Could your trust be disregarded by the courts?
The fact that assets are held in trust is no guarantee that the assets are safe from your creditors, SARS or even a ‘soon-to-be ex-spouse’.
What your intention was when creating the trust and your behaviour towards the trust assets, will determine whether the trust will be labelled an ‘alter ego trust’ or ‘sham trust’. (The two concepts are different).
If you have dealt with the trust assets as if they were your own, then the trust may be open to attack. The courts can pierce the trust veneer and treat the assets as if they fall into your estate. To prevent this scenario, there must be a clear separation between, on the one hand access to the trust assets and, on the other, ownership and control of the trust assets. All trustees – and not just one– should control the trust assets for the enjoyment of the beneficiaries.