Trust

Broadly speaking there are a number of ways in which trusts in South Africa can be
classified. This includes the following classifications:

• • An “ownership trust”, the founder or settlor transfers ownership of assets or
    property to a trustee(s) (in a fiduciary capacity) to be held for the benefit of
    defined or determinable beneficiaries of the trust.
  • A “bewind trust”, the founder or settlor transfers ownership of assets or
    property to beneficiaries of the trust, but control over the assets or property, is
    given to the trustee(s).
  • An “inter vivos trust” is created during the lifetime of a person by way of an
    agreement (contract) between the founder and the trustee(s).
  • A “testamentary trust” is set up in terms of the will of a person and comes into
    effect after their death.
  • A “vesting trust” – trusts where income, capital gains or assets are vested to a
    beneficiary in terms of the trust instrument.
  • A “discretionary trust” – a trust where the trustee(s) in terms of the trust
    instrument, has the right to vest income, capital gains, assets or retained
    amounts in that trust, to its beneficiaries.
  • A “hybrid trust” – the majority of trusts in South Africa will have vested and
    contingent rights provided for in the trust instrument. In other words, a
    combination of the vesting trust and the discretionary trust mentioned above.

1. Specific application trusts – trusts may be classified as a type of trust based
   on the application of the trust, e.g.:

• Trading (Business) trusts
• Asset-protection or realisation trusts
• Charitable trusts
• Land rehabilitation trusts
• Share incentive scheme trusts
• BEE trusts
• Collective investment scheme (CIS) trusts
• Special trusts:

For tax purposes the following types of special trusts are
recognised:

• Special Trust Type A – a trust created solely for the
  benefit of a person(s) with a mental or physical “disability”
  as defined in section 6B(1)
• Special Trust Type B – a trust created solely for the
  benefit of a person(s) who is a relative of the person who
  died and who are alive on the date of death of that
  deceased person (including those conceived but not yet
  born), and the youngest of the beneficiaries is younger
  than 18 years on the last day of the year of assessment.

Information Sources:

1.South African Government

https://www.gov.za/services/legal-matters/registration-trusts

2. South African Revenue Services

https://www.sars.gov.za/businesses-and-employers/trusts/types-of-trust/