| DIFFERENT TYPES OF TRUSTS ? |
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There are mainly two different types of trusts:
A Testamentary Trust (trust mortis causa) – this is where a person creates a trust in there Last Will or Testament.
Or
An Inter Vivos Trust - This is where a trust is created will the founder is still alive.
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| WHO NEEDS A TRUST ? |
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Anybody who wants to protect their assets and who wants to ensure the continuity of their assets.
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| WHAT IS A TRUSTEE ? |
Trustees are the people who are appointed by the founder of the trust that makes the decisions with regards to the management of the assets or investments of the trust in the best interest of the beneficiaries.
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| WHAT IS A BENEFICIARY ? (INCOME AND CAPITAL) ? |
A beneficiary of a trust is the person/s who is en entitled to the property of the trust. A beneficiary can either be an income- and/or a capital beneficiary. Say that one of the assets of the trust is a property, the capital beneficiary will eventually be entitled to the said property. An income beneficiary will be entitled to the income that the property generates (like the lease amount if the property is being leased) while in the trust.
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| CAN I BE A TRUSTEE AND A BENEFICIARY ? |
Yes you can be both, but it is not advisable. It is good practice to have at least one trustee that is independent and not a beneficiary of the trust.
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| WHAT IS THE TAX IMPLICATIONS OF A TRUST ? |
A Trust is taxed by a flat rate of 40% per financial year, however, the income may be distributed between the beneficiaries through what is called ‘conduit principle’, thus tax is only paid once the income is in the hands of the beneficiary, at their marginal tax rate.
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| WHAT HAPPENS ONCE I HAVE TRANSFERED MY ASSETS TO A TRUST? ? |
The moment assets get transferred to a trust, ownership transfer to the trust as well. The trustees are then the custodians thereof and it does not belong to you as individual anymore and therefore it cannot be attached by your creditors.
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| WHAT IS THE LEGAL REQUIREMENTS FOR A LEGAL TRUST? ? |
- The founder of the trust must have the intention to create a trust
- The beneficiaries must be nominated
- The objectives of the trust must be lawful and clearly stated
- The assets that is transferred to the trust must be identifiable
- The trust deed must me legally binding
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