Types of Trusts
Trusts generally have a very wide application and can be tailor-made to meet specific needs. There are a variety of reasons why a trust should be established:
- Safe guarding assets for minor beneficiaries.
- To honour maintenance commitments in terms of a divorce order and settlement agreement.
- Providing for disabled dependants and aged parents.
- Protecting and providing assets for following generations.
- Serving as a holding vehicle for assets as part of an estate planning structure.
- Providing a regular income for favourite charities and other PBO’s.
- Providing for the dependants of a deceased employee.
Protect and Preserve
A Trust is a legal relationship whereby assets are placed under control of another person for the benefit of a third party.
Our trust service includes facilitation of the administration of testamentary trusts which are created in a Last Will and Testament and which becomes operative upon the death of the testator. Inter vivos trusts are established during the lifetime of the Founder, by way of a deed of trust.
The administration of any trust involves the following:
- Managing assets and investments.
- Managing relationships between beneficiaries and Trustees.
- Compliance with relevant legislation – Trust Property Control Act, Income Tax Act, Exchange Control Act etc.
The administration of a trust requires that the Trustees exercise due care and diligence. There are a number of important principles that come into play:
- Giving effect to the trust instrument (i.e. the Deed of Trust, or the Will).
- Exercising any discretion given to the Trustees independently.
- Observing the utmost faith.
- Using greater care in trust property than the Trustee would in dealing with his own.
- Avoiding any conflict of interest.
The fiduciary responsibility of a trustee is onerous:
- Keeping a balance between present and future beneficiaries, where the interests of one cannot outweigh those of the other.
- Treating all beneficiaries impartial.
- Establishing a balance between the production of income and the protection of capital.
- Ensuring that the property of the trust retains its value, and where possible, appreciates.
- Keeping trust property in a proper state of repair.
- Switching speculative investments awarded in trust, to safer investments.
- Investing surplus funds timeously.
- Making sure that co-trustees act prudently.
- Reviewing the trust regularly.
- Submitting statutory returns, such as tax returns, timeously.
- Recording important decisions in writing.
- Honouring the wishes of the Testator or Founder.
- Entertaining requests for assistance from beneficiaries.