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Trusts

Trusts are popular state planning tools and are widely used in most jurisdictions in the financial world. The trustees of an inter vivos trust (L Bates) a natural person or a juristic person as trustee may be a member provided that no juristic person can be a beneficiary (directly or indirectly). The trust may be a member of a Close corporation. The Registrar of Close Corporations has issued guidelines to users to familiarise users of Close Corporations with the relevant procedural requirements to effect membership of trustees of inter vivos trusts. For more information regarding this aspect of trusts kindly contact us by telephone or email and we will clarify it. The trust has no legal personality thus it cannot own property. However, the Deeds Act was amended to define a trust as a "person" for the purposes of the Deeds Act so that registration in the name of the trust now takes place.

Parties to the trust

  • Founder or settler
    This is the person that establishes the trust. The settler is usually the original owner of the property who placed the trust. He appoints the trustees and transfers legal ownership to them and specifies who the beneficiaries are. The settler may also be a juristic person other than an individual, including a company or another trust.
  • Trustees A trustee can either be an individual or a company. Trustees are the management of the trust and the legal owners of the property. The Trust Deed and the Statutory Law impose duties on them. However, they do not own the assets for their own benefit, but on behalf of beneficiaries.
  • Beneficiaries
    They are equitable beneficial owners of the trust property and all conduct should in principal be for their benefit. There are 2 types of beneficiaries:
    • The income beneficiaries who normally have vested rights with regards to the income of the trusts and the trustees are obliged to pay out any nett income to them.
    • The other type of beneficiary is a capital beneficiary and depending on the type of trust they are either the owners of the trust capital or they might become the ultimate owners of the trust assets. They have no right to the income of the trust.

Classification of Trusts

There are various different types of trusts which we do not intend to expound on but further information can be obtained if you so wish by contacting us.

The different types of trusts are, inter alia, inter vivos, testamentary and mortis causa trusts, bewind trusts, vested trusts, discretionary trusts.

The requirements for a valid trust are as follows:

  • The founder must intend to create a trust.
  • The founder must express his intention in a mode act to create an obligation.
  • The subject matter of the trust must be defined with reasonable certainty.
  • The trust object must be defined with reasonable certainty.
  • The trust must be lawful.
  • The Trust Property Control Act requires that the trust must be registered and the trustees are required to exercise the care, diligence and skill which can reasonably be expected of a person controlling the affairs of another.

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