The advent of the Novel Coronavirus (Covid 19) in December of 2019 plunged the world into a state of utter chaos and uncertainty. The pandemic which has wreaked havoc in almost all parts of the world has caused people to adjust how they live their everyday lives, culminating in what has become known as the ‘’new normal’’. This new normal is characterized by redundancies as businesses are forced to downsize, economies rapidly contracting and families losing their loved ones who are often advanced in age and more often than not breadwinners.
From an estate planning perspective, it has become prudent for people ‘’to make hay whilst the sun shines’’ and seriously consider putting their estate matters in order to ensure posterity and to avoid confusion and contestation should one meet their demise. One such method of estate planning is the formation and subsequent registration of a family trust.
What is a trust?
A trust is a three-party fiduciary relationship in which the first party, the founder or settlor, transfers (“settles”) property (often but not necessarily a sum of money) upon the second party (the
trustee) for the benefit of the third party, the beneficiary. A trust is created by a settlor, who transfers title to some or all of his or her property to a trustee, who then holds title to that property in trust for the benefit of the beneficiaries. The trust is governed by the terms under which it was created. In most jurisdictions, this requires a contractual trust agreement or deed. It is also important to note that once a settlor donates his property into a trust and the trustee accepts such donation, the former ceases to have legal title over the property. The property becomes trust property.
From the above it is clear that the following are central to the setting up of a trust;
- There should be the founder, who donates property to the trust
- There should be the trustee/s who should accept appointment and will be in charge of the managing of the trust until a specific future occurrence ,
- There should be beneficiaries who will benefit from the formation of a trust.
- There should be the trust fund/property.
- There should be the trust objectives.