Inter Vivos Trust
As a South African resident, your estate is comprised of all your assets, irrespective of where they are located around the world. However, managing a deceased estate across various jurisdictions if you only have a South African will is often complex, time consuming and expensive.
While not suitable for every individual or family, inter vivos trusts are often recommended for saving on estate duty, but there are other reasons, such as:
To protect your assets from creditors or relationship claims
To provide continuity in assets and revenue generated from these assets after death
To protect your assets if a beneficiary is a minor or is disable
It is essential that the form and governance of your trust is above reproach. To achieve this, it is necessary to conduct a legal audit every so often to ensure the trust stands scrutiny to the most recent laws and techniques.
The will operates as the trust deed guiding the terms of the trust in terms of identifying beneficiaries and under what circumstances they are to benefit or at what point the trust is to terminate.
The intention of a testamentary trust is not to ‘rule from the grave’ or too restrictive in respect of its control mechanisms. Circumstances where a testamentary trust would make sense include
Minor beneficiaries (under the age of 18), or beneficiaries who are of age but lack the necessary maturity or skill to take full responsibility of a sizeable inheritance.
This type of trust usually terminates when the individuals reach a certain age. Depending on the value of the inheritance, the beneficiaries may have access to capital and the termination may be staggered.
The disability of a beneficiary, whether physical or mental, may make it necessary for you to set up a trust to provide either partially or fully for the beneficiary’s maintenance and support for the duration of their life or the impediment.
Skipping a generation, or creating intergenerational wealth, to benefit grandchildren or a subsequent generation as the ultimate beneficiaries. This structure limits the access to the trust funds of the generation in between and avoids unnecessary estate duty. Factors like the age of the next generation and their current financial situation will be important in the decision to create an intervening trust.