Five Things You Need to Know About Trust Setup and Management
There are a lot of questions about trusts. While the primary concern of those setting up a trust is usually to take care of the financial needs of another party or parties, while still maintaining some sort of control in order to guard the value of the trust, it can be hard to reconcile these two factors. For this reason, it is necessary to have an expert involved when you are setting up a trust. Here are some guidelines about trusts in South Africa and what they are all about.
- What is a trust? It basically is a contract that guards assets that aren’t owned by the parties who are the beneficiaries of the trust. This means that the beneficiaries are able to draw financial benefits from the financial benefits that the trust draws through the return on investments.
- What is a trust beneficiary? The beneficiaries are given the rights to the benefits of the trust by the people who set up the trust. Often, in wealthy families, a family trust is set up by the parents with the help of astute lawyers, which entitles the children to some financial assets that are accumulated by the stocks and investments of the trust. All trusts must have verifiable beneficiaries – it is impossible to set up a trust without persons who will benefit from the trust.
- Who regulates trusts? In South Africa trusts setup and management are regulated by the 1988 Trust Property Control Act. This means that the trust deed must comply with a lot of legislative stipulations and agreements. It should be registered with the South African High Court in order to gain validity, and is subject to the approval of the Master of the High Court. Not all of this makes sense to the usual citizen, and the legal jargon and administrative processes can be very confusing. This is why it is vital to get a professional to handle your trust setup and management for you.
- What types of trusts are there? Usually, in South Africa, there are two main types of trusts. One involves living people, and the other is a trust that comes into effect once the trust holder passes away. Both types of trusts involve the safe custody and the management of the trust on the behalf of the trustee.
- Why does a trust need to be managed? Trusts are set up for financial benefit of a beneficiary. If you don’t have experts to manage the trust, weak or bad investments may be made that may cause the trust to become much less valuable. It is crucial that the Master of the trust controls the trust in the most responsible way possible and that bad investments are avoided at all costs. Similarly, the beneficiaries of the trust are not commonly allowed to manage their trusts.
If you need someone to help you with a trust setup and management, contact our team today. With our expertise, we can assist you in setting up a most successful trust.