Page 12 - Nexia SAB&T Trust Guide 2024
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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.
         ■ Business /Trading Trusts: These are inter vivos trusts formed to carry on the
         business with a profit incentive. The trustees should be independent of the
         beneficiaries. Business Trusts:
            ■ May be either public or private.
            ■ Beneficiaries enjoy limited liability trading.
            ■ Administration is less complex and less expensive than a company or
           close corporation.
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