setting up a trustIn the last three installments we have introduced you to the importance of having a legal last Will and Testament in place and protecting your personal wealth and business risk by setting up a Trust. We conclude in today’s session by focusing on the next steps to establish your trust.

Ok, you have convinced me about the importance of having a Trust. What now? 

The next steps in setting up a Trust, requires the drafting of all the legal documentation, such as the Deed of Trust. We highly recommend that you always consult with a professional in doing so. Let us take a look at a few important aspects.

Would my Trust need a name?

As a rule of thumb we advise clients to stay clear of including their family names in the name of the Trust. Remember, the reason for setting up the Trust in the first place is to distance yourself from your personal assets. The last thing you want is to establish a clear link between the name of the Trust and yourself…

Will my Trust be registered with an Authority?

Trusts are registered with the Master of the High Court of SA, and not with the CIPC. The name of the Trust will be linked to a registration number according to which it is differentiated. Registration may usually take a few days to a few weeks.

Can I operate the Trust’s affairs from my personal bank account?

The bank must have its own bank account from which it transacts and will be subsequently have its own income tax number with SARS as well. This assists in the holistic approach of clearly distancing yourself from your personal assets with ownership as well as control of the assets. By following this route you have established a proper structure where the Trust functions completely independently from yourself.

Which assets should my Trust hold?

You should actually consider placing all of your assets into a Trust, but most definitely the following:

  • Fixed Property
  • Any investments such as cash, time-share and shares
  • All your personal assets such as furniture, jewellery and paintings
  • Your business through either the shares in a company or the members interest in a close corporation
  • Your life assurance policy.

Important: You cannot simply cede your life assurance policy to your Trust, as this will trigger a CGT (Capital Gains Tax) event. You will have to take out a new policy in the name of the Trust with the Trust as the primary Beneficiary.

How do I enable my Trust, to own assets that I currently own?

There are only two ways of moving your personal assets into a Trust, and that is:

  1. Physically selling off your assets to the Trust, or
  2. Donating them

how to donate to a trust

Selling my assets to a Trust

Apart from bequeathing the assets in your Will, you will have to sell your assets by means of an actual sales agreement. This agreement states that you have sold certain assets – it is always advisably that you list them per item – to the Trustees and that the transaction took place on a certain date.

Kindly bear in mind that depending on the type of asset you sell, there might be certain taxes or attorney’s fees payable.

Donating my assets to a Trust

According to the Income Tax act, an individual may make a donation to another individual or Trust to any value. Any donation in excess of R100,000 per financial year, will attract donations tax at 20%. A married couple can subsequently make a donation to a Trust of R100,000 each without donations tax being payable.

[box type=”info” style=”rounded” border=”full”]Tip! Donations to registered Public Benefit Organisations or institutions such as schools, churches and universities are exempt from donations tax.[/box]

We trust that you have gained some insight into the importance of having a Last Will and Testament in place as an absolute minimum requirement but also considering implementing a Trust with its numerous advantages when it comes to wealth protection.

Kindly be on the lookout for e-book on this topic that will be released soon.

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