Discretionary Living Trusts A legacy for generations

Written by Trust Specialist, Mervin Messias, it is the culmination of knowledge and expertise that has been acquired over many years’ study and practice of Trust law.

The author recommends the use of Trusts as part of estate planning because they provide solutions to many potentially complicated problems related to asset protection, succession planning, and disability protection. Many little-known benefits of Trusts are revealed to help protect your hard-earned wealth for generations to come. A Trust circumvents the whole process of winding up an estate, together with its potential delays, hassles and frustration.

In fact, a Trust deserves pride of place in any estate plan. It means business as usual, even after death, with no executor, executor’s fees or estate duty.

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    Disability protection


    Disability protection

    Disability protection

    We have looked the first two pillars of Estate Planning – Succession Planning and Asset Protection.  Now we look at Disability Planning.  It’s not something we like to look at lest we tempt fate or have to acknowledge that ageing (and the potential consequences) will beset us all!

    Disability protection is very sensible, but the fruit lies in the way it is structured.

    Having our affairs in order gives us a distinct advantage, both in the short and long term, because life has the uncanny habit of tossing ill-timed curved balls our way.  But, if we have made contingency plans, then everyone will know how to proceed.

    Disability Planning keeps the originator in the driver’s seat, even if s/he is incapacitated later.  Rock solid planning will cover most eventualities, but the structuring process requires top class advice based on experience and knowledge.  Every nuance and situation needs to be considered and covered.

    Despite the circumstances, having a designated plan in place has three key benefits:

    • Disability Planning takes tough and emotional decisions away from distraught family members and plots the way forward as the originator intended. This could be anything from what to do in the event of a debilitating accident or illness to a loss of mental capacity.  It dispenses with potential family drama as well as meddlesome and conflicting input from well-intended outsiders.

    Disability Planning stipulates how the originator would like to proceed in the event of incapacitation – temporary or permanent.  It is clearly documented and not open to debate.  To remove loved ones from having to take responsibility for traumatic decisions concerning your wellbeing, is a profoundly loving consideration.  It helps mitigate untold heartache and potential guilt.

    • In a situation where family relations are strained or you have no immediate family to make decisions for you, your Disability Plan will ensure you are protected. No aggrieved parties will be able to interfere or exact any ‘pay back’ they feel is your due.  Deserved or not, how often have you heard of such people being tossed into some cheap and cheerless institution, and then abandoned?
    • When your Disability Plan is part of a Trust, it may allow you access to funds should they be necessary for costly medical treatment or upkeep.

    A Power of Attorney, however well-intentioned, is an alternative route but it has limited power and potential complications.  You are trusting the appointed agent with your wealth.

    • Firstly, it is often the action taken in response to a sudden onset problem. Diminished mental capacity is frequently the trigger but it is illegal for a person who is already mentally incapacitated to sign a Power of Attorney.
    • A Power of Attorney becomes null and void once the subject is considered fully compromised mentally. Legally, a Curator should be appointed.
    • If overseas accounts are involved, it becomes complicated as each country has its own laws.
    • It is not always readily accepted by third parties, like financial institutions.
    • Should the incapacitation be temporary and the party concerned would like to re-assume control of his/her affairs, the Power of Attorney should be cancelled and written communication to that effect sent to the parties who have a record of it.

    Unfortunately, South African law does not make provision for a durable Power of Attorney.  This is a document which enables the agent to continue to make decisions for and on behalf of the person who has become mentally incompetent.

    In the absence of a Power of Attorney or Trust, a Curator will be appointed to manage your affairs.  You could find yourself on thin ice as the Curator is just one person without any personal connection to you operating with limited checks and balances in place, now in charge of your affairs.  S/he may not have your best interests at heart, and it presents a situation that is difficult to monitor.  Abuse of power and funds is possible, and you will require a Court Order to cancel the Curator’s services – which s/he may oppose.  Since that represents an expensive and tedious legal process, curatorship is not recommended.

    A Trust with a Disability Plan, on the other hand, is far more secure and packs a powerful punch because it falls under the Trust Property Control Act.  This gives the Master of the High Court the legal muscle to enforce the Trustees’ obligations.

    A Trust is a framework that holds the Trustees accountable to the law and to each other.  They are legally obliged to comply with the terms of the Trust Deed and morally obliged to exercise their discretionary powers on more personal matters, as laid out in the ‘Declaration of Wishes’.  A Curator, by comparison, holds all the cards.

    I have specially created a comprehensive document called a ‘Declaration of Wishes’.  It’s a detailed, personal blueprint that provides explicit guidelines on how to carry out your wishes in multiple situations so that virtually nothing is left to chance.

    I’m in the business of creating tailored Disability Plans for individuals, plans that protect their rights and ensure that their personal wishes are carried out without interference from third parties.  The plans cater for multiple contingencies – the here and now, the future and beyond.  No two are the same.

    You’d do well to put your wealth and Disability Plan into a Trust, pay the applicable taxes up front and have the assurance that the Trustees you’ve appointed will take proper care of you.

    Please get in touch if you’d like to pursue the creation of a Disability Plan that is uniquely yours and crafted with attention to detail.  It includes every possible legal mechanism to protect you and keep you in control in the event of a disability.

    DR MERVIN MESSIAS – JD (Juris Doctor) / BA, LLB University of the Witwatersrand
    TEP (Trust & Estate Practitioner) / MTP Master Tax Practitioner – S.A.)

    Book an appointment with my Executive Assistant, Jutleth Mkhonza.  Email or call +27 (0) 11 783 0108