Using a trust in your Will

Different types of Trusts

Types of trusts Inter Vivo Trust

Inter Vivos Trusts are often recommended for saving on estate duty, but there are other reasons

Types of trusts Testamentary Trust

The intention of a Testamentary Trust is not to ‘rule from the grave’ or be too restrictive in respect of its control mechanisms

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

Important

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.

Testamentory Trust

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.

Speak to a qualified financial advisor to learn more

Here are your 5 simple steps to a lasting legacy:

01. When to review your legacy plan and update your will

Changing circumstances may dictate the need to change your will or update your estate planning. Here are examples of life events when you may consider reviewing – and/or changing – yours.

02. Plan an effective Will

The heart of an estate plan is determining what will happen to your property if you become incapacitated or when you pass away.

03. Prepare to create/update your Will

Having a professional will prepared is an important part of your legacy planning. It is an important legal document that has a significant impact on how your family, or those dearest to and dependent on you, live after you die.

04. Other types of Wills

Understanding the differences between Living Wills and Offshore Wills is critically important to motivate the right decision for you and your family.

05. Using a Trust in planning your legacy

Inter Vivos or Testamentory Trusts – what are they and how do they influence the planning of your Will?

01. Time

01. When to review your legacy plan and update your will

Changing circumstances may dictate the need to change your will or update your estate planning. Here are examples of life events when you may consider reviewing – and/or changing – yours.

02. Plan

02. Plan an effective Will

The heart of an estate plan is determining what will happen to your property if you become incapacitated or when you pass away.

03. Prepare

03. Prepare to create/update your Will

Having a professional will prepared is an important part of your legacy planning. It is an important legal document that has a significant impact on how your family, or those dearest to and dependent on you, live after you die.

04. Types

04. Other types of Wills

Understanding the differences between Living Wills and Offshore Wills is critically important to motivate the right decision for you and your family.

05. Trusts

05. Using a Trust in planning your legacy

Inter Vivos or Testamentory Trusts – what are they and how do they influence the planning of your Will?

The Lasting Gift Guide to Estate and Financial Planning

The Lasting Gift Guide to Estate and Financial Planning is designed to help you understand the impact of what you leave behind, what you choose to give away, and all the complexities surrounding them.

Ecsponent Wills Guide