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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    A living trust is created during your lifetime. Ideally, you should consult a Trust Specialist who has the expertise and knowledge to set up a living trust that suits your needs. The question is, is a Discretionary Living Trust right for you?

    Well, it is geared to prepare and protect you, your assets and your beneficiaries for life, and after you die. Its purpose is significant. You, as founder, determine the ‘what and ‘who’, the Discretionary Living Trust determines the ‘how’ and the trust deed determines its success. To succeed, you want someone who really understands the complexity of your situation and intentions, trust law and is competent to advise, interpret and provide for your unique requirements.

    As founder of the trust, you will establish the terms and conditions in consultation with the trust specialist whose greater depth of knowledge will help to secure your best interests and objectives. It is particularly important that the trust deed is carefully worded to avoid ambiguity. Once the trust deed (or trust instrument) has been prepared to meet all your objectives, it will become the blueprint for the trustees to follow. In it, you will nominate the trustees and identify their powers, duties and remuneration. Consider carefully who you would like to act as your trustees and secure their willingness to assume the role. It is preferable to have a minimum of 2 trustees. Ideally, the skills of a competent trustee should include some accounting knowledge.

    Your beneficiaries will also be named in the trust deed. Once the trust deed has been drafted to meet all your requirements, it is signed and submitted to the Master of the High Court for registration, approval of the trustees and the issuing of their Letters of Authority (without which they cannot act). The founder is required to make an initial donation to the trust or it will be deemed non-existent. The donation and transfer of the prescribed assets passes ownership of assets or property to the trustees in a fiduciary capacity to be managed for the benefit of your beneficiaries.

    The founder has the option of trusteeship and beneficiary status. Creating a trust is not a one-off transaction, it is a process that will require updating and amending to accommodate any change of circumstances – like birth, death, marriage and divorce. It’s important to know how to register a trust in South Africa.

    A Trust Specialist can explain how to register a trust in South Africa and provide you with step-by-step assistance when it comes to registering your trust.

    Creating a Discretionary Living Trust is relatively quick – days rather than weeks – and you have the assurance that your assets and beneficiaries are comprehensively taken care of.

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