Setting Up a Trust

Protect assets, provide for your family and plan your estate with a properly structured trust.

A trust is a legal arrangement in which trustees hold and manage assets for the benefit of beneficiaries, according to a trust deed. In South Africa, trusts are governed by the Trust Property Control Act and supervised by the Master of the High Court. Properly set up and run, a trust can protect assets and simplify estate planning.

Why people use trusts

  • Asset protection: assets in a properly run trust are generally not available to your personal creditors.
  • Estate planning: growth on assets held in trust falls outside your personal estate, reducing future estate duty.
  • Continuity: assets do not have to be frozen or transferred when a founder dies.
  • Providing for dependants: managing assets for minor children or family members who need support.
  • Business succession: holding shares in family businesses for future generations.

Inter vivos or testamentary?

An inter vivos (living) trust is created during your lifetime by agreement. A testamentary trust is created in your will and comes into existence on your death, often to hold assets for minor children.

Trusts are taxed heavily

Trusts pay income tax at a flat rate of 45% and have a higher effective capital gains tax rate than individuals. Income and gains can be taxed in the hands of beneficiaries in some cases, and interest-free loans to trusts have tax consequences under section 7C of the Income Tax Act.

Who we help

We advise:

  • Families planning to protect wealth for future generations.
  • Business owners holding shares or property.
  • Parents providing for minor children or a dependant with special needs.
  • Property investors.
  • Existing trusts that need their deed updated or administration put right.
  • Trustees who need advice on their duties and compliance.

How a trust is set up

From planning to Letters of Authority.

  1. Planning
    We discuss your goals, assets, family structure and tax position to decide whether a trust is suitable and what type.
  2. Trust deed
    We draft a trust deed setting out the trustees, beneficiaries, powers and how decisions are made.
  3. Lodging with the Master
    The signed deed, trustee acceptances and supporting documents are lodged with the Master of the High Court.
  4. Letters of Authority
    The Master issues Letters of Authority. Trustees may not act on behalf of the trust until these are issued.
  5. Bank account and tax registration
    A trust bank account is opened, the trust is registered with SARS and assets are transferred into the trust.

Trustees must keep an up-to-date record of the trust’s beneficial owners and lodge it with the Master, as required since the 2022 anti-money laundering amendments to the Trust Property Control Act.

GET IN TOUCH

What to prepare

Helpful information for a first meeting.

  • A list of the assets you are considering placing in the trust.
  • Details of the proposed trustees and beneficiaries.
  • Your existing will and any existing trust deeds.
  • Your goals for asset protection, succession and family support.
  • Contact details for your accountant or financial adviser.

Common Questions

Most adults can be trustees, but the Master may require an independent trustee in certain circumstances, particularly for family trusts. Persons convicted of certain offences are disqualified.
Yes, but a trust where the founder controls everything and treats the assets as their own risks being disregarded as a sham or alter ego, which defeats the purpose of the trust.
No. Growth on assets held in the trust is excluded from your estate, but loans owed to you by the trust form part of your estate, and the tax rules on trusts must be managed carefully.
It depends on the Master’s office. Allow several weeks for Letters of Authority to be issued.
Yes. Trustees must keep proper records, hold trustee meetings, file annual tax returns, keep the beneficial ownership register up to date and act in the best interests of the beneficiaries.

THINKING OF SETTING UP A TRUST?

We design, draft and register trusts that are properly structured, tax-aware and built to last.

Read more: Drafting a will · Trusts and divorce · Buying through a trust yet to be formed

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This page is general information and not legal advice.

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