THE ADVANTAGES AND DISADVANTAGES OF TRUSTS
Category General News
THE ADVANTAGES AND DISADVANTAGES OF TRUSTS
Posted on May 22, 2017 by Visagie Vos
Trusts have various advantages, but unfortunately, there are also disadvantages. Although this is not a complete synopsis of all the pros and cons, it gives a general overview of what’s involved.
Advantages:
Growth taking place in the Trust assets settles in the Trust and not in your personal estate.
By selling the assets to the Trust, the amount owed to you by the Trust will remain outstanding on the loan account and shall be regarded as an asset to your estate.
A Trust offers protection against problems should you become mentally incompetent.
A Trust remains confidential as opposed to documents like wills and records of deceased estates which are public documents and therefore open for inspection.
A Trust can offer financial protection to disabled dependents, children or beneficiaries with special needs.
A Trust can evade the administrative costs of consecutive estates by making provision for consecutive beneficiaries.
A Trust can lighten the emotional stress on your family when you die because the Trust will continue without any of the formalities that are required from a deceased estate.
By choosing your Trustees well you can ensure professional asset and investment management.
The Trust will enable you to have a degree of control over the assets in the Trust after your death, via the Trustees.
After your death and before the estate has been settled the Trust can provide a source of income for your dependent(s).
You will prevent your minor child’s inheritance from being transferred to the Guardian’s Fund.
You will avoid the problem of trying to distribute assets equally among the heirs.
Levels of income may be varied according to the changing needs of the beneficiaries at the discretion of the Trustees.
Due to the assets remaining the property of the Trust and not the beneficiaries it need not be included in people’s estates as part of their assets when they die, which effects a saving in Estate duty.
The Trust assets will be protected from creditors for the same reason.
Disadvantages:
You don’t have full control of your assets, as the other Trustees also have a say in the matter.
A Trust is registered and the authorities can gain access to it.
You could possible choose the wrong Trustees. You could expect problems if the Trustees are vying heirs. This shows how important it is to have at least one independent Trustee.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Author: Welgedacht Properties
