A trust document is a contract, and like any other contract, the wording must be precise and special care should be taken before signing it off. To optimise the structure and secure all the benefits bestowed by a trust, it is generally best to consult a trust specialist.
The first thing to consider is the reasons you have for wanting to set up a trust. These reasons must be methodically set down and explained. At the same time, thought should be given to the current state of legislation and regulatory trends to ensure that the document reflects both the letter and spirit of trust law.
A crude example would be avoiding including a statement in your trust that its sole purpose is tax avoidance. By including statements such as this, you will end up creating a trust that is open to challenge and fails to meet critical legislative tests on the validity of trust structures.
A large number of trust documents have been drafted with insufficient regard for their ability to withstand later challenge. In many cases assets that are assumed to be safely lodged within a trust are then deemed to be part of an estate simply because of injudicious wording. While intentions have to be clear, it is equally important not to set them down in a way that is too dogmatic or prescriptive.
Remember, circumstances change over time and the ability to be flexible is called for. It is also advisable to insert an amendment clause, setting down the circumstances in which the founding articles may be revised or updated, and to ensure that your trust is properly aligned to your will. The client's will should set out what bequests have to be made and to whom.
Planning around key events is also necessary; for example, the death at some stage of the key trustees and any capital gains tax implications. A loan account is also normally set up to repay the capital initially vested in the trust by the founder. Once approved, the trust documentation must be sent to the Master of the High Court for registration, which takes five to 14 working days.