Careful planning and drafting of documents and contracts can affect a person’s ability to create and sustain hard earned prosperity.
In South Africa, there are basically three types of trusts. These are:
- Living trusts (in South Africa called inter vivos trusts),
- Testamentary trust (stipulation in a will) for the benefit of the testator’s heirs
- Testamentary trusts and
- Bewind trusts
Testamentary Trusts are created at the winding up of a deceased estate following a specific stipulation in the deceased per-son's will that a trust must be set up. Testamentary trusts are usually created to hold assets on behalf of minor children, since minor children cannot in terms of South African law inherit anything (in the absence of a trust, assets from the deceased estate left to minor children are sold, and the money is paid to them when they reach adulthood).
Bewind Trusts are created as trading vehicles providing trustees with limited liability and certain tax advantages.
There are two types of living trusts in South Africa, namely vested trusts and discretionary trusts. In vested trusts, the benefits of the beneficiaries are set out in the trust deed, whereas in discretionary trusts the trustees have full discretion at all times about how much each beneficiary is to benefit.