The Trust deed is the written agreement according to which a Trust is created and administered. It is incredibly important to review the Trust deed of the Trust to ensure that it remains relevant and in line with applicable legislation.
Not having an independent trustee can be construed as you having too much control over Trust assets which could compromise the independent status of the Trust. An independent trustee is someone who is not a beneficiary of the Trust, and also not related to any of the beneficiaries or any of the tustees of the Trust.
You can be held personally liable for certain problems that arise in the Trust. Duties of Trusteeship include amongst other things: the duty to know and understand the content of the Trust deed, duty to take control over the Trust assets and have in-depth knowledge of all relevant fundamental laws governing Trusts and Trusteeship etc.
This means that one of the trustees has the power to act alone and therefore does not require the consent of the other trustees - the power to act autonomously may compromise the independence of the Trust.
Trustees are responsible for the proper administration of the Trust.
Trustees are required to keep record of all meetings, decisions and transactions involving Trust assets. If this is not done, you are in breach of your duties and responsibilities as a Trustee.
A Trust must be registered for tax, even if the Trust had no activities during the financial year.
All distributions need to be done in terms of the provision of the Trust deed. The tax treatment of distributions can be substantially different depending on who has received the benefits and therefore may impact the effective tax rate.
It is important to nominate a second line of beneficiaries in your Trust deed. This will ensure that the trustees always have clear rules and guidelines on who should or could qualify as a beneficiary.
If you pass away and a Testamentary Trust has not been provided for in your Will and your children are under the age of 18, their inheritance will be reduced to cash and the proceeds paid into the Guardian's Fund, administered by the Master of the High Court. These funds are not invested in growth investments and are at times difficult to get hold of.
With advice from our leading tax experts (taking Capital Gains Tax and estate duty into consideration) all beneficiaries listed in the Trust will be looked after as your funds within the Trust would be invested wisely.
The trustee administers funds in cases where the dependant cannot do so (for example as a result of a physical or mental handicap). This helps to avoid problems associated with the Guardian Fund.
Agricultural land in your Will
If you own a farm and decide to leave it to your children in equal shares, there could be complications. In terms of the Subdivision of Agricultural Land Act, there are restrictions when it comes to splitting up agricultural land. Leaving the farm to a Trust solves this problem, as the profits of the operation could be paid out in equal shares.
The Trust under your care is not in optimal health and needs to be actively managed to avoid risk. We have a dedicated team of Fiduciary Specialists ready to offer you expert advice to ensure that the Trust is managed correctly and reduce risk.
The Trust under your care seems to be healthy.
If you have any questions, or need assistance, we have a dedicated team ready to help you.
