A trust is an efficient and flexible way to ensure that your assets are looked after. Here are some of the advantages to having a trust.

You will need a trust if:

    • Your assets (including life policies) exceed R3.5m
    • Your assets appreciate in value
    • You have minor children
    • You want to control how and which assets are passed on to your heirs (especially in blended families)
    • You need asset protection planning.

Advantages

    • A trust will protect your assets (whether personal or business) if you should face sequestration or liquidation. In other words, your creditors won’t be able to attach your assets. This is helpful if you’re an entrepreneur, as you can conduct business without risking your family’s future. Similarly, if a beneficiary becomes insolvent, the assets in the trust continue to be protected (unlike shares in a company).
    • Having a curator or administrator to control your assets from being squandered or wastefully dissipated, for example, where the beneficiary is a minor, insolvent, incapacitated or too irresponsible or inexperienced to handle money. Depending on the type of trust, the income received and distributions made may go to any beneficiary at the discretion of the trustee.
    • A trust is not owned by anyone, and is totally separate from the people who have formed it and or control and benefit from it.
    • Trusts can be used to hold shares in a business and to open a savings or cheque account. However, a beneficiary cannot sell a right in a trust (unlike shares in a company).
    • Having a trust avoids having to pay estate duty and other taxes or costs, such as transfer duty, executor’s fees or conveyance fees, after your death. Your dependants (beneficiaries) are therefore spared the hardship of having to wait two to five years for your estate to wind up. A trust also does have not pay Capital Gains Tax (CGT) unless an asset is sold. The growth on assets, such as shares that are transferred to a trust, is also not subject to estate duty because the growth belongs to the trust. (Currently an estate duty of 20% is payable on every rand above R3.5 million of assets an individual owns.)
    • A trust can span multiple generations, continuing to pay benefits to your dependants (beneficiaries) long after you die.
    • A trust is an attractive way for you to keep and build up all your assets.
    • You won’t lose everything in a divorce if you have a trust.

 

Sources
http://c/trustsQA.htm
www.pwharvey.co.za
www.sebenzabiz.co.za