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MTHEMBU & CO ATTORNEYS
Practice Area
Establishing and administering trusts for asset protection and estate planning.
A trust is a legal arrangement in which assets are held and managed by trustees for the benefit of specified beneficiaries. Trusts are widely used in South Africa for estate planning, asset protection, and tax structuring purposes. They are governed by the Trust Property Control Act 57 of 1988.
P A Mthembu Attorneys assists clients with the establishment of inter vivos (living) trusts and testamentary trusts, the drafting and registration of trust deeds, and ongoing trust administration and compliance. The firm also advises on the amendment of trust deeds, the appointment and removal of trustees, and the winding up of trusts.
The legal landscape governing trusts has evolved significantly, with increased regulatory scrutiny and changes to the tax treatment of trusts. The firm stays current with these developments to ensure that clients' trust structures remain compliant and effective.
Trusts are not appropriate for every situation. The firm takes an objective approach, advising clients on whether a trust is the right vehicle for their needs and, if so, what type of trust best suits their objectives.
What is the difference between an inter vivos trust and a testamentary trust?
An inter vivos trust is created during the founder's lifetime. A testamentary trust is created through a will and only comes into existence upon the founder's death. Each has different uses and tax implications.
Do I lose ownership of assets placed in a trust?
Yes. When assets are transferred to a trust, they become trust property and are owned by the trust, not by the founder or the beneficiaries. This is a fundamental principle of trust law and has important implications for control and taxation.
How are trusts taxed?
Trusts are taxed at a flat rate of 45% on retained income (compared to the progressive rates applicable to individuals). However, where income is distributed to beneficiaries, it may be taxed in the beneficiary's hands at their marginal rate. The conduit principle and anti-avoidance provisions add complexity to trust taxation.
Whether you need representation or want to understand your options, get in touch.
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