by Tobias | 12.Jul.2016 | Trusts
Professional Trust Fund Assistance Could Help Safeguard your Family’s Future It is a sad fact that many of those who have done what they believe to be their very best in order to secure the future of their loved ones in the event of their death, often fail to achieve little more than providing their families with a temporary respite from the resulting financial pressures. Unless properly managed, the value of a cash legacy can soon be eroded as a result of inflation, taxation and various financial obligations, consequently leaving beneficiaries with far less than had been the intention of their deceased benefactor when drawing up his or her last will and testament. Even where the provision for an heir is quite substantial, there may still be problems, however. Without professional assistance to set up and administer an effective trust fund, where that heir is a young person with little experience of managing his or her finances, it is not uncommon for a sum that was intended to provide lifelong security, to be squandered within a year or two on expensive purchases for which any value is of a purely short-term nature. Managed professionally, however, that same cash bequest could have not only continued to provide financial help throughout the lifetime of a son, a daughter or a grandchild, but continued to do so for their children and grandchildren too. So, are there any other advantages to be gained if one should decide to establish a trust fund? And to whom should one turn for advice and assistance with the task of setting it up and managing it? In...
by Tobias | 06.May.2016 | Trusts
Trusts can Protect your Assets and Assist with Estate Planning A simple search of the dictionaries and online sources will quickly reveal that there are a variety of ways in which they define a trust. Unfortunately, most of these definitions are couched in legal terms that can present difficulties for the layman. Perhaps the simplest way to describe it is as a relationship in which an individual, referred to in legal terms as the trustor, allocates the right to manage his or her property and financial assets to a second party. This may be an individual or a group. Known as the trustees, the latter undertake to protect and manage these assets on behalf of one or more third parties chosen to be the trust’s beneficiaries. In essence, these are legal instruments that provide an effective means to protect various assets both during the lifespan and following the death of the trustor and could, for instance, be the means to ensure that a financial legacy is maintained and continues to provide its benefits throughout the life of the beneficiaries and perhaps even beyond. When a bequest is made without such a provision, there is a risk that it may fail to provide the benefits that the deceased intended. This is commonly the case with minor children and young adults who may simply perceive their inheritance as a windfall and have little experience of how to use it productively. Trusts guard against just this type of contingency and can be tailored to ensure that its proceeds provide the maximum benefits. For example, the trustees may be instructed to dispense a...
by Tobias | 11.Apr.2016 | Trusts
What Are the Main Benefits of Establishing a Trust Fund? Today, most South Africans, everywhere from Pretoria to Pofadder, are aware that estate duty, capital gains tax and the sundry costs that may arise from handling a deceased estate can severely erode the ultimate value of an inheritance. It can thus minimise the benefits that accrue to the intended beneficiaries. However, this is not the only reason why one should consider taking steps to protect it. In this respect, trust funds can prove to be the perfect instrument with which to protect those assets intended to help your loved ones, as well as making the entire process of planning your estate a safer and more efficient option than simply relying on a basic will. In principle, setting up a fund offers the individual a means to ensure that his or her beneficiaries will enjoy an ongoing income that is designed to provide them with long-term security. It is therefore preferable to willing them a capital lump sum which, unless managed with care, could prove to be of a relatively short-term benefit to the inheritors. Planned with care and depending upon the total value of the bequest, investing in a trust fund offer one the means to ensure a legacy that has the potential to endure for several generations. Death, unfortunately, follows no timetable and it is therefore essential to make early provision for the welfare of a spouse and particularly for one’s children. In the latter case, they are unlikely to have the experience to manage their inheritance effectively and it is in precisely this type of situation that...
by Tobias | 15.Feb.2016 | Trusts
Trust funds are legal instruments to enable the protection of assets and the continuity of a person’s financial legacy. To understand the working of a trust fund, let’s look at this scenario: John has worked hard over a period of 40 years and has built a rather comfortable hedge against financial risks. He knows he is getting older and since death is one risk he cannot escape forever, he wants to make sure that his loved ones are taken care of in the event of his death. Unfortunately, not all his children are financially responsible and may spend their heritage within a couple of months. He also fears that his grandchildren may end up with nothing if their parents make financial mistakes. So he visits a trust lawyer who helps him to set up a trust fund, which helps to protect the assets and ensures that the beneficiaries receive their income without ever being able to use the assets in the trust as collateral for debt, and in this way achieves his objective of ensuring that his loved ones are taken care of. Customisation of the Trust You can set certain conditions to be met before lump sums are payable, such as that the beneficiaries may only receive the particular funds when they turn a specific age. You can also set conditions for the trust of your estate to only pay out funds for education costs or to pay out monthly amounts. The trust fund is thus an excellent tool to ensure that the appointed beneficiaries receive ongoing income or can only use the funds for specific purposes. Once...
by Tobias | 09.Feb.2016 | Trusts
Only once you understand the full potential of trusts do you appreciate why, despite some disadvantages, trusts make excellent estate planning and asset protection instruments. Every trust is unique, even though it falls within a specific category, and the primary function is to protect the property or assets transferred to the trust. It can be established to protect the family’s assets or to ensure that your children will have adequate income if you are no longer around to take care of them. The trust must be set up to meet your specific requirements and this is where the expertise of trust lawyers is appreciated. The Advantages Protects assets after you have passed away. Can exist for an infinite period. Protects a beneficiary from their own financial behaviour such as inability to manage their money. Protects transferred property from creditors. No estate duty payable by the trustees and thus no winding-up fees. Tax benefit since the asset’s value in the trust increases within the trust and not in a person’s estate. Beneficiaries have continuity in their income or usage of an asset even if one of the beneficiaries passes away. The Disadvantages High initial setup cost. Transfer duty is payable when assets are transferred to the trust. Trustees can be held accountable for losses if they have not applied the necessary care in managing the assets. Assets don’t belong to the trust founder, but the trust. High tax rate on earnings from assets held in trust. Higher capital gains tax rate for inter vivos trusts in comparison with the tax rate for individuals. Setup and Governance The persons that establish...
