How to secure your legacy through setting up a Family Trust

In the world of life's certainties, where the inevitabilities of death and taxes loom large, few of us take the time to ponder the fate of our hard-earned assets after our journey on this mortal plane comes to an end. However, those with foresight are busy crafting meticulous plans for both the present and the hereafter. When the reins of control inevitably slip from our grasp due to our absence, there exist legal mechanisms that ensure our influence endures through the annals of time. Among these mechanisms, family trusts stand as a preeminent means to safeguard our legacy, a topic we shall delve into comprehensively.

Comprehending the Trust

A trust, a solemn and fiduciary arrangement, grants authority to a third party, known as the trustee, to safeguard assets for the benefit of designated beneficiaries. In the realm of trusts, three distinct roles converge: the grantor (the one who endows assets), the trustee (the guardian who manages these assets on behalf of beneficiaries), and the beneficiaries (the fortunate recipients of the trust's bounty). Upon the grantor's endowment and the trustee's acceptance of responsibility on behalf of the beneficiaries, the grantor relinquishes control over the assets in question. These assets become wholly separated from the grantor's estate, becoming the property of the trust, bound for utilization in accordance with the trust's specific directives.

The Dual Nature of Trusts

Trusts can be broadly categorized into two primary archetypes: revocable trusts and irrevocable trusts.

(a) Revocable Trusts:

Also known as revocable living trusts, these instruments grant individuals control over their assets during their lifetime. Such trusts can be dissolved while the grantor is alive, providing flexibility in response to changing circumstances, such as divorce or the acquisition of new assets. It's important to note that any malicious use of a revocable trust, such as attempting to evade debts or deprive a spouse of their rightful share during a divorce, can render the trust null and void.

Upon the grantor's passing, a revocable trust transforms into an irrevocable entity, as we'll discuss further.

(b) Irrevocable Trusts:

The irrevocable trust is unwavering in its essence, impervious to alteration or amendment, as its name suggests. When an individual transfers tangible assets, such as real estate or other holdings, into this steadfast trust, the die is cast, and reversing this decision becomes nearly impossible, provided the trust's objectives remain relevant, and its dissolution terms remain inviolate.

The primary advantage of creating an irrevocable trust lies in its protective nature. It serves as an impenetrable bulwark against personal debts or obligations, offering a shield of security.

Family Trusts: The Apex of Estate Planning

A family trust, the epitome of estate planning, exercises prudent control over an individual's or a couple's assets during their lifetime, choreographing their distribution after their passing. Compared to conventional wills, family trusts emerge as a superior alternative. Unlike wills, family trusts are impervious to the probate process, maintaining their privacy and shielding them from public scrutiny.

The scope of assets that can find shelter within a family trust is comprehensive, spanning from residences, agricultural holdings, and business enterprises to vehicles, life insurance portfolios, corporate equity stakes, and beyond.

Advantages of Family Trusts:

1. Tax Optimization: Family trusts offer meticulous tax planning strategies, making them a cost-effective avenue for estate planning.

2. Estate Tax Mitigation: By transferring property into a family trust, surviving spouses can avoid the looming burden of estate taxes upon the first spouse's passing.

3. Mitigating Family Conflicts: Family trusts establish clear directives regarding beneficiary entitlements, reducing confusion and the potential for internal disputes.

4. Professional Administration: Family trusts enable the appointment of skilled trustees for the prudent management of trust affairs.

5. Multi-Generational Legacy: Trusts have the capacity for multi-generational perpetuity, ensuring the preservation of assets in alignment with the family's wishes.

6. Creditor Protection: Assets within a family trust remain impervious to creditor claims, even if one spouse faces significant debt.

7. Asset Preservation: Family trusts safeguard asset integrity, preventing hasty or detrimental judgments on property.

8. Matrimonial Home Security: In Zimbabwe, the personal inheritance of the matrimonial residence by the surviving spouse can have unintended consequences. A family trust secures the home for the benefit of the offspring.

Establishing a Family Trust in Zimbabwe:

Family trusts in Zimbabwe come to life through the services of a duly registered Notary Public. The trust deed, bearing the notarial seal of an accredited Notary Public, must be lodged in the Deeds Registry in Harare or Bulawayo. While the Deeds Office retains duplicates of the deed, the grantor receives an authenticated copy, bearing the Registry's endorsement as proof of registration.

The Superiority of Family Trusts Compared to Wills:

While wills serve as the primary tool of estate planning, family trusts offer a myriad of advantages:

1. Probate Bypass: Family trusts avoid or reduce the conflicts associated with post-mortem estate distribution, resulting in lower probate-related costs.

2. Confidentiality: Trust stipulations remain impervious to prying eyes, in contrast to the public scrutiny endured by probate proceedings and documents.

3. Reduced Contestation Risk: Wills are susceptible to legal challenges and annulments, leading to unforeseen consequences. Family trusts provide a more robust defense against such challenges.

In summary, the family trust emerges as a potent legal mechanism, an impervious fortress that protects assets from the capricious whims of fate. It ensures a legacy that transcends generations. While death and taxes remain inevitable, astute estate planning secures the perpetuity of one's legacy.
Clifford S Ncube is a Legal Practitioner, Conveyancer and Notary Public, practising in Zimbabwe. Holding an LLB Degree from the University of Cape Town (UCT) and a Diploma in Journalism with the Institute of Commercial Management (UK).He can be contacted at: cliffordsncube@gmail.com/ Cell: +263 777 244 855