Ruling from the grave

I get lot's of people (always men, oddly enough) who are very concerned about what will happen to all their hard earned wealth once they are dead and no longer able to act as trustee for their trust.

Well, the first thing to understand is that when you're dead, you're dead.

The second thing is that you don't know in what way circumstances may change after your death. The worst thing you can do is to tie everybody's hands so that when a real need arises they are not able to fulfill it simply because you wanted to rule from the grave.

The best solution that I can offer is -

1) We provide in the trust deed that our client, who is almost invariably a trustee, has the right to appoint a succeeding trustee in his/her will. Choose this person carefully!

2) The donor can write a letter of wishes to the trustees indicating what he/she would like them to do under various circumstances. This letter is a private document and must have no legal standing whatsoever as if it did, it would destroy the trustees' discretion together with the firewall that separates the donor's creditors from the trust assets.

3) The other option is to provide that after the death of the donor, the trust ceases to be a discretionary trust and the trustees become responsible to act strictly in accordance with the directions of the donor (according to his/her will). Under these circumstances, there is no firewall between the beneficiaries' creditors and the trust assets and that could be disastrous.

Should you wish to make an appointment, please feel free to visit Derek's diary and book a time that suits you.

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South African Institute of Chartered Accountants. Designation CA(SA)  Internationally Accredited Financial MediatorsIndependent Regulatory Board for Auditors. Designation RA<Engineering Council of South Africa. Designation Pr(Eng) Member of MENSA, the High IQ Society




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