does your (free) will complement or contradict the trust deed?

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Are you one of the people who feel happy about getting a free will from a so-called professional? In South Africa, people are great targets to receive free products. Is there such thing as a free product, or are you signing up for a future cost? The saying goes “if it is too good to be true, it probably is”. It is no different with a free will, which is most of the time not adapted to your personal circumstances.

Formalities in trust deeds that assist with proper administration

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A family trust is by its very nature an intimate part of the financial and personal lives of a family, but the estate planner often loses sight of the fact that the trust - represented by the trustees - and the estate planner, are separate entities.

Do trust beneficiaries have any rights?

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Many people set up trusts, not really applying their minds. Often trust practitioners do not apply their minds and guide their clients either, use a standard trust deed template and just change the name of the trust, the names of trustees and use a standard template list of beneficiaries. Setting up a trust and selecting beneficiaries require a good understanding of trusts, as well as a proper consideration of one’s personal circumstances. There is no one size fits all solution.

Who can be a beneficiary of a trust?

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Beneficiaries are those persons who are initially named by the founder in the trust deed and are subsequently selected by the trustees from time to time, in terms of the trust deed stipulations, set by the founder.

Where are we with trusts and taxes after the Budget Speech?

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Not that it is anything new, but ‘trust owners’ were holding their breaths yet again before this Budget Speech. It appears not to be ‘trust owners’ alone, but the wealthy in general, who are worried, as government is desperate to plug a whole in its cashflow and budget, as well as trying to create a more equal society. And it is using taxes to drive its agenda.

What are trustees’ obligations?

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Trustees of a trust are akin to the managers of a company. They are the guardians of the trust assets and have a duty to manage these assets in the best interests of the beneficiaries, as provided for in the trust deed. They also have a fiduciary duty to beneficiaries in terms of the Trust Property Control Act.