Page 10 - Nexia SAB&T Trust Guide 2024

There are various kinds of inter vivos trusts that can be set up, depending
on their purpose, for example, family trusts, charity trusts (formed with an
impersonal object), empowerment or employee trusts and business trusts.
An inter vivos trust can be structured as either a vested or discretionary inter
vivos trust. Discretionary trusts are the more common form of inter vivos trust,
where the vesting of benefits or assets in the beneficiaries is done at the
discretion of the trustees.
Inter-vivos trusts are ideal for keeping growth assets (shares, investments,
immovable property) out of an estate planner’s estate, and as a means of
protecting assets from generation to generation.

Testamentary (Mortis Causa) Trust:
Testamentary (Will) trusts are created by a trust clause in a Last Will and
Testament, in which the testator bequeaths assets to the trust and stipulates the
terms and conditions which will apply to the trust.
A testamentary trust only comes into existence upon death of the testator. If, for
any reason, the Will is invalid, the trust will not come into effect (the Master of
the High Court therefore has the power, in this case, to declare a testamentary
trust invalid – unlike an inter vivos trust, where the Master of the High Court has
no such power).
Testamentary trusts are geared towards protecting the interests of minors and
other dependants who cannot look after their own affairs. Assets that form part of
an estate may be moved to the testamentary trust and sometimes include limited
rights such as a usufruct (temporary right to use /benefit from trust assets).
The appointed trustees administer the trust in terms of the Will until the trust
terminates, usually after a predetermined period or at a determined event, such
as a minor turning eighteen or the death of an income beneficiary.
Generally, the terms of a testamentary trust cannot be amended, but the Trust
Property Control Act does give the Court certain powers to amend a trust deed, in
certain specific circumstances.
A testamentary trust may be a discretionary or a vested trust.

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