WHAT is a trust?
For many of us, a trust is something we see in soapies or hear about in the news. It’s some sort of bank account run by lawyers.
A trust is not complicated. It is a service that covers assets for its beneficiaries.
Matlhodi Leteane, head of operations at FNB Fiduciary, said: “Trusts are effective estate planning tools that protect assets on behalf of its beneficiaries.
“The trust is a legal identity that is independent of its creator and members’ other financial and legal dealings. If you start a trust to protect your property and inheritance but later become indebted, your trust offers some protection from what creditors can demand.
Benefits of trusts
- Trusts provide a smooth transfer of wealth from one generation to the next or more generations.
- They are flexible estate planning tools. They allow for the access or use of assets in the trust to be controlled, which prevents potential abuse.
- Trusts separate the ownership of the trust from the assets.
- Trusts are asset and financial management tools that control and protect beneficiaries, such as minors, who can’t or are not legally allowed to deal with their own financial matters.
How to create a trust
You can create a trust as easily as writing a will. You include a provision for a testamentary trust, however, you need to structure your trust to suit your needs.
It is important that people creating a trust use the service of professionals, who know about trust legislation, to check it before you sign – you don’t want your trust to be attacked in court because of some hidden loophole. This makes sure that the trust is managed properly and legally.
