The main reason to set up a trust is to protect assets for the benefit of someone, whether it is you, a spouse, minor children, incapacitated persons or members of the public (charitable trust). A trust should never be registered with the sole purpose of trying to save on taxes as tax laws can change.  

If, however, a trust deed is drafted property, the wealth plan structured effectively and the investments aligned accordingly, it may result in a saving in estate duty and capital gains tax in the event of death.  It is for this reason that a trust has for many years been a popular tool used by estate planners to peg the value of assets. Assets are transferred to the trust during the settlor’s life by way of a donation, loan or both which results in the assets growing in value in the trust opposed to in the founder’s personal estate.  As these assets do not belong to the founder any more, they are protected from the founder’s creditors. This is often a solution for individuals who have business interests and wish to keep their personal assets separate to that of the business.  

It is important that the founder selects the right trustees as they will have the power to deal with the assets in the trust at their discretion.  A trustee has many fiduciary duties and the founder has to ensure that the trustees selected have the required qualifications and experience to fulfil this role. The trustees have to comply with the Trust Property Control Act and be able to understand and adhere to the case law as failing to do so, could have severe implications for the beneficiaries.  As trustees can be held liable personally for losses, it may not be fair to expect of people, for instance family members and friends, to act as a trustee if they have no idea what the role requires. Wealth and Legacy™ Asset Management can provide guidance to trustees and act as corporate trustee to ensure good governance.  

Duties of a trustee:

• Keeping abreast of economic developments.
• Acquaintance with the trust deed;
• Take control of trust property; 
• Managing risks;
• Administration, disposal, investment and general maintenance of trust assets;
• Proper record keeping of transactions and taking of minutes; 
• Preparation and timeouts submission of income tax returns;
• Avoid conflict of interests;
• Act with due care and diligence;
• Exercise discretion;
• Maintain a bank account;
• Being accountable;
• Staying up to date with legislative changes; and
• Keeping abreast of economic developments.