The primary purposes of a family trust – formally known as an inter vivos trust – are asset protection, estate planning, and the organised transfer of wealth across generations. By placing assets into a trust, those assets are removed from the founder’s personal estate and held by the trustees for the benefit of the named beneficiaries. This means that on the founder’s death, the trust assets do not form part of the deceased estate and are therefore not subject to estate duty or to the delays and costs associated with winding up an estate.
Asset protection is another important consideration. Provided the trust is properly structured and the founder does not retain inappropriate control, trust assets are generally ring-fenced from the founder’s personal creditors. This can be particularly significant for business owners, professionals, or anyone exposed to personal liability risk. The trust also allows for continuity – assets held within it continue to be managed in accordance with the trust deed regardless of changes in the founder’s personal circumstances.
On a practical level, a family trust is frequently used to provide for minor children or dependants who cannot legally manage their own affairs, to equalise inheritances in blended families, and to ensure that wealth is distributed in a structured and considered manner rather than in a lump sum. The inter vivos trust is a living vehicle – it operates during the founder’s lifetime and can be adapted as circumstances change, making it one of the most versatile tools available in South African estate and financial planning.
>> See also: “Why do you need a family trust?” | “What are the benefits of an inter vivos trust in South Africa?”
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 – Contact Us.