How to deftly draft a trust doc

Private Property South Africa
The Roosting Venus

Being partial to a little poise and polish, I’ve always firmly subscribed to the belief that you can be comfortable when you’re dead. Why for example would you travel in a tracksuit when you could arrive in, say, Milan looking as if you’ve just stepped out of a mag. The same goes for shoes. I have a galpal who taunts me with her takkies just to get a rise, and tells me that in New Zealand ladies have been known to go shopping in pyjamas.

In the interests of friendship though, I recently succumbed to a pair of comfortable shoes, only to be asked almost immediately, if I was wearing Crocs. Needless to say, I’m back on the straight-and-narrow and as devout as ever to my former notion of saving comfort for when you’re dead.

Talking of death, while our uncle-with-large-property-portfolio is still cooling off in his grave, there have been many mumblings in the greater family circle about how he could have done it better. It does seem that in his case, with assets of over R3.5-million, a trust was the answer. (I say over R3.5 because with a value below that an estate is not subject to estate duty, so a trust wouldn’t have saved any costs.)

But with a trust itself comes a pile of problems. While in essence, a trust is a blank piece of paper, on which you can write what you want, the wording of the document needs to be handled with extreme care. In fact a properly-worded trust deed is vital for a trust to function smoothly.

Factors to consider include well-written definition clauses – expanding fully on all the definitions that will be used throughout the trust deed and providing clear guidance as to what can and can’t be done.

It’s also important to have a detailed description of how the board of trustees should be constituted and careful delineation of the duties and powers of each of the trustees.

Trustee meetings are another frequent area of dispute that can be addressed upfront. While the law requires that all trustees meet at least once a year, that co-trustees are consulted on decisions and that all decisions and financial records are properly minuted and maintained, a trust deed should be specific about how, how often and when trustee meeting should be held. There should also be a delineated process to the followed should there be disagreements or should a meeting be deadlocked.

As it became increasingly clear that there is considerable skill and thought required in drafting a trust agreement, it became increasingly clear too, as to why our uncle hadn’t tackled the matter head-on. We realised too, as in many other cases, that sound legal and financial advice before placing or moving assets can save hugely when it comes to taxes, red tape and bureaucracy. How could or should he have done all this, though, we wondered …

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