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Sunday, August 14, 2022

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Is the time right to consider forming a trust?

Published Dec 14, 2021



By Phia van der Spuy

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The year 2021 turned out to be a challenging one for many people and very few of us had the time to reflect and consider our personal financial and estate planning. Many jobs have been lost and it proved to be particularly challenging for business owners. A number of people can attest to the devastating consequences of not having one’s financial affairs in order when one is faced with a financial challenge or on someone’s death. Now that many people are taking a holiday break, it may be wise to reflect and to consider your personal financial situation and estate plan.

Have a will

Dying without a will may have devastating consequences for your loved ones and will certainly prevent you from leaving a legacy of love. Dealing with death, as many have experienced recently with Covid, is traumatic enough. To leave loved ones destitute can be prevented if you have a valid, well constructed will. If you have minor children, it is reckless to not have a will, creating at least a testamentary trust on your death if there is no trust already created, as your money may have to be paid into the government’s Guardian’s Fund, attracting a low-interest rate, with limited access to the funds until your children turn 18. Your will is a living document and should always be up to date and reflect your current wishes in terms of how you would like your assets to be distributed upon your death.

Consider a trust

Trusts are still relevant today if they are used correctly. They are the only vehicles with the following attractive advantages:

  • Asset protection.
  • Flexibility to cater for varying circumstances and events.
  • Family asset management.
  • “Insurance” should something go wrong with your mental or physical health
  • Preservation of your wealth for future generations.
  • Protection of other people.
  • Continuity for your family after death – no estate freezing.
  • Protection of your family from liquidity issues on your death.

Although a trust is not for everyone, it may be worth your while to carefully consider the aspects discussed above and consult a relevant professional who specialises in trusts and estate planning to provide you with the necessary guidance.

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Phia van der Spuy is a Chartered Accountant with a Masters degree in tax and a registered Fiduciary Practitioner of South Africa, a Master Tax Practitioner (SA), a Trust and Estate Practitioner (TEP) and the founder of Trusteeze, the provider of a digital trust solution.

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