A Trust is a contractual agreement whereby a Founder and Trustees hold property as its nominal owner to the benefit of one or more beneficiaries.
When considering setting up a Trust, be mindful of maintaining a valid legal structure. Understanding the nature of the Trust, beneficiary rights and trustee duties are crucial. Basically, setting up a Trust is complicated and you need to involve a professional to assist you. In this blog we go into detail on how to register a trust in South Africa.
Choose a Trust
There are many options you can choose from when it comes to setting up a trust in South Africa (Family Trusts, Charitable Trusts and Umbrella Trusts etc.).
A Trust can either be a Living Trust or a Testamentary Trust. The biggest difference between the two is that Living Trusts (Inter Vivos Trusts) are created and handled within the creator’s lifespan. Testamentary Trusts, on the other hand, are created according to the instructions in a person’s Last Will and Testament and go into effect after the death of the testator. Most people prefer a Living Trust to prevent their beneficiaries from going to court.
Living Trusts can be subdivided into Discretionary and Vested Trusts. Discretionary Trusts entail trustees having in their absolute discretion the right on deciding how the income and capital of the Trust is awarded to each beneficiary, whereas in a Vested Trust, the trustee do not have absolute discretion. Living Trusts can also be revocable or irrevocable.
A revocable Trust is one that you can completely cancel or amend and you can even remove specific assets within the trust. An irrevocable Trust cannot be amended meaning, assets in the Trust belong to the Trust and you won’t have access to them. It is general better to choose a revocable Trust.
Establish your chosen Trust
This requires you to state your beneficiaries, trustees as well as fund the trust.
Beneficiaries are the people who receive the assets from the Trust. You can be a beneficiary if you are choosing to set up a revocable Living Trust. It is vital that you clearly describe your beneficiaries in the Trust deed and identify them (by name) or make them identifiable (such as your children).
A trustee is someone who is appointed to manage the Trust and act in the best interest of the beneficiaries. Although you will want to be the sole trustee of a Trust,, an additional trustee needs to be nominated. You need to clearly stipulate the boundaries of the trustees’ powers, obligations and competencies. A clear description of the trustees’ discretionary powers, other duties and their remuneration also need to be clearly specified in the Trust deed.
Funding the Trust means that you actually need to transfer assets into the Trust in order to benefit from it, this is not a “cheap” process.. All assets that are transferred to the trust will have to be registered in the name of the trustees in esse.
Supporting Documents
To register a Trust, the following documents need to be presented to the Master of the High Court in the relevant provincial jurisdiction in terms of the requirements stipulated in the Trust Property Control Act:
- A cover letter to the Master of the High Court
- Trust Registration and Amendment form (J401)
- Two original signed trust deeds
- Proof of payment of the Master of the High Court’s fee
- Master of the High Court’s Annexure B form for the fee
- Acceptances of trusteeship by trustee (J417) by each of the trustees, as well as a summary of the nominated trustees’ qualifications and their experience in Trust management. The Master of the High Court must be convinced regarding the trustees’ competency in discharging their duties. If the Master of the High Court is not convinced, they may call for the trustees to put up security, and can insist that the trust be audited.
- A declaration by trustees
- A sworn affidavit signed by the independent trustee
- A certified copy of the Identity Document of each of the trustees
- Beneficiaries Declaration (J450)
- An undertaking by the auditor/accountant (J405) to administer the accounting records of the trust in accordance with generally accepted accounting practice
De-registration of a trust
The Master can only de-register the trust after termination thereof. The common law comes into effect as the Trust Property Control Act does not make provision for it.
The following documents are needed for the termination of a Trust:
- A resolution by Trustees confirming the desire to terminate the Trust
- The original letter of authority;
- The closing bank statement reflecting a nil balance;
- Proof that the beneficiaries have received their benefits
Once the Master acknowledges and approves your submission, you will need to visit the closest SARS office for the deregistration of the Trust Tax number.
The following documentation will be required by SARS:
- A resolution by Trustees confirming the desire to terminate the Trust
- A copy of the letter of authority;
- The closing bank statement reflecting a nil balance;
- Proof that the beneficiaries have received their benefits
- Copy of the last Annual Financial Statements, reflecting zero assets and zero loan accounts, with the IT34A assessment.
Advantages of Registering a Trust
Some advantages of registering a Trust besides the apparent advantages of having your assets and family protected, include: Reduced estate taxes and protection from creditors who might want to seize assets due to insolvency or debt. Now you know how to register a trust in South Africa.
Now Read: Bear in mind how beneficiaries are defined in the trust deed
People also ask
How much does it cost to register a Trust in South Africa?
The cost of setting up a Trust, drafting a Trust deed and finally registering it in South Africa can total anywhere between as little as R7000 to R20 000. A registration fee of R250 is payable to the e Master of the High Court.
Do trusts register with the CIPC?
No, Trusts are not registered with CIPC, but with the Master of the High Court.
What assets can be registered to the trust? Can cars and other movable assets be put in the trust?
How are the amount to register a trust calculated. And how long does it take to register a trust. Please advise. Thank you
Who can assist with this process is it possible to do it as an individual or the relevant people with expertise in this regard?
Hi
My family matters are in disarray…so much so that I’ve become dysfunctional with no income since COVID.
I’d like to protect my assets for my kids when I’m unable to, I’m keen to open a living trust…how best can you help me?
Call me 0847266392
Can I draw money from a trust on a monthly basis
I need help setting up a trust account
I need to know if we can register our family home as a trust so that all the descendants from my family benefit and the house is not owned by a particular person but for all until eternity
Thank you for your enquiry via the Crest Trust website, which I’m sure you found very informative.
On the question whether you can register your family home as a trust, the answer in short, is no.
The house will currently probably be registered in the name of a natural person. For the house to be transferred to a trust, you will first need to register a trust with the Master of the High Court. The family member will be the beneficiaries of the trust.
Once this is done, the current owner of the house has to dispose of the house to the trust. This can be done in any of the following three ways:
– The house must be sold to the house. As the trust does not currently have any funds, the trust will owe the purchase price to the owner (seller) on a loan account and the loan account will still be part of his/her estate. If the value of the house is worth more than R1 000 000 there will be transfer duty and conveyancing costs payable.
– The house can be donated to the trust, in which case transfer duty, conveyancing costs, as well as donations tax of 20% of the value of the property will be payable by the owner/seller.
– The house can be bequeathed to the trust in the Will of the current owner. The house will only be transferred to the trust on the death of the owner. No transfer duty, or donations tax, is payable and only ‘n very small amount of conveyancing cost will be payable.
The last option is obviously the cheapest way of disposing of the house to a trust.
I trust this will answer your question.
hi
is it for personal trust or companies trust you need informations on?
you can email me danielpotgieter@icloud.com
Hello Daniel
The amendments as per the FIC response to the amended Schedule 1 of the FIC Act contained in PCC 6A are applicable to all trusts (excluding testamentary and other vested trusts) as well as to all companies. There are no company trusts.
So, the FIC act is applicable to all trusts, excluding the following trusts:
– Testamentary Trusts
– Trusts created by a court order.
– Trusts created for a person under curatorship; and
– Trusts created by the Trustees of a retirement fund in respect of benefits payable to the beneficiaries of that retirement fund.
I trust that this answers your question.
Vriendelike groete / Kind regards
This is good I will like to know I bout the money how much am going to pay on this trust how it works pay once off or
Good day
I want to register a trust for the purpose of getting an NPO
What is the minimum number of trustees required for intervivos trust
What are the requirements of registering a Trust for a choir, or as a choir? Indigenous kind.
IT trust set up
Hi, what, if any, will a previously disadvantaged Community gain to set up a Communal trust? How feasible is it, and what number of persons can be included in such Community Trust?
I would like to know what is needed for me to open a family trust and who should I contact
Hi Teresa,
Thank you for your enquiry. One of our professionals have contacted you.
Hi how does one start a family trust fund and what are the benefit of a trust, how many trustees can be put on a trust and how much it is to start a trust
Hello. Do you pay once off or are you also billed monthly ?
Please contact me as I’m interested.
Goeiedag
Watter dokumentasie/bewyse moet aan die stigter van die trust gegee word vir sy kennissname en versekering dat die trust wel bestaan? Volgens die makelaar wat my pa se testament opgestel het, en volgens die testament is daar ‘n trust waarvan my ma die begunstigde is. Ek bevraagteken die bestaan van die trust aangesien my pa gee bewyse daarvan het nie. My pa het dit aangevra by die makelaar, wat nou sê dat die trust ontbind is toe my ma in Februarie oorlede is. Daar moet dan tog dokument wees wat dit staaf?