Trust Registration

What are the Trust Registration Advantages?

Asset Protection & Tax Advantages:

A trust’s assets are protected within the entity, thus they cannot be attached if you or a Trustee becomes insolvent. In most cases, you will also gain Tax Advantages within the Trust Structure.

Provide for you Family – but still keep your ‘hand on the wheel’:

Trust Registration protects the financial well-being of your dependents, whilst simplifying your estate administration when you are no longer able to do so yourself. Within the trust you can however spell out the rules.

1. To administer and protect assets that are reserved for beneficiaries.
2. The trust assets do not form part of your personal estate and are therefore not assets taken into account for the purpose of estate duty.
3. The assets in the trust are protected from creditors & possible effects should you become insolvent in your personal capacity.
4. There is continuity in a trust, the concept does not die. The trust assets are unaffected should one of the trustees pass away.
5. To manage & pay income benefits to beneficiaries (your dependents).

1. It is recommended that there should be at least 3 Trustees of which one acts as an independent Trustee, usually a professional like an Accountant, Attorney or Auditor.
2. The Trust may need Annual Financial statements compiled by a registered accountant or accounting officer. In addition tax returns would need to be filed to SARS.
3. Minutes or resolutions needs to be kept upon any decision made in a trust.
4. The trust would need a bank account to account for transactions by the trust.

1. The vesting or discretionary family trust: The founder and trustees agree to set up the trust, and the founder’s assets are sold or donated to the trust, creating a loan account. If assets are donated, the trust is subject to donation tax implications. The trust may also acquire other assets through purchase or inheritance.
2. The business trust: The private business trust can be a discretionary trust or a bewind structure, which means that the trust capital holds vesting rights. In this case, the business trust is used primarily to carry on a business with the intention of making a profit.
3. The charitable trust: Under the terms of the Income Tax Act, charitable trusts are not required to pay tax.
4. Special trusts: A special trust may only be set up to protect the interests of someone who is described in the Mental Illness Act 18 of 1973 as mentally ill or who has a serious physical deformity.

Where the trust itself is taxed, it is taxed at a flat rate of 45%. Special trusts are taxed on a sliding scale from 18% to 45% (same as natural persons). Top Tip: Trusts do not qualify for any of the rebates provided for in Section 6 of the Income Tax Act.