Today Rauch Gertenbach will deal with frequently asked questions relating to Trusts:
1. Are there different types of Trusts?
Yes, there are different types of trusts which consist of the following:
Testamentary Trusts also called Mortis Causa trusts.
Inter Vivos trusts which can be classified into Court Order -, Discretionary – and Charitable Trusts
2. How do the different types of trusts come into existence?
A testamentary trust comes into existence at the death of the testator/testatrix and the contents of the trust deed is found in the will.
An Inter Vivos trust is created during the lifetime of the founder or by means of a court order. Inter vivos (Latin, between the living) is a legal term referring to a transfer or gift made during one's lifetime.
3. What is the objective of trusts?
The main objective of a trust is to protect and maintain the assets in the trust to the benefit of the beneficiaries. The assets of the trust are excluded from the estate of the founder and the beneficiaries.
4. What does the term “beneficiary” entail?
There are two types of beneficiaries, namely Capital and Income Beneficiaries.
Capital beneficiaries are entitled to the Capital of the trust while Income beneficiaries are entitled to the Income generated in the trust.
They may be the same person/s.
5. What is a “trustee” and what is his / her duty?
A trustee is a natural, or juristic person with a nominee, that is appointed to administer the trust and the assets of the trust.
The trustee has a duty to act with the necessary care, skill and diligence expected from someone in his/her position. He/She is expected to manage and protect the assets of the trust to the benefit of the beneficiaries and if he/she fails to do so, he/she may be removed in terms of a court order or by the Master of the High Court.
The Master of the High Court now insists that an independent trustee be appointed.
6. At which Master’s Office does one register your trust?
A trust gets registered at the Master’s Office that has jurisdiction over the area where the majority of the trust’s assets are located. For example; if the majority of the trust’s assets are in Beaufort West, the trust will be registered at the Master’s Office in Cape Town. Normally trusts are created with one asset, e.g R100 donation.
7. What are the duties of the Master of the High Court in connection with trusts?
The Master of the High Court supervises the administration of trusts in his/her jurisdiction area. The Master has the powers to appoint and remove trustees, to register and dissolve a trust, may also request the trustee(s) to supply him/her with the financial statements of the trust and may also launch investigations into the administration of the trust by the trustee(s).
8 Does a trust have separate legal personality?
No, a trust is not regarded as a legal person that has separate legal personality except in terms of the Income Tax Act. The Trust is represented by the Trustees in their capacity as such.
9. Must all trusts be registered for income tax?
Yes, it is required that all trusts are registered for income tax.
10. Must trustees lodge a bond of security at the Master’s office?
No, the lodging of a bond of security is only necessary in exceptional cases and if not exempted in the Trust Deed.
For more information on trusts and how to put them to effective use, feel free to contact Danie Acker or Anél Cloete at 044 601 9900 or email@example.com .