OH 53 Learning Objectives 4.Analysing the Rules Pertaining to a Trust Corporation by: Comprehending the legal nature of a Trust Interpreting the formation, documentation and Membership of a Trust Interpreting the advantages and disadvantages of a Trust Examining accounting and taxation requirements of a Trust Examining the Banking requirements of a Trust

OH 54 Criteria 4.Analyse the Rules Pertaining to a Trust Define a Trust Describe a Trust as a legal entity List the requirements for a valid Trust Describe the Trust Instrument Describe the parties and their respective roles in a Trust List the two main types of Trusts Define a Business Trust

OH 55 Criteria (Continued) 4.Analyse the Rules Pertaining to a Trust List the advantages of a Trust List the disadvantages of a Trust List the accounting records to be kept by a Trust Describe the taxation of a Trust Describe the liability of the Members of a Trust Judge the contractual capacity of a Trust

OH 56 Requirements for a valid Trust There must be an intention from the founder/donor, to create a Trust and he/she must used sufficient terms to create it, namely: Clearly described property Identified/identifiable beneficiaries or a clearly described impersonal or personal objective A Trustee who has undertaken to act as such and who, in his assigned capacity, controls the assets or owns them The Trust object must be a lawful one

OH 57 Trust Instrument The Trust Instrument contains the: Terms and conditions agreed to by the Donor, Trustees and Beneficiaries Determines how the Trust will be administered Determines who the parties to the Trust are When and how the Trust will be terminated

OH 58 Parties in a Trust There are three parties who play an important role in Trusts, namely: 1.The Donor 1.The Trustee 2.The Beneficiary

OH 59 Types of Trusts There are 2 main types of Trusts namely: Testamentary Trust Inter Vivos Trust These Trusts can be sub-divided into: Business Trusts Charitable Trusts Discretionary Trusts Pour-over Trusts

OH 60 Credit Risks of Trusts The Bank must ensure: That the transactions are always to the benefit of the Beneficiaries That the Trust Deed specifies the powers of the Trustees The powers of the Trustee must be verified in the Trust Deed to ensure that they have the necessary power to sign Suretyships on behalf of the Trust