A trust is an arrangement that allows someone to hold assets (without owning them) for the benefit of the trust beneficiaries. The key element of the trust arrangement is the transfer of ownership and control of the trust assets from the donor or founder to one or more trustees who hold the trust assets not in their personal capacities, but for the benefit of the trust beneficiaries.
A trust beneficiary is entitled to benefit under the trust arrangement, from vested or discretionary rights determined by the trust deed. Trust beneficiaries are usually natural persons, though a juristic person such as a company may also be the beneficiary of a trust. All trusts are required to have ascertainable beneficiaries.
Trusts are governed by the Trust Property Control Act 1988. A trust’s constitutional document is a trust deed which sets out the framework in which the trust must operate, including its powers and limitations. As a general rule trusts must be registered with the Master of the High Court in the relevant jurisdiction where the trust’s assets are situated. Trustees may only act once the Master has issued letters of authority allowing them to act.A trust does not have legal personality because it is, simply, an accumulation of assets. In some circumstances – such as for tax purposes – it is regarded as having a separate legal identity. Despite its lack of legal personality, a trust can have legal capacity and the trustees may perform juristic acts as long as the trust deed allows this.
A trust may be used to hold and protect personal or business assets, which is especially beneficial in the event of subsequent liquidation, sequestration or divorce. Trusts may also be used to hold shares in businesses and to ensure the continuity of ownership of assets. Assets may be placed in a trust by donation of assets to a trust or selling assets to a trust.
