TRUSTS still remain a very useful estate planning tool if set and managed properly, an expert has advised.
H Glacier Fiduciary head Tanya Cohen says the unique feature of a trust is the separation of legal and beneficial ownership.
"This means that different legal personnel hold the legal obligation to manage assets to those who are entitled to benefit from the assets.
"It is this unique feature that many financial intermediaries and their clients overlook, but which gives rise to the benefits that can facilitate a client's estate planning and succession wishes," Cohen says
She says many clients and advisers focus only on the estate duty savings achieved by transferring growth assets to a trust. She says the trust has significant no-tax benefits.
"The trust's assets are protected from creditors of the settler, the trustees and the beneficiaries, as well as the administrative procedures (freezing of account and so on) and costs such as executor's fees, incurred at death," she says.
Cohen says a discretionary trust caters for flexibility in a way that no other legal entity can.
"Trustees decide what and how much to distribute to beneficiaries, depending on changes in both the legislative environment and in the beneficiaries' circumstances."
Trust assets, Cohen says, can be vested in a beneficiary or applied for his benefit, without being distributed to him.
She says whereas the details of the deceased's estate appear in the liquidation and distribution account, which is filed at the master's office, a trust's financial affairs are never made publicly available.
Cohen advises that people need to ensure that they are advised in relation to the ongoing management and taxation of the trust.
"We frequently see clients who have set up trusts and never transferred assets to them, or whose deeds are defective, or who do not benefit from the the tax advantages, simply because they do not know how to."
Cohen advises people to use specialists to draft trusts to avoid disappointments.
"We have seen trust deeds that do not provide for adopted children, or default beneficiaries, or that grant trustees impermissible powers," says Cohen.
Trusts still vital tool in estate planning and management
TRUSTS still remain a very useful estate planning tool if set and managed properly, an expert has advised.
H Glacier Fiduciary head Tanya Cohen says the unique feature of a trust is the separation of legal and beneficial ownership.
"This means that different legal personnel hold the legal obligation to manage assets to those who are entitled to benefit from the assets.
"It is this unique feature that many financial intermediaries and their clients overlook, but which gives rise to the benefits that can facilitate a client's estate planning and succession wishes," Cohen says
She says many clients and advisers focus only on the estate duty savings achieved by transferring growth assets to a trust. She says the trust has significant no-tax benefits.
"The trust's assets are protected from creditors of the settler, the trustees and the beneficiaries, as well as the administrative procedures (freezing of account and so on) and costs such as executor's fees, incurred at death," she says.
Cohen says a discretionary trust caters for flexibility in a way that no other legal entity can.
"Trustees decide what and how much to distribute to beneficiaries, depending on changes in both the legislative environment and in the beneficiaries' circumstances."
Trust assets, Cohen says, can be vested in a beneficiary or applied for his benefit, without being distributed to him.
She says whereas the details of the deceased's estate appear in the liquidation and distribution account, which is filed at the master's office, a trust's financial affairs are never made publicly available.
Cohen advises that people need to ensure that they are advised in relation to the ongoing management and taxation of the trust.
"We frequently see clients who have set up trusts and never transferred assets to them, or whose deeds are defective, or who do not benefit from the the tax advantages, simply because they do not know how to."
Cohen advises people to use specialists to draft trusts to avoid disappointments.
"We have seen trust deeds that do not provide for adopted children, or default beneficiaries, or that grant trustees impermissible powers," says Cohen.
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