There is no single trust type that is best for every family. In South Africa, a discretionary inter vivos trust is a commonly used family wealth structure because it allows trustees, within the powers of the trust deed, to decide when and how income or capital should be distributed among beneficiaries.

That flexibility can be useful where family members have different needs, where there are minor children or vulnerable dependants, or where assets are intended to remain under long-term management rather than being distributed outright. Because a discretionary beneficiary generally has only a contingent right until the trustees exercise their discretion, trust property may also be better insulated from that beneficiary’s personal creditor or matrimonial risks than assets already vested in the beneficiary. The exact result depends on the trust deed and the circumstances.

A discretionary inter vivos trust is not always the most appropriate option. A testamentary trust may be better suited to post-death provision, while a qualifying special trust may have advantages where the statutory requirements are met. The appropriate structure depends on the family’s objectives, assets, funding method, tax position, governance needs and willingness to administer the trust properly.

See also: What is the purpose of a family trust? | What are the benefits of an inter vivos trust in South Africa? | What are the disadvantages of a discretionary 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.