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WRITING YOUR WILL
What is a Children's Trust and how do they work?
What is a Children's Trust and how do they work?
Updated over a week ago

The children's trust which Quickwill uses is a testamentary trust, which is an independent legal entity that gets created upon your passing. The trust deed which governs this trust is created as part of your Quickwill, if you choose to create one.

Trusts and trustees

A trust is managed by trustees, who manage the assets of the trust to the best of their ability, in line with the powers awarded to them in the trust deed, to the benefit of the beneficiaries of the trust. Make sure you appoint people who you trust and believe are capable and competent to do this.

Trusts are often used in cases where the testator has minor children or children who are differently-abled and will require care for the duration of their life.

It is advisable that you have more than one trustee and a maximum of three. Try to appoint one professional person, a lawyer or an accountant for example, who will know about the formalities regarding the administration of a trust - such as filing trust resolutions, and ensuring the trust accounts are submitted to the Master as and when necessary.

Real life scenario for the use of a Children's Trust

That sounds like a mouthful, so let's use an example: Zac is a testator who has three children, aged 5, 7 and 11. Zac owns 8 properties in Cape Town. Zac is divorced from the mother of his children, Zoey, as Zoey was a spendthrift. Zac wants to leave all his assets to his three children, and ensure that there will be enough money to provide for the maintenance and support of his children (medical care, education, subsistence etc) until they are adults. If Zac creates a Children's Trust, his assets will upon his passing be transferred to the Children's Trust, where it will be managed by the trustees he appointed in the Trust Deed. The Trustees will need to ensure that these assets are managed appropriately so that the needs of the children (beneficiaries of the trust) can be taken care of as Zac intended. Properties will have to be managed by the trustees or they can appoint managing agents which the trustees will oversee. Trustees may deem it necessary to sell some of the properties at some point, or take out a bond over a property to help to pay for the education of the children.

Trustees will be able to decide, for instance, whether it is financially viable for the children to go to expensive private schools, given the financial status of the assets in the trust and the specific directions in the trust deed.

In summary, a trust is a legal entity which will take over your assets upon your passing and mange the assets in a way which would ensure that your children maintain the standard of living you envisaged for them.

In the trust, you will indicate when the trust will terminate and determine that assets should be distributed between the beneficiaries upon the termination of the trust.

How much does it cost?


Due to the legal nature of trusts, they require a basic level of administration. Depending on the competency of the trustees, they might be able to take care of these administrative duties themselves, or might need to appoint professionals to assist them with these duties. Either way, trustees or the professionals who help them, will be entitled to remuneration for their services. An example will be the annual financial statements that need to be drawn up for the trust by an accountant. This accountant is entitled to his usual professional fee, and the trust would have to pay for the expense. There is no fixed amount of how much the running of a trust costs, and it will greatly depend on the value and type of assets in the trust which need to be managed. Suffice to say, that the value of your estate should be big enough to be able to handle these type of administrative expenses, all while providing for the beneficiaries of the trust, until at least the date of termination of the trust.

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