Which trust is the right option for you – a living (inter vivos) trust or a testamentary trust? Choosing the right trust is important, and it is a decision that impacts you and your family.

Choosing the right trust for you and your family is necessary. A trust is an essential financial and estate planning tool that can assist to protect your business and personal assets during and after your lifetime for your intended beneficiaries. There are some important points to keep in mind when it comes to deciding which trust is best for you.

What should you know about a living (inter vivos) trust?

  • A living (inter vivos) trust, created during your lifetime, manages assets for you and your beneficiaries.
  • You are able to determine which beneficiaries can receive an income from the trust, and which beneficiaries can receive capital.
  • By creating an inter vivos trust, you in essence create another legal entity where specific assets may be housed, which will then be administered and dealt with in terms of the trust deed that you (the founder) have created.
  • A living trust is suitable for people who would like to protect their assets for future generations during and after their lifetime.
  • A living trust is governed by a trust deed.

What should you know about a testamentary trust?

  • The terms of a testamentary trust are written into your will, and only come into existence after you pass away.
  • A testamentary trust is usually set up to hold assets on behalf of minor children. This trust is known as a will trust.
  • This trust is only created on your death, and it doesn’t offer any protection for your assets during your lifetime.
  • What happens if you have an invalid will? Did you know that if your will is invalid, then the trust is also going to be invalid and won’t come into effect?
  • Will trusts can’t be registered with the Master of the High Court during your (the testator’s) lifetime.
  • A testamentary trust is suitable for people who have minor children or vulnerable family members. This trust assists you to protect and manage the inheritance of a minor child or a vulnerable family member.

It is imperative that you consult an expert if you would like advice about choosing the right trust for your unique circumstances. Make sure that you consult an experienced Trust Specialist who can answer all your questions and explain the trust creation process to you.

As a Trust Specialist, I can explain the advantages and disadvantages of these trusts. I have many years of expertise and knowledge in trust creation, and I look forward to scheduling a consultation with you and advising you on the ins and outs of living trusts and testamentary trusts. Get in touch for a quotation and to find out more about these types of trusts.

DR MERVIN MESSIAS
JD (Juris Doctor) / BA, LLB (Wits) / TEP (Trust & Estate Practitioner)

Schedule an appointment with my Executive Assistant, Jutleth Mkhonza. Email julie@mmtrustspecialist.co.za or call +27 (0) 11 783 0108.