How to Open A Trust in South Africa

   
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How to Open A Trust in South Africa

How to Open A Trust in South Africa
How to Open A Trust in South Africa

According to one definition, a trust is a “legal body established by one person (the Founder) through which a second party (the Trustee) possesses the authority to manage the Trust’s assets or property for the benefit of a third party (the Beneficiary)”.

In South Africa, there are two different kinds of trusts: testamentary trusts and living (inter vivos) trusts. A testamentary trust is established in accordance with a testator’s will, and it only takes effect following the testator’s passing. A living trust or inter vivos trust is established during the trustor’s lifetime and is a legal agreement between the founder and the trustees (s). Inter vivos is a Latin expression that means “between the living” or “while alive.”

REQUIRED DOCUMENTS

In accordance with the procedures outlined in the Trust Property Control Act, the following paperwork must be provided to the Master of the High Court in the pertinent provincial jurisdiction in order to have a trust registered:

A cover letter to the Master of the High Court Proof of payment of the Master of the High Court’s fee of R 250 Master of the High Court’s Annexure B form for the R 250 fee Acceptances of trusteeship by trustee (J417) by each of the trustees, including a summary of the proposed trustees’ qualifications and their experience in managing trusts. The Master of the High Court must be satisfied that the trustees will be competent in discharging their duties. If the Master of the High Court is not satisfied, he/she may call for the trustees to put up security, and may even insist that the trust be audited. Beneficiaries Declaration (J450) Trust Registration and Amendment form (J401) Two signed trust deeds An undertaking by the auditor/accountant (J405) to administer the accounting records of the trust in accordance with generally accepted accounting practice A declaration by trustees A sworn affidavit signed by the independent trustee A certified copy of the Identity Document of each of the trustees

Why trusts might not always be a wise decision

Tax: A trust’s income is now taxed at 45%, the highest rate that applies to individuals. The maximum effective rate on capital gains that applies to all taxpayers is 36%.

General Fees: When someone dies, the court examines their assets to make sure that the debt owed by the Estate is current. The court also makes sure that any unpaid debt is paid after the procedure is over.

Administration: Maintaining the most recent version of the Trusts’ records is crucial. These documentation must be comprehensive and regularly updated.

How can you be confident that the choice you are making is the right one?

 

Each person has specific wants and requirements, therefore creating trust frameworks may be advantageous to some people but not to others. In some circumstances, using a trust can harm the outcome of your estate plan, adding complexity and needless costs. Due to this, it makes sense to work with a professional who is aware of the ramifications of these structures both now and in the future if you intend to leave your spouse and children an inheritance.

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