We all know the importance of a will – it’s the cornerstone of responsible estate planning. But for families with complex assets, business interests or blended family dynamics, a will on its own may not be enough. That’s where trusts come in providing the structure, flexibility and protection that a will cannot always achieve on its own.
“A trust is not about control,” explains PJ Veldhuizen, Managing Director of Gillan & Veldhuizen Inc. “It’s about care – ensuring your assets are managed with intention and that the people you love are protected long after you’re gone.”
Two types of trusts: Two different purposes
- The Living (Inter Vivos) Trust
As the name suggests, an inter vivos trust is established during your lifetime. It becomes a separate legal entity that can own assets such as property, shares, or even an operating business. There are two common variations:
- A Family Trust – used to hold and manage family assets such as property portfolios, investments or long-term funds. It ensures continuity and can simplify estate transfer by keeping assets out of your personal estate.
- A Trading Trust – typically used by business owners to hold income-generating assets like buildings, machinery or shares. This allows business operations to continue seamlessly in the event of a death or disability, while also potentially reducing exposure to estate duty.
“The beauty of a living trust,” says Veldhuizen, “is that it allows you to separate ownership and control. You can place assets under the management of trustees you trust, while still benefiting from them during your lifetime.”
However, inter vivos trusts established many years ago should not be left on autopilot. Alfred Bester, Director at Legacy Fiduciary Services, cautions that “care should be taken with older trusts, as changes in the law – particularly income tax legislation, exchange control regulations affecting non-SA beneficiaries and decided court cases – have reshaped the trust arena.”
Bester advises that every trust deed should be reviewed regularly to ensure trustees can update it in line with new legal and tax requirements. One example is Section 7C of the Income Tax Act, which targets low or interest-free loans made to a trust, deeming the interest foregone as a deemed donation by the lender.
He also points to a more nuanced but crucial amendment: “Trust deeds should allow trustees to award capital gains and taxable income to beneficiaries in the same tax year that such gains arise, while retaining those awards within the trust until the trustees decide to pay them out. This flexibility can reduce overall tax exposure, especially where beneficiaries’ marginal tax rates are lower than the trust’s flat rate of 45%.”
- The Testamentary (Will) Trust
A testamentary trust is created by your will and comes into effect only after your death. Instead of bequeathing assets directly to your spouse or children, you can direct them into a trust that manages those assets for their benefit.
This is particularly valuable in blended families or where dependants may not be financially mature. For instance, you might leave your estate to a testamentary trust for your spouse to receive the income during their lifetime, with your children inheriting the capital later.
Or you might leave assets for a prodigal heir, ensuring trustees can control how and when funds are accessed. “In essence,” says Veldhuizen, “a testamentary trust acts like a holding station – protecting assets until they’re ready to move into the right hands at the right time.”
Why consider a trust?
Beyond structure and control, trusts provide several estate-planning advantages:
- Avoiding double estate duty
Assets transferred to a trust no longer form part of your personal estate, preventing the same assets from being taxed again when they pass to the next generation.
- Continuity and succession planning
For entrepreneurs and professionals, a trust allows for smooth business succession and continuity in ownership. “It’s particularly effective for family-run businesses or property portfolios,” notes Veldhuizen. “You’re not starting from scratch each generation.”
- Protection for blended families
In families with children from previous marriages or varying financial needs, trusts help balance fairness with protection — ensuring everyone’s interests are respected according to your wishes.
- Safeguarding minors or vulnerable beneficiaries
Trustees can manage funds on behalf of minor children, individuals with disabilities, or spendthrift beneficiaries, ensuring their inheritance is preserved.
- Professional oversight and objectivity
Appointing a professional or corporate trustee ensures impartial management, legal compliance, and long-term stewardship beyond the family’s emotions or capacity.
A trust should never be seen as a mechanism to hide wealth – rather, it’s a structure to manage it responsibly. It’s about intention, foresight and the kind of planning that turns wealth into legacy.
“The right trust can be the bridge between what you’ve built and what you hope to leave behind,” concludes Veldhuizen. “With proper structure, advice and regular review, you can ensure your legacy endures – in both purpose and practice.”