WILL YOUR TRUST STAND UP TO SCRUTINY?

There are many benefits of having a family Trust, but most importantly they provide protection of assets from creditors, a shield from Estate Duty and control over preservation of the assets into the future.

In order to ensure that these benefits are intact and maintained it is important to ensure that the administrative and authoritative requirements have been met. These requirements establish the Trust as an independent entity, at arm’s length, with the founder.

Should the administrative and authoritative requirements not be complied with, the Trust could be set aside as a “sham”, thereby negating the intended benefits.

The requirements are to maintain proper minutes and resolutions, as well as Financial Records for the Trust.

Generally we find that the Annual Financial Statements are prepared in order to submit the Annual Income Tax returns. This ensures part compliance with the requirements. Unfortunately most trusts do not have a complete set of minutes and resolutions. Every transaction in the Trust must have a resolution approving it.

We highly recommend that you consider the extent to which you have complied with this requirement in your trust. Should you find it lacking we are offering a service to review the Trust transactions and prepare the resolutions that should have been put in place.

Should you be interested in this service please contract Liza Wood on lizaw@lucro.co.za

This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)