What is a trust and itโs legal terms?
A thread ๐งต
A thread ๐งต
What is personal capacity? It is you as an individual.
What is a trust? A trust is itโs own legal entity which holds assets on behalf of its beneficiaries. It does not die.
There are 3 terms commonly used with a trust: Founder, trustee & beneficiary. What do they mean?
What is a trust? A trust is itโs own legal entity which holds assets on behalf of its beneficiaries. It does not die.
There are 3 terms commonly used with a trust: Founder, trustee & beneficiary. What do they mean?
Founder: this is the person who sets up the trust. This can be set up in their will or in a trust deed
Trustee: this is appointed by the founder. There is no limit on how many trustees there can be buy too much of something isnโt good. It is recommended that 3 is a good number.
Trustee: this is appointed by the founder. There is no limit on how many trustees there can be buy too much of something isnโt good. It is recommended that 3 is a good number.
A trustee should act in the best interest of the trust and its beneficiary. An independent person can be appointed as a trustee. They should have sufficient financial Knowledge so the trust is used to its maximum potential.
Beneficiaries: Your family (husband, wife, child...), someone who you want to receive benefits from the trust. Benefits can be consistent income or assets (land, buildings, companies etc.)
Can you be the founder, trustee and beneficiary? Yes you can - given that you appoint and an independent trustee
Trust come with some advantages. One of which is assets protection. If a trustee or beneficiary declares insolvency, the bank or creditor ...
Trust come with some advantages. One of which is assets protection. If a trustee or beneficiary declares insolvency, the bank or creditor ...
... who is owed money cannot take away assets from the trust as it belongs to the trust and not their own personal capacity.
Assets in a trust does not have any estate duties or executor fees. If assets were in personal capacity, when you die it goes into an estate
Assets in a trust does not have any estate duties or executor fees. If assets were in personal capacity, when you die it goes into an estate
An estate can take month to years to resolve and assets can get frozen until it is resolved. Whereas with a trust, there in none of that. Your beneficiaries will benefit from day 1 of your death. No estate fees, no executor fees, no conveyance fees.
You should always sit with a financial advisor when setting up a trust. Itโs important to note that any income declared to a trust is taxed at the HIGHEST level of 45%. But if the income from the trust is declared to the beneficiary it will be taxed at thier personal income level
In SA, if you form a family trust it is compulsory to have an independent trustee who has no blood relationship to the family.
There is cost involved in setting up a trust. This can range anywhere from 5k - 15k. Remember, expensive is not always better.
There is cost involved in setting up a trust. This can range anywhere from 5k - 15k. Remember, expensive is not always better.
A trust is NOT for the benefit of the founder. It is for the benefit of its beneficiary.
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