Simply put, a trust allows you, as the founder, to transfer your personal or business assets to one or more trustees who then hold the assets for the benefit of the trust beneficiaries. Trusts are not only for the wealthy or successful, they are worth considering at any stage of your business.
The advantages of trusts are that they:
1. Provide protection against creditors
Trusts protect your assets in the event that you run into financial difficulty: Because the assets are separate from your name, creditors do not have a claim on them. This advantage is especially important for small businesses exposed to potential liability.
2. Are versatile
A trust can be used to:
- ensure the continuity of ownership of assets.
- protect your family wealth, so that your legacy is preserved for future generations.
- protect your business assets from predatory claimants
- provide for relatives who may not be able to look after themselves or take care of their financial affairs.
3. Provide efficient succession
Because trusts never die, beneficiaries will be able to continue enjoying the asset if one beneficiary were to pass away.
4. Reduce estate duty
As a trust is not part of your estate, it can save you costs and taxes as there is no estate duty and no fees for winding up an estate.
5. Provide continuity
When you transfer shareholding of your company to the trust there is continuity – the business can carry on even though you have died.
When setting up a trust, it is vitally important that:
- the trust deed is worded properly. To be effective, a trust should be custom-made to serve your individual circumstances and needs.
- your trust is properly governed, and the administration kept meticulously up to date.
- your trust remains valid. There are multiple processes that need to be strictly adhered to such as registration, a complete schedule of assets, annual audits, appointing of trustees, archived minutes of meetings.
To decide whether a trust is right for you, speak to us at Diga. We can assist you in making the correct decision for your personal situation and business. We are familiar with all the processes and regulations and we can help you every step of the way to ensure your trust is compliant and valid. Should you require any assistance, email us on firstname.lastname@example.org and let us know your specific needs.