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There are far-reaching financial and legal implications of setting up a trust.
13 January 2021 06:59
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If youâre considering setting up a living trust, bear in mind that it is an administratively intensive process that requires you to follow the strict procedures set out in terms of the Trust Property Control Act. Further, it is important to ensure that such a trust is appropriate for your estate planning needs and is fit for purpose, keeping in mind that there are far-reaching financial and legal implications of setting up a trust.
Identifying the purpose of the trust
A living trust can serve a number of purposes, so it is important to consider upfront what it is you wish to achieve by setting one up. An inter vivos trust can be used to protect or preserve an asset for the benefit of one or more beneficiaries over a period of time, such as in the case of a family farm that the trust founder wishes to protect for future generations. A trust can also be used by the founder to protect their personal assets from their business activities by transferring certain assets, such as the family home, into a trust to protect the asset from potential creditors.