Page 4 - Nexia SAB&T Trust Guide 2024

INTRODUCTION

This guide is designed to help anyone involved with a trust understand the key
elements of forming and administering a trust in South Africa.
Anyone thinking of setting up a trust needs to make sure that they are creating
a valid legal structure, and also understand the nature of the trust, the duties
of trustees, the rights of beneficiaries and the recent legislative amendments
affecting trusts in South Africa.
Some points to consider when setting up a trust:
The most important consideration is whether the founder /donor is willing to
relinquish direct control over assets transferred to the trust. If not, the trust may
be regarded as a front (sham) or alter ego of the founder, and the protection and
planning opportunities afforded by transferring the assets to the trust may be
lost. Another important consideration will also be how to get any growth assets
from an estate planning point of view into the trust.
Other considerations are:
■ Whether the trust fits into the overall estate plan.
■ The trust should not primarily be used to mitigate paying taxes.
■ Whether the benefit of the trust justifies the costs and administration involved
in keeping the trust compliant.
■ When you are required to appoint an independent trustee.
■ Loans made by individuals and companies to trusts.

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