By Sydney Eckley
Fiduciary Advisor

You might have heard rumours of changes in trust law. You might even have heard of the amendments to the Trust Property Control Act (“TPCA”) and the rigorous reporting standards recently published by SARS. If not, feel free to read more about it here.

Analogously, when a trust deed is viewed as a motor vehicle, you purchase it when you register a new trust. Thereafter, regular maintenance needs to be performed by someone who understands how it was built, to ensure the best benefit is enjoyed therefrom. You need to take your deed for a “service” every now and again, to keep it in tip top shape and running smoothly.

More often though, changes in trust law necessitate a pair of expert eyes, laid upon your trust deed on an ad hoc basis. Think of it as hitting a pothole with your vehicle and reparations might need to be made, depending on the damage and thus, audits to your deed and possible amendments thereof are required.

However, taking your deed for a regular “service” or amending your deed, in response to changes in law, is only part of proper “trust ownership”. With these recent changes, the roads “trust owners” must now drive on, are bumpier and wind significantly more. They are full of potholes and oil spills. The K53 driving handbook has been rewritten, and the meaning of road signs and the rules of the road have changed. “Trust drivers” need to relearn how to drive, to continue driving legally.

If arriving at your destination safely with an undamaged vehicle and all the passengers and luggage intact piques your interest, one must consider employing the help of a better navigator. To retain the optimal benefit from your trust, a “navigator” or rather independent trustee, can be appointed to help navigate and guide through the many perils. This is nothing new and the benefits thereof are well established, but with these new roads and rules, it is has become imperative.

Trustees need to keep track of changes in the content of the luggage compartment of trust (detailed asset register). Record of where the Trust has driven in the past, where it wants to go from its current destination and how to get there, is paramount (annual financials and goals).

You need to keep an eye on who the passengers are and where they sit (beneficiaries and their circumstances). You need to know who has already eaten their snacks and provisions for the journey (keeping track of distributions made to beneficiaries) and who is still asleep in the back and might want to eat it later (keeping track of loans and vested but unpaid distributions). Understanding how much of the snacks SARS is going to eat (tax). The Ability to spot when a “trust driver” is tired and should be relegated to backseat driver, or worse, left behind to walk the rest of the way (dealing with trustees and forced termination of office).

This is naturally a very simplified and limited comparison, and the duties of trustees and especially independent trustees, are vast, but bar none, a properly understood and administered trust is still the best way to preserve generational wealth and facilitate its transfer. If you are serious about wealth, you must remain serious about your trust.

Put bluntly, trusts have become more difficult to administer properly and the time for outsourcing the administration thereof to an independent trustee firm, is here. When analysed over the long run, the cost thereof will pale in comparison to the value added thereby.

Contact us, to install your savvy new trust GPS. We’ve recently downloaded and installed the updated maps for South Africa.