Online Reporter
Miriam Tose Majome
Correspondent
It is important for everyone to remember that they will die one day — sooner or later — and they should, therefore, make plans for how their hard-earned property will be distributed when they are no longer there.
There are options, such as writing wills, registering trusts or companies, or donating assets while they still can.
Today we focus on trusts.
However, it must be emphasised that trusts are not for every family, because they can create more problems than they are supposed to fix.
Say a couple acquires a modest suburban house, for example. They also establish a small family business, which helps them raise and educate their four children. In time, they both die and leave the property and business to their now grown-up children.
They do not leave wills, but leave only the very best intentions and the kind of blind faith that only parents can have in their children.
They believe that all will be well and that their children will continue to be united and take care of the property and business, sharing the profits and losses equally.
However, it takes the death of a parent or both of them to realise that it was the parents who were the glue which held the siblings together.
The death of parents, more often than not, tears families apart and brings out hitherto unknown or the worst traits in siblings. Before long, the adult children are quibbling like spiteful toddlers over the assets and bills; mauling each other over responsibilities.
Each child is only interested in their share of the inheritance. Some expect to continue living in the house for free, because it belonged to their parents without a thought about the maintenance costs.
They forget that they can only enjoy it because some other child is fixing the gutters and paying the municipal rates. Before long, things break down so much that they decide the best way is to sell their parents’ assets, share the proceeds and go their separate ways.
This is not what their parents envisaged of course, but it is inevitable because of the lack of estate planning. The Administration of Estates Act provides a guide to administering estates if there is no will.
However, it can be messy and not what the deceased intended for their property. Without proper planning, the State will decide for you what to do with your assets when you are no longer there.
A trust
A trust is an arrangement to protect property or certain other interests for the benefit of third parties. The trust property is administered for achieving the objectives the trust is set up for.
There are as many types of trusts as there are reasons for establishing them, such as providing education and support for the founder’s children or for charitable or developmental objectives.
Some are set up to protect vulnerable members of society, animals or the environment. They can be small, like family trusts, or immense trusts that span time and international space, such as the Rhodes Trust or Beit Trust.
Family trusts are gaining popularity among property owners in Zimbabwe, because they are realising the need to protect wealth for current and future family members, ensuring intergenerational wealth transfer and stability.
Setting up a trust: The role of the notary
Trusts offer an additional layer of security and flexibility together with wills.
Establishing a trust is a legal process that requires precision and thoughtfulness. It is highly advisable to consult with a legal practitioner who is also a qualified notary. A notary public is a public officer, authorised by the High Court, specifically empowered to draft, attest, and authenticate contracts and other crucial legal documents.
While the drafting of a trust document can technically be done by anyone with legal knowledge, only qualified lawyers can practice as notaries and appear at the Deeds Office to facilitate the official registration of the trust.
The notary’s expertise is invaluable in ensuring the trust document is legally sound and effectively reflects the founder’s intentions. They will provide guidance on the essential clauses, including the trust’s objectives, the powers and responsibilities of the trustees, and the specific terms for their appointment and discharge.
This foundational document, known as a Deed of Trust, may be officially registered in the Deeds Registry Office. Trustees are appointed to manage its affairs, and the trust founder can also serve as a trustee. Trusts can be established during the lifetime of the founder or death through a will.
Benefits of a trust
In brief, trusts secure assets from unforeseen circumstances, such as creditors, or from being sold by beneficiaries. Only trustees can jointly make decisions for the trust.
They are also cost-effective because the initial registration is fairly reasonable, and is a once off cost. Trusts also provide tax efficiency, for they benefit from certain tax exemptions and concessions when disposing of assets.
Most importantly, a trust is a separate legal entity, so it means trust property is separated from personal property.
Termination of a trust
The Deed of Trust will provide for the circumstances under which the trust can be terminated or be wound up. Trusts are usually dissolved when the specific objectives for which they were established have been achieved. For example, if a trust was set up solely for the education of certain children, it will terminate upon fulfilment of that objective.
A trust can also be terminated by mutual agreement if the founder, trustees, and beneficiaries agree. They can also be terminated by court order, usually if there are disputes or if the trust’s purpose has become impossible or impractical to fulfil.
Miriam Tose Majome is a lawyer and a Commissioner with the Zimbabwe Media Commission. She writes in her personal capacity and can be contacted on [email protected]
