Page 12 - Nexia SAB&T Trust Guide 2022

Vested (Vesting) Trust: Here the trustees are not given any discretion in the deed,
and the beneficiaries and their benefit(s) are fixed and predetermined.
The beneficiary has a vested right to the income and capital of the trust, which
cannot be contested by anyone else.
In the event of the death of the beneficiary prior to payment, the deceased
beneficiary’s interests are transmissible to his heirs, and these must be included
in his estate for estate duty purposes.
Trusts can also be described according to the purpose for
which they are formed
■ Asset-Protection Trusts: Asset-protection trusts include a wide range of legal
structures which are set up in an attempt to mitigate the effects of taxation,
divorce and bankruptcy on the beneficiary. Any form of trust which provides
for trust property to be held on a discretionary basis falls within this category,
e.g. a family trust which is designed to secure the interests and protect the
property of a group of family members.
■ Family (Private) Trusts: These can be testamentary or inter vivos trusts. Their
main objective is the protection and maintenance of trust property, for the
benefit of minor children, or family relations of the founder.
■ Empowerment/Employee Trusts: These are inter vivos trusts formed to
empower staff and give them the chance of meaningful participation and
“ownership” in the business venture.
■ Offshore Trusts: The term offshore trust describes a trust which is set up
in a tax haven jurisdiction. In South Africa the term includes any non-South
African or non-resident trust that has its place of effective management
outside of South Africa. There are both tax advantages and disadvantages
with regards to offshore trusts and in South Africa there are both general
and specific anti-avoidance provisions that can negatively impact the use of
offshore trusts.

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