The Business Trust and its role as an entity in the financial environment
- Authors: Nel, Ebenhaeser Cornelis
- Date: 2012
- Subjects: Trusts and trustees -- South Africa , Corporations -- Taxation -- Law and legislation -- South Africa , Asset-backed financing -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Doctoral , LLD
- Identifier: vital:10250 , http://hdl.handle.net/10948/d1020175
- Description: The trust figure in South Africa has undergone an interesting process of evolution during the last century – from a mere gratuity or private tax evasion tool to a proper family protection, business entity, investment, and structured finance vehicle. Its flexibility and multi-functionality positioned the trust as an ideal legal institution for many innovative ideas in the search for holistic business structures, economic empowerment transactions, general estate planning and risk protection initiatives, and ultimately, its application as financial instrument and structured finance entity. The development of both traditional and synthetic securitisation schemes in South Africa has been investigated, with some emphasis on the application of the special purpose institution, which may be in trust form. It is submitted that the application of the trust figure has developed without any significant contribution from the local legislator. A sound legal and regulatory framework is crucial for the creation of a strong future environment for legal and financial vehicles. The question is, however, whether the current South African legal framework for the application of the business trust, and also as a vehicle for financial instruments, is adequately sound and robust in light of the standards set in the international business and financial environment. It is submitted that the hybrid nature of the South African legal landscape is conducive for the development of sound legal systems in an ever-changing legal and economic reality. It is further submitted that in the development of proper legal frameworks, South Africa should position itself particularly in its context as a Southern African developing democracy. The South African trust development is compared with that of some foreign jurisdictions as well as with international conventions and treaties of relevance. Some recommendations for necessary changes are made and it is submitted that such future development of the trust figure should not take place haphazardly, but within the context of a structured regulatory model.
- Full Text:
- Date Issued: 2012
- Authors: Nel, Ebenhaeser Cornelis
- Date: 2012
- Subjects: Trusts and trustees -- South Africa , Corporations -- Taxation -- Law and legislation -- South Africa , Asset-backed financing -- Law and legislation -- South Africa
- Language: English
- Type: Thesis , Doctoral , LLD
- Identifier: vital:10250 , http://hdl.handle.net/10948/d1020175
- Description: The trust figure in South Africa has undergone an interesting process of evolution during the last century – from a mere gratuity or private tax evasion tool to a proper family protection, business entity, investment, and structured finance vehicle. Its flexibility and multi-functionality positioned the trust as an ideal legal institution for many innovative ideas in the search for holistic business structures, economic empowerment transactions, general estate planning and risk protection initiatives, and ultimately, its application as financial instrument and structured finance entity. The development of both traditional and synthetic securitisation schemes in South Africa has been investigated, with some emphasis on the application of the special purpose institution, which may be in trust form. It is submitted that the application of the trust figure has developed without any significant contribution from the local legislator. A sound legal and regulatory framework is crucial for the creation of a strong future environment for legal and financial vehicles. The question is, however, whether the current South African legal framework for the application of the business trust, and also as a vehicle for financial instruments, is adequately sound and robust in light of the standards set in the international business and financial environment. It is submitted that the hybrid nature of the South African legal landscape is conducive for the development of sound legal systems in an ever-changing legal and economic reality. It is further submitted that in the development of proper legal frameworks, South Africa should position itself particularly in its context as a Southern African developing democracy. The South African trust development is compared with that of some foreign jurisdictions as well as with international conventions and treaties of relevance. Some recommendations for necessary changes are made and it is submitted that such future development of the trust figure should not take place haphazardly, but within the context of a structured regulatory model.
- Full Text:
- Date Issued: 2012
A legal-comparative study of the interpretation and application of the doctrines of the sham and the alter-ego in the context of South African trust law: the dangers of translocating company law principles into trust law
- Authors: Stafford, Rowan Bell
- Date: 2011
- Subjects: Trusts and trustees -- South Africa , Equity -- South Africa , Law reform -- South Africa
- Language: English
- Type: Thesis , Masters , LLM
- Identifier: vital:3695 , http://hdl.handle.net/10962/d1003210 , Trusts and trustees -- South Africa , Equity -- South Africa , Law reform -- South Africa
- Description: This thesis analyses the doctrines of the sham and the alter-ego and their application to the law of trusts in South Africa. Following an initial examination of the historical development of the law of trusts in English law and the principles of equity law, the study focuses on the current legal status of the trust inter vivos in South Africa and the similarities to its English forerunner. The work traces the sham doctrine back to its origins in English law, where the term “sham” was first used in the context of fraud and dishonesty in cases involving matters arising from hire-purchase agreements, and explains how it gradually began to find its place in the law of trusts. During the exploration, the work highlights the cornerstone of the sham doctrine’s development, the Snook test, which in effect became the internationally accepted guideline for any sham trust enquiry. In terms of the alter-ego doctrine, the work highlights the birth of the principle in Australian law and the doctrine’s immediate reception into other common law jurisdictions and its resultant development. The growth, maturity and popularity of the doctrines are key to the thesis and, in the course of the investigation, the study provides a legal-comparative analysis of the treatment of the doctrines in the context of trusts against that in other common law countries. The study then shifts its focus to South Africa’s interpretation and application of these doctrines in trust law, and reveals the erroneous judicial development in which the courts have in some instances mistakenly replaced the sham doctrine with the company law doctrine of piercing the corporate veil or, in other instances, have erroneously conflated the two trust doctrines. The results highlight a breach of a fundamental rule observed overseas – the “no half way house” rule, which specifically cautions against South Africa’s chosen direction when allowing the lifting of a trust’s veil. The study closes with suggestions as to how the country could reconcile the problems underlined in the thesis by means of law reform, as well as offering practical advice for settlors, trustees and beneficiaries, the core of which is given in the handbook that accompanies this thesis.
- Full Text:
- Date Issued: 2011
- Authors: Stafford, Rowan Bell
- Date: 2011
- Subjects: Trusts and trustees -- South Africa , Equity -- South Africa , Law reform -- South Africa
- Language: English
- Type: Thesis , Masters , LLM
- Identifier: vital:3695 , http://hdl.handle.net/10962/d1003210 , Trusts and trustees -- South Africa , Equity -- South Africa , Law reform -- South Africa
- Description: This thesis analyses the doctrines of the sham and the alter-ego and their application to the law of trusts in South Africa. Following an initial examination of the historical development of the law of trusts in English law and the principles of equity law, the study focuses on the current legal status of the trust inter vivos in South Africa and the similarities to its English forerunner. The work traces the sham doctrine back to its origins in English law, where the term “sham” was first used in the context of fraud and dishonesty in cases involving matters arising from hire-purchase agreements, and explains how it gradually began to find its place in the law of trusts. During the exploration, the work highlights the cornerstone of the sham doctrine’s development, the Snook test, which in effect became the internationally accepted guideline for any sham trust enquiry. In terms of the alter-ego doctrine, the work highlights the birth of the principle in Australian law and the doctrine’s immediate reception into other common law jurisdictions and its resultant development. The growth, maturity and popularity of the doctrines are key to the thesis and, in the course of the investigation, the study provides a legal-comparative analysis of the treatment of the doctrines in the context of trusts against that in other common law countries. The study then shifts its focus to South Africa’s interpretation and application of these doctrines in trust law, and reveals the erroneous judicial development in which the courts have in some instances mistakenly replaced the sham doctrine with the company law doctrine of piercing the corporate veil or, in other instances, have erroneously conflated the two trust doctrines. The results highlight a breach of a fundamental rule observed overseas – the “no half way house” rule, which specifically cautions against South Africa’s chosen direction when allowing the lifting of a trust’s veil. The study closes with suggestions as to how the country could reconcile the problems underlined in the thesis by means of law reform, as well as offering practical advice for settlors, trustees and beneficiaries, the core of which is given in the handbook that accompanies this thesis.
- Full Text:
- Date Issued: 2011
The continued viability of the discretionary Inter vivos trust as an instrument for estate planning
- Lötter, Therésilda Sieglinde
- Authors: Lötter, Therésilda Sieglinde
- Date: 2007
- Subjects: Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Language: Afrikaans
- Type: Thesis , Masters , MCom
- Identifier: vital:900 , http://hdl.handle.net/10962/d1006148 , Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Description: The purpose of this study is to determine whether a discretionary inter vivos trust is still an effective instrument for estate planning. The process of estate planning, the role the trust plays in it and the background to the trust are described. The taxability and tax saving opportunities when the trust are utilised are discussed in the light of the Estate Duty Act, 45 of 1955, the Income Tax Act, 58 of 1962 (including the Eighth Schedule thereof) and the Transfer Duty Act, 40 of 1949. The opinions of tax and legal authorities in articles and relevant case law are also discussed. The impact of the "letter of wishes" on the stipulations of the trust deed is examined. Amendments to the Income Tax Act have placed a limit on the use of a trust for estate planning through a number of anti-avoidance measures, the introduction of a capital gains tax (in the Eighth Schedule) and the imposition of a high tax rate. The increase in the deduction granted in arriving at the dutiable amount of an estate, in terms of section 4A of the Estate Duty Act, from R1 500 000 to R2 500 000 has imposed a further limit on the use of the trust as an instrument in estate planning. The research demonstrates that, notwithstanding the amendments to the Income Tax Act, the trust still is a viable instrument, mainly because the trust operates as a conduit and because of its potential use in dividing taxable income amongst a number of beneficiaries. The stipulations included in the trust deed and the "letter of wishes" (if one exists), must be thought through carefully when estate planning is done, as it can give rise to the application of the general and specific anti-avoidance provisions as included in sections 7 and 103 of this Act. The research also concludes that, in assessing the effectiveness of the trust as an instrument in tax planning, the disadvantage of paying the higher transfer duty when the immovable asset is transferred to the trust should be weighed up against the possible saving in income tax and estate duty at a later stage. It is also clear that most assets owned by the trust are tax neutral, whilst many of the amendments under discussion deal with the taxability of trust income. The quantitative considerations underlying the use of the trust as part of the estate plan, remain unchanged. The research concludes by providing a framework of quantitative and qualitative criteria that can be used by an estate planner to determine whether it will be advantageous to transfer an asset to the trust to achieve the objectives of the estate plan.
- Full Text:
- Date Issued: 2007
- Authors: Lötter, Therésilda Sieglinde
- Date: 2007
- Subjects: Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Language: Afrikaans
- Type: Thesis , Masters , MCom
- Identifier: vital:900 , http://hdl.handle.net/10962/d1006148 , Taxation -- Law and legislation -- South Africa , Trusts and trustees -- South Africa , Trusts and trustees -- Taxation -- South Africa , Estate planning -- South Africa , Estates (Law) -- South Africa
- Description: The purpose of this study is to determine whether a discretionary inter vivos trust is still an effective instrument for estate planning. The process of estate planning, the role the trust plays in it and the background to the trust are described. The taxability and tax saving opportunities when the trust are utilised are discussed in the light of the Estate Duty Act, 45 of 1955, the Income Tax Act, 58 of 1962 (including the Eighth Schedule thereof) and the Transfer Duty Act, 40 of 1949. The opinions of tax and legal authorities in articles and relevant case law are also discussed. The impact of the "letter of wishes" on the stipulations of the trust deed is examined. Amendments to the Income Tax Act have placed a limit on the use of a trust for estate planning through a number of anti-avoidance measures, the introduction of a capital gains tax (in the Eighth Schedule) and the imposition of a high tax rate. The increase in the deduction granted in arriving at the dutiable amount of an estate, in terms of section 4A of the Estate Duty Act, from R1 500 000 to R2 500 000 has imposed a further limit on the use of the trust as an instrument in estate planning. The research demonstrates that, notwithstanding the amendments to the Income Tax Act, the trust still is a viable instrument, mainly because the trust operates as a conduit and because of its potential use in dividing taxable income amongst a number of beneficiaries. The stipulations included in the trust deed and the "letter of wishes" (if one exists), must be thought through carefully when estate planning is done, as it can give rise to the application of the general and specific anti-avoidance provisions as included in sections 7 and 103 of this Act. The research also concludes that, in assessing the effectiveness of the trust as an instrument in tax planning, the disadvantage of paying the higher transfer duty when the immovable asset is transferred to the trust should be weighed up against the possible saving in income tax and estate duty at a later stage. It is also clear that most assets owned by the trust are tax neutral, whilst many of the amendments under discussion deal with the taxability of trust income. The quantitative considerations underlying the use of the trust as part of the estate plan, remain unchanged. The research concludes by providing a framework of quantitative and qualitative criteria that can be used by an estate planner to determine whether it will be advantageous to transfer an asset to the trust to achieve the objectives of the estate plan.
- Full Text:
- Date Issued: 2007
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