A trust is an entity utilised for testamentary or business purposes.
Under South African law there are three main types of trusts, namely inter vivos trusts, testamentary trusts and non-discretionary trusts (bewind trust). Testamentary trusts are created when a deceased estate is being wound up and are structured as part of a person’s will. Testamentary trusts are usually created to hold assets on behalf of minor children or other heirs for a specific period of time.
Non-discretionary trusts (bewind trust) are created as trading vehicles. They provide trustees with limited liability and certain tax advantages.
Discretionary trusts are normally used as estate planning tools, to hold and protect growth assets. It is very important that a trust specialist should handle the drafting and registration of trusts, as there are numerous pitfalls that must be taken into account when setting up a trust.
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