I don't agree with this .......Our mother can't be a donor and trustee at the same time
I don't agree with this .......Our mother can't be a donor and trustee at the same time
Agree with HR, but I also see another problem, there is no independent Trustee!
The master of the court can see this as a family affair/business, and the Trust will lose all its protection.
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Donors can't be trustees, thats how trusts work otherwise its simply an alter ego, its not a matter of whether you agree or not its simply how it works.
Regarding the independent trustee, we had one (a specialist CFP), but he resigned due to insurance issues with his new company and we have since not been able to replace him. We're trying our best here.
A donor can be a trustee. The issue arises when the donor is the only trustee.
Ok I might be mistaken about the trustee/donor issue.
Can we move back to the estate duty question?
So basically I'm just trying to verify the crux of this issue, if you die and a company owes you money in an unsecured loan and your will says the loan is to bequethed back to the company and the directors of that company are responsible for estate duty and other costs, is this a possible scenario or will there be another outcome?
That is the answer. If your mother is the donor AND a Trustee then there is nothing to tie up with regards to the company and the loan. The Trust or the Company will/can just take over the loan/money if a resolution is written about it. The money "owed" does then not have to be paid back. So being a Trustee and the donor might just be your answerCan we move back to the estate duty question?
Totally correctA donor can be a trustee. The issue arises when the donor is the only trustee.
Also correct ..... normally it is an independent lawyerthere is no independent Trustee
Its not a matter of whether I agree or not - it is not the way it worksDonors can't be trustees, thats how trusts work otherwise its simply an alter ego, its not a matter of whether you agree or not its simply how it works.
Ok but if my mother donates the money to the trust then a donations tax will be due immediately as opposed to an estate duty when she dies correct? I don't see any scenario here where SARS doesn't get their cut of that money, it's just a matter of timing.
Basically yes, but it will be better to do a full reconciliation of which option will be the best.
It is not going to help a lot, based on the amounts you are talking about, but remember that for individuals there is a donation exemption of R100 000 per year. This could be used to lower the loan amount
I think you should consult a proper Trust lawyer - you will find a lot of your questions answered and perhaps will find a solution to your problem.
Basment Dweller (18-Aug-16)
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