Protection of assets
A beneficiary can’t sell a right in a trust (unlike shares in a company). If a founder or beneficiary becomes insolvent, the assets in the trust continue to be protected (unlike shares in a company).
Tax-efficient income splitting
Income from a trust can be structured in a number of ways to provide tax efficiency. For example, R100 000 earned by a trust can be split between five beneficiaries, so they earn R20 000 each.
Assuming they earn no other income, they would pay no tax as this amount is below the tax threshold.
Custodianship of assets
Custodianship of the assets of the trust prevents them from being squandered or wastefully dissipated, for example, in those instances where the beneficiary is a minor, insolvent, incapacitated or inexperienced in money matters.