What is a Trust?
A Trust is a structure to which property or other assets is transferred by the founder of the Trust to beneficiaries nominated in the Trust Deed. The Trust Assets will be administered and managed by trustees appointed in the Trust Deed for the benefit of one or all the beneficiaries. Very important to note that the Trustees are therefore not the owners of the Trust Property, nor the beneficiaries of the Trust until such time as the Trustees exercise the choice to allocate assets and / or income to the nominated beneficiary (ies).
Trusts in Namibia
Namibian Trust Law is regulated by the Trust Moneys Protection Act 34 of 1934. The Trust Moneys Protection Act has appointed the Master of the High Court as the regulatory authority over trustees and trust moneys. The Financial Intelligence Act of 2012 has further placed certain duties and responsibilities on trustees of a Namibian Trust.
Namibian Trusts are normally used for the following purposes:
- Estate planning;
- Can be used to run a business;
- Protection from creditors;
- In order to protect assets from a spouse in a matrimonial matter; and
- In order to administer assets on behalf of a person who is unable or incapable of managing the assets himself / herself.
How To Register A Trust In Namibia:
- Trust Deed;
- Copy of the proof of identity of the settler;
- Copies of the proof of identity for each trustee; and
- Proof of the registered physical address of the Trust.
Who can be a trustee in a trust in Namibia?
The only legal requirement in Namibia for a person to be a trustee is that she or he is at least 18 years old and “of sound mind.”
- Growth that takes place in the trust as assets settles in the Trust and not in your personal estate;
- By selling the assets to the Trust, the amount owed to you by the Trust will remain outstanding on the loan account and will be regarded as an asset in your estate;
- A trust provides protection against problems if you become mentally incompetent. It may also make it unnecessary to appoint a curator to handle your financial affairs;
- A trust remains confidential, unlike documents such as wills and records of deceased estates which are public documents and are open to the public for inspection;
- A trust can provide financial protection to disabled dependents, dependent children or beneficiaries with special needs;
- A trust can circumvent the costs of administering successive estates by providing for successive beneficiaries;
- A Trust can reduce the emotional stress on your family when you die, as the Trust will proceed without any of the formalities required of a deceased estate;
- By choosing your Trustees wisely, you can ensure professional asset and investment management;
- The Trust will enable you, through the Trustees, to retain some control over the assets in the Trust after your death;
- After your death and before your estate has been settled, the Trust can provide a source of income to your dependent(s);
- You will prevent your minor child(ren)’s inheritance from being placed in the Guardianship Fund;
- You will avoid the problems of having to divide assets in order to make an equal distribution to the heirs;
- Income levels can be varied at the discretion of the Trustees along with the changing needs of the beneficiaries;
- Because the assets remain the property of the Trust, and not of the beneficiaries, they also do not have to include the assets as part of their estates when they die,
- The trust assets will be protected against creditors for the same reason.
- You no longer have overall control over your assets, as the other Trustees will also have a say;
- You could possibly choose the wrong Trustees. Problems can arise if they are rival heirs. That’s why it’s so important that you have at least one independent Trustee.