SA Trusts backround

Question 1

Estate Freezing

Answer 1

Sell growth assets to a trust, any increase in value of those assets will be excluded from CGT that can arise on death and will also be excluded from a client’s dutiable estate for estate duty purposes.

Question 2

Benefits arising from the use of a trust

Answer 2

1. Assets protection
2. Estate Freezing
3. Many people can’t manage their own affairs, trustees can manage and control assets for the benefit of the beneficiaries.
4. Beneficiaries can get certian rights in a trust.
5. Trading trust can be used to carry on some trade or business
6. Future generations can be protected.
7. Co-habitaition trust can be used to provide rights for people who are not married but live together.

Question 3

Definition of trust

Answer 3

Legal relationship which has been created by a person(founder) through placing assets under the control of another person or persons(trustees), during the founders lifetime(inter vivos trust) or founder’s death(testamentary trust), for the beefit of third persons(beneficiaries).

Question 4

The parties to a trust

Answer 4

1. Founder- person who forms the trust
2. Trustees- responsible for the administration
3. Beneficiaries- person who benefits under the terms of the trust deed.

Question 5

Types of trusts is based on:

Answer 5

1. whether the founder is alive or dead
2. the rights of the beneficiaries and owners of the trust property
3. where the trust is formed