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Q & A
Trustees in office and Beneficiaries who have accepted a benefit .
Secondly , the Trust Deed in its entirety or the resolution tabling the amendments , may be submitted to the Master of the High Court
Your Advisor may recommend filing a replacement Trust Deed , meaning your original Trust Deed will be replaced in its entirety with a new Trust Deed . This is generally recommended because it will prevent confusion when the original Deed needs to be read with the amendments .
4 . Do my Trust beneficiaries have a claim on Trust assets ? If you have a properly structured living discretionary Trust , the answer is no , however I need to qualify this answer .
A discretionary Trust assigns the sole discretion relating to all decisions , to the Trustees . These decisions include , but are not limited to , the investments made , allocations / distributions of income or capital , etc . This means no beneficiary has a vested right or claim against our Trust assets , they only have a hope to receive a benefit .
The beneficiaries do , however , have a right to proper administration of the Trust since Trust assets are administered for the benefit of the beneficiaries . If you distribute taxable income to a beneficiary and the cash does not leave the Trust ’ s bank account , that beneficiary will now have a loan with , or vested right , in the Trust .
5 . Why should I rather set up a living ( inter vivos ) Trust instead of a testamentary Trust ? A living Trust is created while the founder is alive and a testamentary Trust is created through the deceased ’ s Will , on death , thus the founder is deceased .
With a testamentary Trust you will first pay estate duty , executor ’ s fees , capital gains tax , and most probably auction fees , before effect is given to your bequests . By this time , you might have lost more than half your asset value just to cover these costs .
We recommend setting up a living , discretionary Trust , as we want you as the initial beneficiary to receive the benefit while you are alive . Some of these benefits are full asset protection against creditors , continuity of your legacy , tax savings ( conduit principle ) and eradicating your personal estate to eliminate or reduce estate duty , executor ’ s fees , capital gains tax , etc .
6 . Do I still require a Will when my assets are in Trust ? Yes , you do . Even though all your assets may be in Trust , you may still have a loan account with your Trust , which is an asset in your estate until settled in full . Since 2017 , when legislation regarding loan accounts changed , it is even more important to address this in your Will .
You also need to appoint an executor to administer your estate . If you have minor children , you need to appoint a guardian for them . If you do not have a valid Will on death , you will die intestate , then the Master needs to appoint an executor and your wishes will not necessarily be carried out , since the heirs will be determined by the Intestate succession Act .
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SA Real Estate Investor Magazine MAY / JUNE 2023 14