If you own a farm near Cape Town and want to protect it as an asset against creditors, you can, for instance, transfer the property to a trust. When you draft a will, it describes your final wishes and when you pass away, the assets in your estate, if so stipulated in your will become part of a trust. However, it is highly recommended to seek legal guidance regarding trusts, the different types, setup procedures, and implications from our attorneys in Cape Town, as trusts are complicated financial and legal instruments.
As our attorneys in Cape Town can explain, an inter vivos trust is a trust, created during the founder’s lifetime. It is created by registering a trust deed with the Master of the High Court. Our attorneys in Cape Town assist clients in lodging the title deeds for such trusts. In the very basic form, with this type of trust, the founder transfers their asset ownership to the trust through a sale.
The testamentary trust forms part of estate planning. It only comes into effect once a person passes away.
The bewind trust is one in which the founder of the trust gives a specific amount or assets to a beneficiary. However, the trustees of the trust control the trust and how the asset(s) are managed and distributed. The ownership of the assets, unlike with an ownership trust, is transferred to the beneficiary, though control of the assets is left in the hands of the trustees. It is important to ensure control separation or ownership of the assets for the trust to be legally valid. We recommend consulting with our attorneys in Cape Town on how to do such to ensure the validity of a trust.
We can further distinguish between the vesting and discretionary trust. With the vesting trust, the Trust Deed determines whether the beneficiary can get income, how much, how, and when. With the discretionary trust, the trustees have the discretion to decide on the amount, frequency, and manner in which the beneficiary can receive capital or money from the trust.
Trusts for asset protection and family trusts can be created, in addition to charitable and employment trusts, to name only a few. If you wish to ensure the protection of assets and distribution of income to a beneficiary or beneficiaries, speak to our attorneys in Cape Town for advice on the best type of trust for the purpose and the procedure for registering it.
Note: this article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information. Information is relevant to the date of publishing.