Setting up a trust? It’s not just a signature and a done deal.
Many South Africans assume that once a trust deed is signed, they’re covered for tax, estate duty, and asset protection. But if trustees don’t follow the rules, the trust may not hold up, and that could undo everything it was meant to protect.
Here’s what you need to know:
- A trust is not a legal person. It can only act through its appointed trustees.
- Follow the trust deed. Operating with too few trustees or outside the stated authority? The trust may be unable to act legally.
- Trustees can be held personally liable. Especially when they act in self-interest or breach fiduciary duties.
- Don’t ignore admin. Annual tax returns and financials must be kept up to date.
- Control vs. enjoyment must stay separate. A sole trustee can’t be the sole beneficiary.
Trusts remain valuable tools for protecting wealth if managed correctly. But missteps can cost you dearly.
Ensure your trust is set up and managed the right way.