ASSETS
The Seven Habits of
Highly Effective Trustees
Managing the Administrative Burden
BY JOSE DELGADO
One of the questions often asked by people considering creating a trust for estate planning or asset protection purposes is,“ What is the down side to having a Trust?” The reply to this is: the compliance with the administrative burden placed on Trustees. It would be great if assets could simply flow into Trusts by a process akin to osmosis. Regrettably, a little more is required to satisfy the legal requirements and those of third parties, such as SARS and creditors, as to whether assets are in fact Trust assets or not. On the upside, however, these requirements are not unduly or more onerous than those placed on directors of companies, and constitute a small price to pay when taking into account the benefits that Trusts afford.
As a guideline to assist you in ensuring you comply with your obligations as a Trustee, we summarize below the seven key areas of compliance to be adhered to by you.
1Bank account: The Trust Property Control Act( TPCA) provides that“ whenever a person receives money in his capacity as trustee, he shall deposit such money in a separate trust account at a banking institution.” If you have registered a trust that owns any of the following, they will need to be paid to and held in a bank account in the name of the Trust:
• Investment properties that generate rental income;
• Shares that generate dividend income;
• Investments that earn interest
• Or monetary donations are made to the trust
2 The Founding Settlement:
An often overlooked but important point to bear in mind is that, until such time as the Founder of the Trust has disposed of income or assets and vested them in the Trustees, the Trust does not come
56 FEBRUARY 2017 SA Real Estate Investor www. reimag. co. za