When dealing with the administration of property there are two main types of trusts namely: inter vivos trust and a testamentary trust.
What Is An Inter Vivos Trust?
An inter vivos trust is a trust created during the lifetime of the owner of the assets. These types of trusts may be utilised to protect assets intended for the beneficiaries over a long period of time. In addition, it may also assist the owner of the assets in keeping its personal assets separate from its commercial or business activities.
For an inter vivos trust to be properly set up, the requirements set out in the Trust Property Control Act 57 of 1988 (hereafter “TPC”) must be complied with.
An inter vivos trust can furthermore, assist in the administration of a deceased’s estate as the assets held in trust will simply be distributed to the beneficiaries of the trust by the trustees.
What Is A Testamentary Trust?
A testamentary trust is set up in the last will and testament of a deceased. Ordinarily, the will would include instructions on the setting up of the trust. The trust is not created until the death of the deceased, whereafter the assets contained in the trust will be distributed by the trustees to the beneficiaries in accordance with the testator’s instructions.
General Steps For Setting Up a Trust
Trusts have a complicated process that needs to be followed in order to ensure that they have been validly set up. In general, the following steps may be followed when setting up a trust:
- Set out the purpose of the trust
- Elect the type of trust you intend to set up
- Name the trust
- Nominate and elect trustees and beneficiaries
- Transfer the assets
- Prepare registration documents
- Submit registration documents to the Master
It is important to note that when registering a trust, the Master’s office in whose jurisdiction the majority of the assets in the trust fall under will have to be used.
Conclusion
The requirements for setting up a trust can be tricky. Considering their aim is mainly to protect assets it is important to ensure that legal assistance is sought in order to ensure that the purpose of the trust is fulfilled.
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