Category: Estate Planning and Administration

ESTATE PLANNING AND GUARDIANSHIP

Guardianship in its widest sense includes custody and embraces the care and control of the minor’s person as well as the administration of his/her property and business affairs. Guardianship in some instances where the parents are alive can be awarded to third parties, although done with exercising extreme caution. The courts are not quick to deprive natural guardians (mother and father of a minor) of their rights unless it is the best interests of the minor child.

Guardianship involves acting on the child’s behalf, it may entail to sue on behalf of the child, enter into and conclude contracts as well as manage/transact in the property of the child. A guardian must act in the best interests of the child. All decisions and undertakings must be done to the benefit of the minor child, which principles the natural guardians (parents) are expected to be guided by. In the event that both parents have passed away then guardianship may be acquired by making an application in the courts of law, and proving that the child has been orphaned and you intend to become the minor’s guardian as it will be in their best interests.

Parents often overlook the importance of the children’s lives after their death, especially if they are still minors, and leave no provisions or plans of which particular adult will take over the role of being the minors’ guardian. Be a parent that does not gamble with their child’s future – plan ahead and put in place safeguards that ensure that your child/ren are taken care of even after your death. Let your wishes be carried out and not the general thoughts of a family tribunal. Plan accordingly for your child/ren, and elect trustworthy adults who will have your child/ren’s best interests at heart always, and will not plunder their inheritance.

Be wise and prudent when it comes to the affairs of your children, and their inheritance! #MakeAPlan

 This article is published for information purposes only – seek the advice of a Lawyer. 

ESTATE PLANNING AND CUSTODY

Custody refers to the legal right a person of majority status (usually a parent) has over a child, including the right to have physical control of the child; right to regulate their daily life, right to determine questions relating to their education, social and religious upbringing. The custody of a child becomes a cause for concern and discussion in the instances where the parents separate or file for divorce, or in the unfortunate occurrence of either or both parents’ death. In the event of separation or divorce, parents can always sit down and agree which of them will be the custodian parent of the child/ren, or they could exercise joint-custody. At divorce, this is awarded by the High Court through an order.

In the case of death, families usually sit down and discuss the fate of the child/ren left behind – issues custody come up, and it is decided which relative will “take” the child/ren in and provide for them. These decisions are usually guided by principles of practicality and having to make sure life goes on, and may not always be what is best or what the parents would have desired for the minors.

It is important to think ahead of time and plan according for WHO will have custody of your child/ren when you pass away, WHERE will they stay, WHAT will happen to the assets and wealth you had amassed, and HOW will they have access to it. You are assured to have peace of mind knowing that there is an all-encompassing plan about the custody of your child/ren, should you die whist they are still young. The court can also award custody of the minor child to someone other than the parent of the child if it is in the best interest of the minor child/ren.

The #covid19 pandemic and our experience in this practice prove that planning is important because you will never know when it will be needed the most! Do not leave your children out in the cold and their fate and future in the hands of people who may not have their best interests at heart. #MakeAPlan!

This article is for information purposes only – seek the advice of your Lawyer. 

Understanding a Family Trust

Setting up Family Trusts

A Family Trust is created through a legal document called a Notarial Deed of Trust or Notarial Deed of Family Trust. This document is prepared only by a Notary Public who is a Legal Practitioner. A Notarial Deed of Trust is lodged and registered at the Deeds Registry Office in terms of the Deed Registries Act Chapter 20:05. The document sets out all the terms governing the trust in relation to founders, trustees, beneficiaries, objectives and all issues to do with the functioning of the trust.

Requirements

The following are the key requirements in registering a Family Trust or any other Trust for various purposes and objectives. A Trust is required to have:

  • The proposed name of the Family Trust
  • Founder(s)
  • Trustees
  • Beneficiaries and
  • The objectives of the Trust.

A proposed or suggested name of the Family Trust is required. In most cases the founders propose the family surname for example Moyo Family Trust.

Founder

A Founder is the person desirous of creating a Family Trust. A Founder can be one person or more. The full name of the Founder as appears on identity documents must be provided as well as their date of birth, identity number and addresses. Usually Founders are parents or a relative who creates a Family Trust for their children and grandchildren as well as those not yet born, to benefit from certain donated properties. A Founder is entitled to make a donation to the trust   and it can be immovable or movable property. If the Founder donates an immovable property to the Trust, transfer of rights is done through conveyancing from the individual names of the Founders to the trust. The immovable property is then registered in the name of the Trust not in the individual names of the beneficiaries. A Founder can also be a trustee.

Trustee(s)

A Trustee is a person appointed and authorised by the Founder to manage property on behalf of the beneficiaries. The property does not belong to the Trustees but the Beneficiaries. It is required that a Trust must have a least two Trustees at any given time. In most cases the Founders become the Trustees or they can appoint a trusted relative or any other person who may be a professional or has knowledge in property management. It is advisable to appoint as Trustees people who own properties and have knowledge in running a business to ensure the efficient management of the Trust property. The full names of the Trustees are required, date of birth, ID number and physical addresses. Appointment, tenure, removal, remuneration and duties of the Trustees will be stated in Trust Deed.

Beneficiaries

Beneficiaries are people who are intended to benefit from the Trust. Property is donated by the Founders to the Beneficiaries but is managed by the Trustees on behalf of the Beneficiaries. In most cases the Beneficiaries are children of the Founders or any other relatives. Grand children may also be listed as Beneficiaries as well as the unborn children of the Founders. Beneficiaries can be as many as the founders desire since there is no minimum or maximum limit. If the Beneficiaries are known, their full names, date of birth, ID numbers are required. If the Beneficiaries are minors the names and identity details of the guardians are required. The terms and conditions on how the Beneficiaries will benefit will be stated in the Trust Deed.

Objectives

Objectives of the Family Trust are also required when registering a Trust. The objectives must be lawful. The objectives differ depending with the intentions of the Founders. Usually it is the love and affection that the Founders have for the Beneficiaries. It is more often the role of the Notary Public (Legal Practitioner) to formulate the objectives with the instructions of the founder. Another requirement is the registration fee required by the Deeds Office which is gazetted by the government as well as the legal fees for the Notary Public for preparing the document.

Benefits

There are a number of benefits that comes with registering a Family Trust, which are:

  1. A trust has perpetual succession. This means that a Trust does not die. Upon the death, demise or incapacitation of the Founder or Trustees the Trust is not liquidated but continues to operate until dissolved by the Trustees of the time being in accordance with the provisions of the Trust Deed.
  • There are tax benefits. A Trust enjoys some tax exemptions for example when the Founder passes on, property registered in the Trust is not distributed under the Deceased Estates Succession Act where the government calculates taxes against the total value of the Estate. The property survives as if nothing happened.
  • A Family Trust also prevents inheritance wrangles and disputes between children and relatives. The property registered or donated in a Trust is not subject to distribution upon death of the Founders. The property remains as if nothing happened.
  • Property belonging to a Family Trust is also protected from creditors in the event that the Founder has passed on. Creditors cannot claim a property registered in a Family Trust.
  • There is protection of family property as it is managed by Trustees on behalf of the Beneficiaries or children. A Family Trust can benefit future generations. No child can sell or destroy property belonging to the Trust. A Family Trust also prevents abuse of property and funds as it is managed by Trustees. Beneficiaries can equally enjoy the profits accrued in a Family Trust.
  • A Trust, through Trustees, is considered by the law as a separate legal entity. This means that even where there is a legal dispute be it contractual, criminal or matrimonial against the Founder or Trustees, the property in the name of the Family Trust cannot be regarded as belonging to the Founder or Trustees. They are treated separately except in exceptional cases provide for by the law.
  • A Trust enjoys contractual rights. This means that a Trust can enter into valid contracts with individual or entities. A Trust can also operate and own a company. A trust can be a shareholder in any business and is allowed to trade for the benefit of the Beneficiaries. A Trust can also own or dispose immovable or movable property.

This article is published for information purposes only – seek professional legal advice from an attorney.