Take care of your child with a Trust
Minor children cannot receive inheritances directly from an estate, even if they have been named as an heir. Should both parents die, the proceeds of the parent’s assets will be paid to the Guardianship Fund managed by the Master of the High Court. If the parents have nominated a legal guardian, the money can be paid to the guardian. However, then the parents do not have certainty that the legacy is used fairly for their children.
Trusts are a practical way to ensure that your inheritance is protected for the care of your minor children. The will must outline which assets are bequeathed to the testamentary trust, as well as naming trustees to manage the trust money. This can be the guardian or adult family members , but must also include an independent trustee, with knowledge of trusts for example an accountant or lawyer.
Trusts are tax liable and must file tax returns. The flat tax rate on trusts is 45 %. The tax law provides for special trusts, which are taxed at the same rate as individuals. This includes testamentary trusts for minor relatives of the deceased. Capital gains tax also applies to trusts. It is therefore important to involve an expert in the trust management.
Parents can decide that the trust is dissolved as soon as the child or youngest child is 18 and they then receives everything in it or that they benefits from the trust for life.