Trust tax question

[CLIVE-TRIANGLE]

So, lets take this example.

I have some assets that I want to protect in a trust.

Will I be a beneficiary to the trust? and will the e.g. attorney be the trustee?

If this is the case how am I still the owner of the assets? as the trustee is the main controller of the assets correct?

As a minimum you would have an independent trustee, plus two (frequently husband and wife).
Husband and wife and children are the beneficiaries.
The trustees manage the assets (and business) of the trust strictly and solely for the benefit of trustees.
(The last line is where most trusts fail..)

Follow JustLoadit's advice.

It is basically correct that the assets of a trust cannot be attached by a creditor of a beneficiary. However be aware that the income that accrues to a beneficiary from the assets can be attached. As an example, if the trust owns property that it lets and beneficiary A is in trouble, the creditor can claim that beneficiary's share of that income. Similarly, if the asset is sold by the trust, the distribution to A can be attached.

There are other considerations also, and to my mind the most critical are:
- the location of the independent trustee
- ensuring continuity - who will replace a deceased trustee?

[CLIVE-TRIANGLE]

If you have property that you wish to transfer to a trust (or a company for that matter) would you pay transfer duty on it?

If it would normally attract duty, then yes.
Also bear in mind the donations tax issue.

[Imp]

Thanks guys very helpful info.

[Basment Dweller]

I am currently setting up a family trust and I am receiving conflicting advice about whether to appoint one to our board.

One side say that the independent trustee is important to keep the trust impartial and not a sham or alter ego.

The other side claims the the independent trustee is a big pain in the ass and can hinder the business process as he has to validate trust decisions.

Do any of you guys have experience with independent trustees?

[Justloadit]

The whole point of a trust is to maintain integrity of assets, with out an independent trustee, this will be seen as you simply trading using the trust as a vehicle, and by so doing it means that the trust no longer offers the protection it is meant to have.
The whole point of an independent trustee is to ensure that all decisions made by the trustees follow the original mandate set up in the trust, and to protect the beneficiaries of the trust, and are not there to satisfy one of the trustees or all of the trustee.
Any trust which does not have an independent trustee will be seen as any other type of business structure.

I would think that a trust would need a minimum of 2 trustees, one of them being the independant.

I suggest that you contact an attorney who specializes in this field, to make sure that the trust is set up to protect what the original intention was for. There are 2 that I know of in Johannesburg, Rob Velosa and Bizfin, both in Randburg.

[Houses4Rent]

Justloadit is spot on.

If the trustees do all things correctly the independent trustee won't find any reason to object to anything and will approve all decisions.

if however the independent trustee is a problem for any reason simply fire him/her and appoint a new one.

A good/competent independent trustee is not only required, but also worth something as he/she would stop you to do something illegal/against the mandate of the trust.

I use the Cape Town part of DVK (the V is for Velosa)

[Basment Dweller]

Thanks this is a very informative thread for me, I am currently talking to a guy called Ian Van Greunen from a company called Consolidated also in Randburg, every heard of them?

Another question, what kind of service does Rob Velosa provide as an independent trustee? Does he help you with your financials, provide advice, facilitate meetings etc?

[Justloadit]

Yep Rob and Bizfin provide everything, from minutes to financials, all mater related to Trusts. This is the reason that I recommend that you get involved with a company who only deals in Trust issues, they can get complex. Any lawyer can set up a Trust, but like anything in life, get the expert when dealing in this space.

[Houses4Rent]

To my knowledge the functions of an Independent Trustee and Trust accountancy are 2 separate matters. They can be together, but do not have too. I have them with 2 separate parties to keep it more "at arms length" and other reasons.