12 May TERMINATING A DISCRETIONARY LIVING TRUST
One of the benefits of a discretionary living trust is that it is not limited by time, and may continue to exist for as long as it serves its purpose.
However, termination may become necessary one day, owing to any of the following factors:
- By court order.
- The fulfilment (or failure) of the object of the trust.
- The absence of beneficiaries, either through death or renunciation of their rights as beneficiaries. A trust without beneficiaries is null and void.
- The destruction of trust property through no fault of the trustees.
- The absence of trust assets, such as, when all trust assets have been distributed.
- The passing of a unanimous resolution by the trustees. Before the resolution is passed, they have first to apply their fiduciary responsibility to the beneficiaries, consider the intention of the founder and the circumstances that justify the termination and then formulate the strategy regarding the disposal of any remaining trust assets.
- The trust deed may have a resolute condition that stipulates the trust be terminated on a certain date or on the occurrence of a specific event.
The decision to terminate a trust is an important one.
To terminate a trust, the trustees are required to adhere to the prescribed administrative procedures determined by the Master and SARS. They have also to make provision for the safe storage of trust documents for the specified five-year period following the termination of the trust.
Trust specialists are equipped to advise and assist with the termination of a trust. It is a service that reduces the weight and time required for the trustees to correctly complete the task.