Their complexity and structures have deepened over the centuries, so if you’re thinking of establishing one, you should consult an expert in the field, otherwise you could enter into a world of disaster. We recently heard of a gentleman who committed suicide because he was experiencing financial difficulties but could not access his assets as they were tied up in trust.
Having said this, provided you seek advice from a trust expert and you thoroughly understand the implications involved, a trust can assist you greatly and reduce your risks.
What type of trust should you choose?
A testamentary trust is formed upon death for the benefit of beneficiaries. If you have minor children or dependants with special needs, you can use this type of trust to continue supporting and providing for them when you are no longer able to. The trust does not exist before your death, it is founded by the executor of your estate upon your death.
The trust deed is contained in your will, which stipulates which assets are to be transferred into the trust. The executor follows the instructions in your will and arranges for the necessary assets to be transferred into the name of the trust. Assets include property, shares, cash from the sale of other assets, investments, etc.
An inter vivos trust is formed during your lifetime and can continue after your death. Usually you will form this type of trust to protect your assets from creditors, reduce your estate duty liability, pass down family wealth or provide for minor or disabled heirs. It’s important to remember that you relinquish control and ownership of your assets when you sell or donate them to a trust.
FPM acts as trustees for many of our clients’ trusts and our in-depth knowledge, experience and expertise ensures our clients get the peace of mind they deserve.
Should you have any questions regarding trusts, please contact me on 011 778 9353 or e-mail me at firstname.lastname@example.org.
GEMMA DE LUCA
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.