Essential Requirements for a Family Trust in Zimbabwe

Family trusts are now popular in Zimbabwe and a significant number of individuals and/or families are setting up family trusts. It is important to know the essential requirements to set up a family trust in Zimbabwe.

If a family trust is not formed or administered correctly, it can create a legal nightmare and affect all parties involved. Anyone thinking of setting up a trust should be aware of the essential requirements.

1. Choose a Name for Your Trust: A family trust should have a specific, identifiable name, though it is not legally required to carry the founder’s name or surname.

2. Clearly Defined Purpose: The trust must have a lawful, specific objective, even though “family trust” is only a descriptive term.

3. Trust Deed: While oral trusts are legally possible, a well-drafted written deed is essential. The trust deed outlines the terms, names of founders, trustees, beneficiaries, objectives, rights, and processes for trustee changes and asset distributions.

4. Appointment of Trustees: Trustees must be at least 18 years old, competent, independent, and act in the best interests of the beneficiaries. Both locals and foreigners can serve as trustees.

5. Beneficiaries: A trust without beneficiaries is invalid. Beneficiaries must be clearly identified or ascertainable, usually being family members.

6. Registration with the Registrar of Deeds: Trust deeds must be lodged for registration with the Registrar of Deeds, not the Master of the High Court. Once registered, the trust gets a unique registration number.

7. Open a Bank Account for the Trust: Though not strictly required, a separate bank account is crucial to keep trust assets separate from those of trustees or beneficiaries.

8. Compliance with Tax Laws: Trusts must register with ZIMRA and comply with estate duty, capital gains, and income tax requirements.

9. Transfer Assets to the Trust: Assets must be legally transferred (cession/donation) to the trust to ensure they vest in the trust and not with the trustees. This often requires formal conveyancing or share transfers.

10. Administration and Management: Efficient management, possibly with the help of accountants or lawyers, is key. Regular reviews of the trust’s objectives and proper record-keeping are essential for long-term success.