What is a Business Trust?
A business trust is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries. Unlike a company, a trust isn’t a separate legal person; it’s a fiduciary relationship governed by a trust deed.
Key Steps to Register a Trust
- Choose Trustees
- Select at least two trustees (often including one independent trustee) who are over 18 and capable of managing assets responsibly.
- Trustees owe fiduciary duties to the beneficiaries.
- Draft the Trust Deed
- The trust deed is the core governing document. It outlines the purpose of the trust, beneficiaries, trustee powers, and how assets are to be managed.
- Have the deed prepared or reviewed by a legal professional to ensure compliance with the Trust Property Control Act.
- Name the Trust
- Decide on a unique name for the trust. Trust names are submitted to the Master of the High Court and do not require reservation through the CIPC.
- Identify Beneficiaries
- Specify who benefits from the trust: these could be family members, business partners or a charitable purpose.
- Register with the Master of the High Court
- Submit the trust deed and other forms to the Master’s office in the jurisdiction where most trust assets will be managed.
- Once approved, the Master issues Letters of Authority giving trustees the legal mandate to act.
- Open a Trust Bank Account
- Use the Letters of Authority to open a dedicated bank account in the trust’s name. This keeps trust assets separate from personal assets.
- Transfer Assets to the Trust
- Move property, cash, shares or other assets into the trust. Transfer procedures differ depending on asset types (e.g. title deeds for property).
- Register for Taxes
- Trusts must register with SARS, even if they do not generate income. Register for income tax and other taxes where applicable (e.g. VAT, PAYE, SDL).
- File Beneficial Ownership Declarations
- As part of anti‑money‑laundering measures, trusts must declare beneficial owners. Register these details with the Master’s office by the prescribed deadlines to avoid penalties.
Why Choose a Trust?
- Estate planning: Protect assets for heirs.
- Flexibility: Manage investments efficiently.
- Confidentiality: Trust deeds are typically private documents.