Should I Put All My Assets in a Trust?

Trusts have become a buzzword in many social conversations – from YouTubers telling viewers to “buy every asset under a trust” to detractors calling them costly tools reserved for the rich. In an age of easily accessible advice, it can be difficult to decipher whether a trust is a practical tool or an emotional decision. The truth? There is no one-size-fits-all.

Be clear on the goal

There’s a myth that trusts are always the superior choice when planning your estate – but their effectiveness depends entirely on your circumstances.

Trusts require careful thought. Most people establish them to move growth assets out of their personal estates to preserve, grow and protect assets for future generations – but if not structured correctly, trustees aren’t chosen carefully, or simply not distinguishing personal assets from trust assets – it could fail.

The people behind the trust

Unfortunately, many families fall into the trap of choosing trustees based on emotional ties rather than competence, often resulting in conflict, sidelining, or alliances that undermine the trust. We’ve seen well-intentioned plans unravel when trustees lack financial knowledge or can’t work together.

Ask yourself: would you entrust a business to people with no experience or a history of conflict? If not, the same should apply to a trust. As a living structure, it needs trustees who are objective, collaborative, and add real value for the beneficiaries, in essence they are able to manage the affairs of another in a prudent manner

Do you have the personality for a trust?

Even with the right rationale and trustees, trusts can fail if the founder lacks the right mindset. We’ve seen founders treat trust assets as their own, struggling to separate ownership from control, especially where the founder is also a trustee.

If you can’t relinquish control or expect trustees to follow your wishes unquestioned, the trust fails. . Trustees must act independently and in the best interests of the beneficiaries, not the founder or funder of the trust

In South Africa, you can wear many hats in relation to a trust, which means that you could be the founder, funder, trustee and beneficiary of the same trust. In contrast, offshore trusts have stricter regulations, often requiring institutional trustees. This is done to ensure that the effective management of the trust remains in the intended jurisdiction. So, there is a clear separation of ownership and control. As a founder or funder, you must be willing to hand over control, so it’s crucial to assess the trust company’s credibility.

In addition to the above, another big consideration should be tax implications. Distributions from offshore trusts to South African beneficiaries may be taxable. Always seek tax advice in the jurisdictions in which the trust and the beneficiaries are tax resident, before establishing the trust.

In summary, setting up a trust – whether domestic or offshore – is a deeply personal decision that should align with your long-term vision and practical needs. Whether it’s to protect vulnerable beneficiaries such as minors, prevent wealth erosion, optimise tax, or preserve assets, a trust can be powerful but only if it’s purposefully structured and managed by capable, aligned trustees. It’s not a status symbol or quick fix, but a strategic tool rooted in your values, family dynamics, and financial goals.

By Nokuzola Cossie, Head of Fiduciary at Standard Bank Wealth and Investment, South Africa.