16/03/2022
Family Trust
The creation of a family trust is a way in which you can protect your assets for the benefit of intended beneficiaries. It allows you, as the founder, to create a vehicle that is administered by Trustees and functions the way in which you intend it to both during your lifetime and after you die.
What is a Trust?
A “Trust” is created by way of a "notarial deed” . The Trust
i. Creates a legal institution represented by its Trustees in their official capacity
ii. Can sue and be sued in the name of the all of the Trustees in their official capacity
iii. Can acquire, own and dispose of assets through the Trustees in their official capacity
iv. Can exist in perpetuity subject to the conditions set out in the Deed of Trust.
What are Trustees?
The Trustees are administrators of the Trust. Their duties and powers are defined in the Deed of Trust.
Advantages of a Deed of Trust
• The assets owned by a Trust belong to the Trustees in their official capacity .
Neither a Trustee, Founder nor beneficiaries can personalize the assets of the Trust.
• The Trustees can buy assets in the name of the Trust and dispose of them.
Should an asset be purchased by the Trust and registered in its name, its disposal can only be done by the Trustees in their official capacity and not by an individual associated with it.
• The Trust is run for the benefit of its beneficiaries in accordance with the objects of the Trust
Where the beneficiaries are the Founder’s children and descendants, any income generated by the Trust is for their benefit. Should the Founder die or no longer be able to personally provide for the upkeep of the beneficiaries, the Trust can continue to do so undisturbed.
• A Trust is a means of ensuring that the interests of the beneficiaries are looked after during and after the Founder’s lifetime. One does not have to worry about their children’s financial wellbeing after their demise as the Trust will continue to exist and operate after the Founder’s death. The Trustees will continue to carry out their mandate per the Deed of Trust
• The Trust continues to run even after the death of one or more of its Trustees.
Even after the death of the Founder, a Trustee or Beneficiary, the Trust continues to exist. Deceased Trustees are replaced in terms of the Deed of Trust.
• Assets of a Trust do not form part of a Trustee’s or beneficiaries’ estate when they die.
Because the assets belong to the Trustees in their official capacity, the death of any individual associated with the Trust does not affect the assets.. At most, the deceased is replaced as a Trustee or beneficiary of the Trust in accordance with the Deed of Trust.
• Trust assets do not form part of the matrimonial property of the Founder or Trustees.
Any assets that form part of the Trust cannot be claimed.
• Assets are not affected by the financial demise of one or more of its Trustees.
Where a Trustee or beneficiary has a judgment entered against them, the Trust assets are not affected by the judgement as they do not belong to the individual.
Creditors cannot claim Trust assets in satisfaction of the debt.
Protection offered by a Trust.
By transferring ownership of their immovable property to a Trust, one protects themselves against the following common scenerios:
• Upon the death of one or both of their parents, the house in which the children of the deceased live is sold by relatives to the prejudice of the children,
• A woman buys a stand or house, registers it in the partner/husband’s name and the partner/husband proceeds to sell it without consulting the partner/wife to the prejudice of the family.
• A property is bought and registered in a relative or friend’s name in order to protect the asset from a philandering husband only for the trusted friend or relative to dispose of the asset without consulting the purchaser of the property.
• A parent purchases assets and registers them in their child’s name only for the child to dispose of the property despite the fact that the parent resides in said property.
It is thus advisable to set up a family Trust that states who the beneficiaries are, how they are to benefit from the Trust as well as how the Trust is to be run to the best advantage of the beneficiaries.
By Kudzai Pamela Kaseke