In South Africa, an inter vivos trust can be useful for estate continuity, long-term family governance and the structured management of assets. Assets that have been validly transferred to the trust are administered by the trustees rather than forming part of the founder’s personal estate, although any loan account or other enforceable right retained by the founder may remain an estate asset.

A properly administered trust can also separate trust property from the personal estates of the founder, trustees and discretionary beneficiaries. This may provide useful protection where family members carry business, professional or personal risks, but the result depends on genuine separation of control, proper trustee conduct and the circumstances in which assets were transferred.

Trusts can also provide tax planning flexibility, but the rules are technical. An ordinary trust is currently taxed at 45% on taxable income that is taxable in the trust and has a maximum effective capital gains tax rate of 36%. Qualifying income or capital gains may, in appropriate circumstances, be taxed in resident beneficiaries or attributed to a donor or funder instead. Since 1 March 2025, the section 25B flow-through rule is limited to resident beneficiaries. Current tax rules should always be checked with SARS before distributions or funding decisions are made.

See also: What are the disadvantages of a trust in South Africa? | What is the tax rate for an inter vivos trust? | What are the advantages of a living trust?

Disclaimer: The information provided here is intended as general guidance only and does not constitute legal, tax, or financial advice. Every situation is unique, and legislation is subject to change. We invite you to reach out to our team at Wealth and Legacy Group for guidance tailored to your specific circumstances.