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Creating an inter-vivos (between the living) trust in South Africa offers several benefits. Primarily, I will be looking at estate planning, asset protection, and financial management. 

Here are five key reasons why it is essential to consider creating an inter-vivos trust:

Estate Planning 

One of the primary reasons for creating an inter-vivos trust in South Africa is for estate planning purposes. 

For those who don't know, estate planning involves making arrangements for the management and distribution of one's assets after death or in case of incapacity, typically through legal documents like wills and trusts. 

Assets held in an inter-vivos trust are not considered part of the deceased's estate. They do not go through the testamentary process upon the settlor's death. 

It can result in significant savings in terms of estate duty (inheritance tax) and executor's fees, as these assets will not be subject to these charges. 

Moreover, it ensures that the assets are distributed according to the settlor's wishes without the delays and potential public scrutiny associated with deceased estates.

Asset Protection 

An inter-vivos trust can offer protection against creditors in cases where the settlor might risk legal action or insolvency. 

Since the trust and not the settlor owns the assets, they are generally protected from claims against the settlor. 

Inter-vivos trusts are attractive for individuals in high-risk professions or business owners seeking to protect their assets. 

Continuity and Succession Planning

An inter-vivos trust can provide continuity and succession planning for family businesses or investments. 

By placing these assets in a trust, the settlor can ensure they are managed according to their wishes even after death, without the disruption from probate or family disputes. 

This can be particularly important in South Africa, where family businesses form a substantial part of the economy.  

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Tax Planning

Inter-vivos trusts can sometimes offer tax benefits. 

For example, by spreading income among beneficiaries, the overall tax burden might be reduced since multiple beneficiaries might fall into lower tax brackets.

Compared to a single individual owning all the assets. 

However, it's important to note that the tax laws regarding trusts in South Africa are complex and have been subject to changes, including the potential for higher trust taxes.  

Protection of Beneficiaries

An inter-vivos trust can be set up to protect beneficiaries who might be unable to manage their affairs due to age, disability, or other reasons. 

For example, a trust can ensure that a child or a disabled family member is financially provided. 

This can consider their needs and circumstances without risking mismanagement or exploitation. 

In South Africa,  an inter-vivos trust may be a versatile and effective tool for estate planning, asset protection, tax planning, and ensuring the welfare of beneficiaries. 

Should you require a new trust or your current trust deed amended.

Please get in touch with our offices, and I am happy to assist! 

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