Is Your Trust Compliant?
Anyone thinking of setting up a Trust needs to make sure that they are creating a valid legal structure and must also understand the nature of the Trust, the duties of the trustees, and the rights of beneficiaries.
Points to consider when setting up a Trust:
The founder/donor must be willing to relinquish direct control over assets transferred to the Trust. If not, the Trust may be regarded as a front (sham).
The Trust must be established in terms of a Trust Deed which reflects the parties (founder, trustees and beneficiaries) and their intentions. The Trust Deed may not be misleading to third parties about the true terms of the Trust, otherwise the Trust will be void and so will all the transactions with such Trust.
All decisions and actions taken by the trustees must be made with reference to the Trust Deed.
Trustees must act with the care, diligence and skill expected of them under the Trust Property Control Act No.57 of 1988 (TPCA) and failure to do so the court will hold the trustees personally liable.
There must be an independent trustee who is not a family member, not a beneficiary of the Trust and not the Trust’s accountant.
The beneficiaries must be clearly defined or ascertainable in the Trust Deed.
The trustees must have trust meetings every year and keep minutes of all trust meetings and resolutions and open a bank account for the Trust.
The Trust must be registered for tax.
Any changes of trustees or amendments to the Trust Deed or beneficiaries are only of legal force and effect once the original Letters of Authority have been amended by the Master to reflect that change.
For any queries or assistance regarding the above please contact Myers Attorneys on 011 346 2422 or firstname.lastname@example.org
You can also visit our website www.myersattorneys.co.za