Trust Administration
A trust is a separate entity from an individual and is able to own property and other assets. A trust comes into being through an agreement between the founder and the trustees defining how assets are going to be managed and distributed.
There are two kinds of trusts:
Inter -vivos Trust
An inter- vivos trust is created between living persons and have the following benefits:
Tax savings – assets can be transferred to/bought directly by the trust thereby limiting the growth of the asset value of the individual’s estate. The assets will then no longer be in the name of the individual and no estate duty will be payable, on the assets in the trust, upon the death of the individual. Income, received by the trust, can be distributed to beneficiaries, thereby limiting income tax liability.
Protection of assets – Should an individual be declared insolvent, assets held by the trust will not form part of the insolvent estate.
Testamentary Trust
Testamentary trusts are created at the winding up of a deceased estate following a specific stipulation in the deceased person’s will that a trust must be set up. Testamentary trusts are usually created to hold assets on behalf of minor children, thereby preventing the inheritance of minor children from being paid to the Guardian’s fund.