What Is a Trust in South African Law

What Is a Trust in South African Law

There are 3 basic types of trusts, namely a property trust, a Bewind trust and a curatorship trust. Most often, however, trusts are described by the way they are formed: a trust is often described as a tripartite legal relationship. A trust is a structure set up by the founder to which ownership is transferred and is then administered by trustees on behalf of one or more beneficiaries in accordance with the trust deed or will (as the case may be). In a relevant sense, a trust can be considered a generic form of a corporation in which the settlors (investors) are also the beneficiaries. This is particularly evident in the Delaware Business Trust, which could theoretically be organized using the language of the “governmental instrument” as a cooperative or limited liability corporation,[10]:475-6, although traditionally the Massachusetts Business Trust has been widely used in the United States. One of the most important aspects of trusts is the ability to separate and protect the assets of the trustee, multiple beneficiaries and their respective creditors (especially the trustee`s creditors), making it a “suppressed bankruptcy” and leading to their use in pensions, mutual funds and asset securitizations[10], as well as the protection of individual wasters by the Spendthrift Trust. South Africa is well positioned to serve as a base for investment in Africa, and sovereign trust (SA) is able to help establish South African companies and trusts. The use of trusts as a means of inheriting substantial wealth can have negative connotations; Some beneficiaries who are able to live comfortably on escrow products without having to do a job may be jokingly called “trust fund babies” (regardless of age) or “trustafarians.” [24] Trustees manage matters related to the trust. The trust`s business may include the prudent investment of the trust`s assets, regular accounting and reporting to beneficiaries, filing required tax returns, and other obligations. In some cases that rely on the trust instrument, trustees must make discretionary decisions about whether beneficiaries should receive trust assets in their favour. A trustee can be held personally liable for problems, although fiduciary liability insurance similar to liability insurance can be purchased for directors and officers. For example, a trustee could be held liable if assets are not properly invested. In addition, a trustee may be held liable to its beneficiaries even if the trust has made a profit but no consent has been given.

[20] However, in the United States, as well as for directors and officers, a disclaimer can minimize liability; Although this was previously considered contrary to public policy, this position has changed. [21] This is a trust created during the founder`s lifetime. There are two types of living trusts in South Africa, namely acquired trusts and discretionary trusts. In the case of vested trusts, the beneficiaries` benefits are set out in the trust deed, while in the case of discretionary trusts, the trustees are at all times free to determine the amount that each beneficiary should receive. A living trust is created by the creation of a trust deed and the registration of the trust (as well as various mandatory forms) with the Master of the High Court. The trust takes effect upon registration. (a) to another person, the trustee, in whole or in part, to manage or dispose of, in accordance with the provisions of the trust deed, for the benefit of the person or group of persons identified in the trust deed or for the purposes set out in the trust deed; or trusts have their origin in England, and therefore English trust law has had a significant influence, particularly in common law legal systems such as the United States and Commonwealth countries. As more South Africans set up trusts outside the country, Grant Barbour, Managing Director – Private Clients, explores the key differences that advisors and individuals need to be aware of. Trusts have existed since Roman times and have become one of the most important innovations in property law.

[3] Trust law has evolved differently due to court decisions in different states, so the statements in this article are generalizations; It is difficult to understand the jurisdiction specific to each jurisdiction. Some U.S. states are adapting the Uniform Trust Code to codify and harmonize their trust laws, but there are still state-specific variations. In some jurisdictions, certain types of assets may not be subject to a trust without a written document. [14] Living trusts, unlike testamentary trusts, can help a trust or avoid inheritance. [45] Avoiding inheritance can reduce costs and preserve privacy[46] and dynamic trusts have become very popular. [47] Estate is potentially expensive, and estate records are open to the public, while distribution through a trust is private. Living trusts and wills can also be used to plan for unforeseen circumstances such as incapacity or disability by giving discretionary powers to the trustee or executor. [46] It is necessary to examine what income is taxed in Cyprus and which regime applies without residence in Cyprus. .

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