Once again I am grateful to the Independent on Saturday’s Personal Finance section (15 June 2019) for an article by Phia van der Spuy, a Fiduciary Practitioner and Master Tax Practitioner.
Should you die while you have minor children, that is under 18 years of age in SA, you need to ensure that plans have been made for their future care and inheritance. If you die intestate, that is, without a Will, all of your assets will be liquidated and put into the Guardians Fund controlled by the Master of the High Court. This fund receives very low interest and allows limited access until the minor child turns 18.
So how to avoid this issue of your assets being liquidated and put into the Fund there are 2 things to be done. First and foremost draw up a well-drafted Will. Get expert advice if you have any queries. Secondly consider setting up a Trust which will prevent liquidation of assets and those being placed in the Guardians’ Fund.
Any natural person can be the beneficiary of a Trust but where it is a minor s/he should be assisted by a guardian when decisions have to be made. There are 2 types of Trust that one use.
1. Testamentary Trust – this is set up in terms of your Will and activated upon your death. This form of Trust will require that CGT, Estate Taxes and Executor’s Fees are payable before assets are transferred to the Trust. It is also important to ensure that the beneficiaries, trustees and any other conditions applying to the Trust are clearly spelled out in your Will. Such a Trust will be set up in terms of your Will for all beneficiaries who are under 18 and is wound up when the youngest turns 18.
2. Inter Vivos Trust – set up during your lifetime. Accumulated assets will not be taxable upon your death.