How Does A Trust Work In South Africa?

Is a trust a juristic person South Africa?

A trust is a legal entity which is created to hold assets for the benefit of certain persons or entities.

It is not a juristic (legal) person but there are times when, in terms of certain statutes, a trust is regarded as having a separate legal identity (for example for tax purposes in terms of the Income Tax Act)..

Can a Trust hold shares in a company in South Africa?

Trusts may be used to hold shares in businesses for asset protection and to ensure the continuity of ownership of assets. … The trustees are required to administer the trust, including any shares held by the trust in a company, solely for the benefit of the trust’s beneficiaries.

How much does it cost to set up a trust in South Africa?

Setting up a trust can cost between R4,000 and R12,000. Careful consideration must be given to the wording of the trust deed because you want to ensure that the trust is both tax effective, and also that your family will continue to benefit when you die.

How do I set up a trust in South Africa?

You must decide on the following before you can have a trust deed drafted by a professional trust practitioner:The name of the trust. … The type of trust. … The purpose or object of the trust. … The name of the founder. … The names of the proposed trustees. … Nomination of beneficiaries. … Trustees’ powers. … Administrative procedures.More items…•

What is a trust company in South Africa?

A business trust is defined as a trust where the trustee uses the trust assets to do business for profit in order to benefit the trust beneficiary or to further the aims of the trust. A trust may have no more than 20 trustees.

Should I put my house in a trust?

A trust will spare your loved ones from the probate process when you pass away. Putting your house in a trust will save your children or spouse from the hefty fee of probate costs, which can be up to 3% of your asset’s value. … Any high-dollar assets you own should be added to a trust, including: Patents and copyrights.

How many trustees must a trust have South Africa?

three trusteesTrustees. The Master requires trusts to have a minimum of three trustees with one of them preferably being an independent third party. Trustees must be trustworthy and honest individuals with high integrity and must always act with care, diligence and skill.

Which is better trust or company?

A company can control the assets of other entities, as long as it holds the majority stocks of those companies, and has majority voting rights. Whereas, a trust can only manage the assets in accordance with the trust deed terms. … Therefore, it retains only limited control of assets.

How does a trust fund work in South Africa?

A trust beneficiary is entitled to benefit under the trust arrangement, from vested or discretionary rights determined by the trust deed. Trust beneficiaries are usually natural persons, though a juristic person such as a company may also be the beneficiary of a trust.

What are the disadvantages of a trust?

Drawbacks of a Living TrustPaperwork. Setting up a living trust isn’t difficult or expensive, but it requires some paperwork. … Record Keeping. After a revocable living trust is created, little day-to-day record keeping is required. … Transfer Taxes. … Difficulty Refinancing Trust Property. … No Cutoff of Creditors’ Claims.

How is a trust taxed in South Africa?

A trust is taxed at 40%, but a special trust is taxed at a sliding scale from 18% to 40%. A Special ‘Type A Trust’ should apply at the SARS branch for classification as it qualifies for certain relief from Capital Gains Tax. … An income tax reference number must be filled for a Trust/Company that is a beneficary.

What is a trust in South African law?

South African trusts are also governed by the Income Tax Act, Estate Duty Act and common law. … A trust does not have a legal personality, because it is simply an accumulation of assets. Because of this, a trust cannot own property. Any property held in trust is held by the trustees in their capacity as trustees.