By Sharon Fadzai Manangazira – June 2022
According to seminary book titled ‘Counsels on Stewardship’ under the chapter ‘Wills and Legacies,’ some to Ellen G White’s wills are made in “so loose a manner that they will not stand the test of the law…” it is against this background that the importance of establishing Family trusts for the benefit of our loved ones or those people near and very dear to us comes into play.
When entertaining thoughts to establish a Family trust, questions for consideration revolve around the status of personal wealth/ business in the event of death.
Put in another way, the other question could be what will be the status of your wealth/ business should you and your spouse die at the same time today? interestingly, what will be the status of your wealth/ business should your family be wiped away completely after tragedy strikes? Put differently what is your plan assuming all your children die before you?
What is a Trust?
This is a vehicle or instrument recognized at law as a ‘person’ constituted through a legal document known as a ‘trust Deed’. Assets are placed under the management of a trust by a Founder who transfers some/ all of his property into the trust’s name. The trust holds property or assets for a specific person or group, called the beneficiary. A trust is a separate legal persona. trust assets and incomes are not owned out rightly by trustees or founders thereof.
Examples of trusts include Family trusts, Charitable trusts and Community trusts. The major purpose of creating Family trusts is to protect and manage family assets/ businesses for both current and future generations. When we donate our assets into a family trust we no longer have legal ownership of them. The Assets are now, ‘owned and controlled’ by the trustees. Ownership and control of the Assets will reside in the ‘office’ of the trustees in their official capacities NOt personal capacities. This function they exercise for the sole benefit of the beneficiaries. trusts are usually associated with the province of the wealthy. however, there are actually many benefits to creating them, for all. trusts can help one manage his property and assets, make sure they are distributed after your death according to your wishes, and save your family money, time and paperwork.
How a trust is constituted
The following are the key focus areas:
(a) Engage the services of a notary public and not just a generic legal practitioner who is not registered by a Law Society of Zimbabwe as a notary public. it is important to verify the status of the notary public prior to the use of services from the Law Society of Zimbabwe. There are many people who are drafting trusts even in the streets but be extra careful as in most cases it’s simply a cut and paste approach without necessarily giving practical legal advice on the dangers that might arise due to your own unique setup.
(b) List your trust’s prospective names in order of preference and decide on a name for the Family trust.
(c) it is pivotal to appoint trustworthy, “trustees”. These are people who will manage and control the assets in the trust for you and with your best interests at heart. Once identified obtain the Full Name, Date of Birth, iD Number, and Physical addresses of the trustees.
(d) identify the specific assets like real estate or high-value items you want to immediately donate to the trust and the specific details thereof, for example:
– title deeds for immovable properties whether in-country or offshore;
– dividends from shareholding held on companies listed on the ZSE, JSE etc.
– foreign currency held in bank accounts whether in-country or offshore;
– surplus revenue obtained from incomegenerating projects and/or
– business structures are otherwise known as “madhiri” in street lingo
(e) Determine the beneficiaries. These are people whom you would want to benefit from your personal wealth.
Advantages of a Trust
A trust has its own legal personality – This means that family trusts are capable of entering into binding contracts as well as suing or being sued by individuals and artificial persons alike. The structure of a trust provides privacy (unlike in a company) – There is no legal requirement to submit returns of any nature to the Registrar of Companies as is the case with companies. The trust affords the Founder a certain assurance of asset protection. in the event that a Founder develops mistrust as it relates to trustees, the Founder can ensure that through the provisions of the trust there are conditions and precedents that need to be met before any property that is vested in the trust is disposed of.
There is flexibility in distributions among beneficiaries – The decision to apportion which property to a specific beneficiary lies squarely with the founders of the trusts. There is no need to incur financial costs in undertaking transfer processes to an heir who is already a beneficiary of a trust. A trust thus, provides for a smooth and quick transition of assets to the next generation. it affords greater flexibility in that a trust is capable of catering for future expected or unexpected circumstances that may occur i.e. death, family expansion, and insolvency, legislative changes e.g. Marriage Bill or Succession Laws
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