In South Africa, minor children cannot inherit property and, in the absence of a trust, and assets held in a government institution, the Guardians` Fund, are returned to children as adults. As a result, testamentary trusts often leave assets in a trust for the benefit of these minor children. The trust fund is an age-old instrument of feudal times, sometimes greeted with contempt because it is associated with the idle rich (as in the pejorative „baby trust fund“). But trusts are very versatile vehicles that can protect assets and put them in good hands now and in the future, long after the original owner of the asset dies. The purpose of this document is to clarify certain issues regarding trusts and policies to be held in trust and should serve as a guide for manufacturers selling these plans. The document will address issues such as: Although there is no specific language requirement to create a trust, if this desire is only a „hope“ or a „wish“ (called „precatorial“) that the property be used in this way, this creates uncertainty in the interpretation of the Fixator`s intention. Living trusts generally do not protect assets from U.S. federal estate tax. However, married couples can effectively double the amount of the estate tax exemption by setting up the trust with a formula clause. [48] A trust provides a mechanism whereby a person (the „trustee“) can make property available to another person (the „trustee“) for the benefit of a third party (the „beneficiary“) while retaining some control over the assets.
The property is owned and managed by the trustee. A permissible restriction is an unnecessary trust that prevents the beneficiary from selling their interest in the trust (i.e., protecting the assets while they are still in the hands of the trustee). In particular, the beneficiary may not sell or assign its right to future income or assets. In addition, its creditors are not able to recover or seize these rights, at least until the beneficiary actually receives the money. See, for example, Kelly v. Kelly, 11 Cal. 2d 356 (1938). The purpose of a wasteful trust is to provide support and maintenance to the beneficiary, especially if the beneficiary is negligent in their spending habits. (a) the assets constitute a segregated fund and do not form part of the trustee`s own assets; Qualified Personal Residence Trust: This trust removes a person`s home (or vacation home) from their estate. This could be useful if the properties are likely to be highly appreciated. The second case, Blum v. the Queen, decided by the Tax Court of Canada in September 1998, dealt with the question of whether profits and income from shares acquired by a grandfather in trust for his grandchildren were attributable to him.
Mr. Blum sold shares of the company in 1987 and 1988. Although the shares were issued in his name „in trust“ for his grandchildren, the CRA included capital gains and interest in Mr. Blum`s income for both years. Mr. Blum appealed to the Tax Court of Canada, arguing that, although there were no formal trust documents, the funds had not been used personally by the funds, but that he had held the shares and subsequent proceeds of the trust sale for the grandchildren. The court found that it was a legally created trust and therefore the profits and interests were not attributable to Mr. Blum.
The person(s) for whom the trust is established and who ultimately owns the income and/or assets of the trust. Trust beneficiaries can be either „income beneficiaries“ if they are entitled only to the income of the trust, or „capital beneficiaries“ if they would be entitled to receive the capital of the trust, or both. In a relevant sense, a trust can be considered a generic form of corporation whose settlors (investors) are also the beneficiaries. This is particularly evident in the Delaware Business Trust, which could theoretically be organized as a cooperative or limited liability corporation using the language of the „governmental instrument“,[10]:475–6 although traditionally the Massachusetts Business Trust is common in the United States. One of the most important aspects of trusts is the ability to divide and protect the assets of the trustee, multiple beneficiaries and their respective creditors (in particular the trustee`s creditors), making them „non-insolvent“ and leading to their use in annuities, mutual funds and asset securitisations[10], and the protection of individual spenders by the profligate trust. Generally, there is no allocation to a child`s „trust for“ accounts if the funds come from a child`s inheritance, child tax benefits, a non-resident donor and funds received from an independent person. A trust may have multiple trustees, and these trustees are the rightful owners of the trust`s assets, but have a fiduciary duty to the beneficiaries and various obligations, such as a duty of care and a duty of disclosure. [19] If trustees do not comply with these obligations, they may be removed by legal action.
The trustee can be a natural person or a legal entity such as a corporation, but the trust itself is generally not an entity and any lawsuit must be directed against the trustees. A trustee has many rights and obligations that vary depending on the jurisdiction and instrument of escrow. If a trust does not have a trustee, a court may appoint a trustee. A revocable trust may be amended or terminated by the settlor during his or her lifetime. An irrevocable trust, as the name suggests, is a trust that the settlor cannot change once established, or a trust that becomes irrevocable after death. Instead, the sole beneficiary may be one of two or more trustees. If there is more than one beneficiary, one of them may be the sole trustee. See, for example, Blades v.
Norfolk Southern Railway, 29 S.E.2d 148 (N.C. 1944). (c) the trustee has the power and duty to manage, use or dispose of the property in accordance with the terms of the trust and any special obligations imposed on the trustee by law. An exception to this rule is if it is a consideration. In particular, if consideration for the trustee`s declaration of a trust to be acquired later were paid as assets, most courts would likely treat the transaction as a contract to form a trust. If the assets are actually acquired, the contract may be performed on purpose, even if the grantor has changed its mind. Trusts can also be used for tax planning. In some cases, the tax consequences of using trusts are less than other alternatives.
As a result, the use of trusts has become an integral part of individual and business tax planning. Trust is widely regarded as the most innovative contribution to the English legal system. [6] [Verification required] Today, trusts play an important role in most common law systems, and their success has led some civil law systems to include trusts in their civil codes. In Curaçao, for example, the Trust entered into force on 1 January 2012; However, the Civil Code of Curaçao only allows explicit trusts formed by notarial deed. [7] The France recently added a similar Roman law instrument to its own law, the Trust,[8] which was amended in 2009; [9] A trust, unlike a trust, is a contractual relationship. Trusts are widely used internationally, particularly in countries within the sphere of influence of English law, and although most civil law systems do not generally include the concept of trust in their legal systems, they recognise the term under the Hague Convention on the Law Applicable to Trusts and on their Recognition (sometimes only to the extent that they are parties).
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