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Why you should consider having a trust (and what exactly a trust is)

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A trust is a collection of assets vesting in the trustees (the administrators of the trust) who manage it in terms of a “trust deed” for the benefit of the trust’s beneficiaries.

The “trust deed” is a legal contract between the trust’s founder and its trustees that sets out the rules for managing the trust. It sets out which assets are transferred into the trust, thereby becoming “trust assets” that are exclusively controlled by the trustees.

Trusts form a vital part of financial planning and estate planning.

A trust puts assets under the control of others who acts in your place for your beneficiaries.

A trust results in continuity in the event of, for example, death.

Beneficiaries of a trust may enjoy the capital and income, but they have no hand in the management thereof. This makes it especially useful when a beneficiary is a child or someone incapable of managing their own financial affairs.

The Money Show's Bruce Whitfield interviewed Andrew Auld, Alexander Forbes Financial Planning Consultants’ Executive Wealth Manager.

Listen to the audio (scroll down) for more detail.

A testamentary trust establishes a trust in the event of your death. You save a lot of estate duties by setting up a trust. Trusts save your heirs money in the long term.

Andrew Auld, Alexander Forbes Financial Planning Consultants’ Executive Wealth Manager

It’s clever to hold some assets in a trust. This way your creditors can’t easily get to it.

Andrew Auld, Alexander Forbes Financial Planning Consultants’ Executive Wealth Manager

To set up a trust during your lifetime you need several millions of rand to make it worthwhile. The trust must have the ability to sustain itself.

Andrew Auld, Alexander Forbes Financial Planning Consultants’ Executive Wealth Manager

Don’t steer away from trusts because you think it’s too complicated.

Andrew Auld, Alexander Forbes Financial Planning Consultants’ Executive Wealth Manager

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