Page 10 - Nexia SAB&T Trust Guide 2024
P. 10

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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