Online Reporter
Trust Maanda
Legal Position
WE previously discussed estate planning. One of the ways to safeguard your assets for the benefit of your beneficiaries after you die is by way of setting up a family trust.
A trust is a means by which you can ensure that your assets will remain in existence for the use, and benefit of your family, and other beneficiaries without these beneficiaries owning them.
A trust is a legal relationship that is created by a trust deed which is a document that lawyers draft for you and lodge it in the Deeds Registry.
A trust therefore comes into existence through registration just as a company comes into existence.
A trust is a legal relationship of parties which usually involve the founder, trustees and beneficiaries.
The relationship is created by the founder who places assets under the control and administration of the trust for the benefit of named persons who are known as beneficiaries. A trust is created by a trust deed.
It is formed by a founder or settlor into which he or she transfers his or her assets for the benefit of their intended beneficiaries.
In the trust you include other trustees. The trustees will hold and administer the assets of the trust in the interest of the beneficiaries of the trust. In the trust will be names of the persons you chose as your beneficiaries.
While the trustees control the property and assets of the trust, they do not have any beneficial interest in the trust property.
They hold the property in trust, and apply it for the benefit of beneficiaries, and for accomplishment of the specific aims and objectives of the trust.
The characteristic of a trust is that it separates legal ownership and beneficial interest.
The trustees become the owners of the trust property as far as third parties are concerned and the beneficiaries have a legal expectation that the trustees will manage the trust property for their benefit.
A trust deed must contain certain information in order for a trust to be registered. These essential elements for the creation of a valid trust are provided for in a statue that regulates registration of trusts.
The trust deed must contain an intention to create a trust.
The trust must express its intention in a way that creates an obligation. It must state object or purpose of the trust which is lawful. The trust deed must properly define the trust in clear and certain terms.
There are several advantages of having assets in a family trust.
A trust vests property in the trustees, and this means that the assets are protected from your personal creditors since the assets will not be personally owned by the settlor or trustee or beneficiaries.
A trust is a separate vehicle from the individuals that form the trust. As the assets held by the trust will not be owned by the trustees or the beneficiaries, the trustees’ or these beneficiaries’ creditors will have no legal claim against the trust except on exceptional grounds.
A trust is capable of perpetual succession, meaning trustees can always be appointed to the trust and beneficiaries will remain benefitting from it. When any trustee dies, the trust and any assets owned by it, remain in the name of the trust.
A trust, as opposed to administration of a deceased estate, provides better confidentiality and privacy in respect of an individual’s affairs.
The Master’s Office is a public office. It is an office of record and any member of the public can request to inspect the file in which an estate of the deceased is administered.
The accounts lay for inspection. The account is published in the public newspaper. Creditors are invited to lodge their claims. With a trust, there is no public scrutiny on the assets that the beneficiaries enjoy, With a deceased estate there is potential for litigation.
Any interested person can object to the appointment of the executor, can apply for an executor’s removal, challenge the manner in which the administration is handled or the distribution plan, among a host of other challenges that can be made.
Where a will exists, interested parties may contest the will on any legal grounds including its validity.
Litigation can be time consuming and costly. This is not so with a trust. It
has very little scope for litigation although trustees can litigate against
themselves to enforce the objectives of the trust or their obligations in terms of it.
The law imposes a number of responsibilities upon trustees, including the duty to maintain an appropriate level of skill and prudence when carrying out their duties and exercising the powers conferred upon them by the trust deed and applicable law.
Registering a trust is done through lawyers. It is one of the ways to safeguard your estate.
Trust Maanda is a legal practitioner and a partner at Maunga
Maanda And Associates. He writes in his personal capacity. He can be contacted on +263772432646 or [email protected].
