The importance of a Trust
A Trust is a legal arrangement in which a trustee is appointed to manage assets on behalf of a beneficiary . In the case of a minor child , a Trust can be an effective way to ensure that their inheritance is protected and managed properly until they come of age .
By assigning a Trust to manage a minor child ’ s assets , one can ensure they are used for the child ’ s benefit and not wasted or misused .
In terms of South African law , children younger than 18 are not legally capable of managing their inheritance . Any funds inherited by minors – either through testate or intestate succession – must be administered by a testamentary Trust . However , if no such Trust exists or is appointed to manage a minor ’ s inheritance , then any money will be transferred to the state-run Guardian ’ s Fund where they will be administered until the child reaches age 18 . The Guardian ’ s Fund forms part of the Master of the High Court .
All money held in the Guardian ’ s Fund is invested in the Public Investment Corporation , an asset-management company wholly owned by the government . Over the years , there have been several reports of extensive fraud and corruption at both institutions *.
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Disclaimer : Kindly note that this does not constitute financial advice the information provided is purely informational . In terms of the Financial Advisory and Intermediary Services Act an FSP should not provide advice to investors without an appropriate risk analysis and thorough examination of a client ’ s particular financial situation . The information , opinions and communication from the PPS Group or any of its subsidiaries , whether written , oral or implied are expressed in good faith and not intended as investment advice , neither do they constitute an offer or solicitation in any manner . PPS is a licensed insurer conducting life insurance business , a licensed controlling company and an authorised FSP . PPS Fiduciary Services is a division of PPS , a licensed life insurer , controlling company and FSP .
Pros and cons of a Trust
There are pros and cons to assigning a Trust to manage a minor child ’ s assets . On the one hand , a Trust provides a structured and managed approach to managing the assets , which can be reassuring for parents who want to ensure their children ’ s financial well-being . On the other hand , a Trust can be expensive to set up and maintain , and there may be ongoing fees associated with managing it .
For this reason , PPS created the PPS Beneficiaries Trust for members who do not have a Trust , nor do they want the assets they have bequeathed to a minor ( s ) to be paid into the Guardian ’ s Fund .
The PPS Beneficiaries Trust ( a not-for-profit Trust ) offers a costeffective solution , eliminating fees for drawing up documentation , capital acceptance and dissolution . Trustees appointed by PPS manage the Trust and take accountability for the investment of funds and administration thereof . It also eliminates the need for individuals to go through the costly and rigorous administration of setting up and maintaining a Trust .
The Trust further caters to beneficiaries ’ different investment needs by offering a range of investment portfolios managed by highly experienced fund managers . They ensure that the inheritance a PPS member left for their minor beneficiary ( ies ) will be wellmanaged until they are an adult ( s ) and ready to make it a part of their legacy .
Final thoughts
Inspiring your child to make their dreams a reality even after your death is a noble goal . By identifying your child ’ s dreams , creating a Will and establishing a Trust , you can ensure that your child has the support they need to achieve their goals .
Roy McMurchie
* https :// www . citizen . co . za / business / what-exactly-is-the-government-guardiansfund / and https :// www . ft . com / content / 7a8ac00a-64d2-11e8-a39d-4df188287fff
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