Page 6 - Nexia SAB&T Trust Guide 2024

ESSENTIAL REQUIREMENTS FOR A VALID TRUST

■ The founder must have a serious intention to create a trust.
■ The key element of the trust arrangement is the transfer of control
of the trust assets from the founder to one or more trustees, who
hold the trust assets, not in their personal capacities, but for
the benefit of the trust beneficiaries. The trust is essentially an
arrangement that allows someone to hold assets for the benefit of
the trust beneficiaries. The Trust Property Control Act defines a trust
as “...a structure into which property is transferred, which is then
administered by trustees, on behalf of one or more beneficiaries, in
accordance with the trust instrument...”.
■ The trust property must be clearly identified.
■ The trust object (which could be personal or impersonal) must not be
vague, but must be clearly stated and lawful.
■ There must be a binding obligation on the trustee(s) to administer
and manage the trust property.
■ The trustees must be authorised and have legal capacity (for example,
in South Africa, when you turn 18, you are free to contract and
conduct your own affairs without your parent or guardian’s assistance).
■ There must be at least one beneficiary.
■ The trust beneficiaries must be clearly identified or easily identifiable.
■ Note that the Trust Property Control Act does not specify the
requirements or procedures required for the formation of a valid
trust in South Africa. The Master of the High Court might have issued
Letters of Authority, and assigned a registration number to the trust,
but this does not necessarily make the trust valid. Usually the validity
of a trust instrument is only tested by its creditors, or the South
African Revenue Service (hereinafter referred to as SARS), or by a
spouse in a divorce case.

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