Compelling reasons to incorporate a trust into your estate plan

TRUSTS are versatile estate planning tools that can be tailored to suit your specific objectives, assets, beneficiaries, and planning horizon. Whether preserving wealth, protecting vulnerable heirs, or managing taxes, trusts offer unique advantages. This article explores five effective ways to use a trust as part of your estate plan.

- ALEX ODENDAAL

1. Safeguarding the inheritance of minor children

South African law limits the contractual capacity of minors, which creates complications when leaving assets directly to children under the age of 18. Where a minor is nominated as a beneficiary—for example, on a life insurance policy—those funds will be administered by the Guardian's Fund until the child reaches adulthood.

Accessing these funds can be cumbersome and subject to administrative limitations, including capped annual withdrawals and approval by the Master of the High Court. A more practical solution is to set up a testamentary trust in your Will. This type of trust only comes into effect upon your death and allows assets earmarked for your minor children to be managed by trustees of your choice, providing structure, oversight, and the flexibility to meet your children's evolving financial needs.

2. Caring for beneficiaries with disabilities