The Trust

Simply a Trust is a relationship  governed by agreement under which one person transfers title to specific assets to another who agrees to hold or manage it for the benefit of a third person. For asset protection it is best for the agreement to be documented in what is called a Deed of Trust which is then lodged by a registered lawyer (notary public) with the Registrar of Deeds.


In this arrangement founder can form a trust (a legal corporate entity) through entering an agreement (deed of trust) with a another person (say Jones) to transfer title to his assets to a Trust which Jones as trustee will hold and manage for the benefit of either the founder, his family or other people or organizations. The person who benefits is called the beneficiary. The assets or funds that comprise the donation to the Trust are called the Trust Fund.


The primary object of all trusts is that the capital funds thereof be suitably invested and that the income arising therefrom be devoted to some specific purpose or be paid to specified beneficiaries. The trustee must so invest the trust funds that the maximum possible income thereon is earned for the income beneficiaries, and also ensure that the risk of capital loss when the investments are ultimately realized is reduced to a minimum.  Generally the beneficiary is paid out from interest and dividends on the trust assets in such a way that the Trust Fund is allowed to grow.

Types of Trusts


Inter vivos trusts (living trusts)

An inter vivos trust is a trust that is formed during the lifetime of the donor. The transfer of the assets in the trustee takes place during the lifetime of the donor. One can retain a measure of control over the assets transferred to a trust, and can even make himself a trustee, though it is advisable, that the founder of a trust refrains from being the sole trustee when the trust is formed – he may create a trust with himself and another as trustees. In this way he divests himself of ownership of his property so that he holds it only in a fiduciary capacity for the benefit of another.


Once the trust is created, it becomes irrevocable. The donor cannot retain the right to change his mind at a later stage and amend the terms of the trust deed unilaterally without defeating the purpose of the trust. The disposition must be a genuine, total transfer of ownership to the trust.

There are two types of living trusts in Zimbabwe, namely vested trusts and discretionary trusts. In vested trusts, the benefits of the beneficiaries are set out in the trust deed, whereas in discretionary trusts the trustees have full discretion at all times about how much each beneficiary is to benefit.


Will or testamentary trusts

The will trust is a trust which becomes effective or is established only upon the death of the donor and is contained in the donor’s will. Because the trust does not take effect during the donor’s lifetime, he is able to amend the terms of the trust at any time before his death. For example the Beit Trust was set up by the will of Alfred Beit and became effective at his death. A will trust is usually simpler to form than the living trust since account does not have to be taken of the donor’s interest and control during his lifetime. Where a trust is created by will the testator stipulates in his will that the bulk of his estate or a particular asset, instead of being distributed among beneficiaries, is to be managed and administered by administrators for the benefit of beneficiaries nominated by the testator. The testator also specifies the powers of the administrators and the division of the income and capital among the beneficiaries and provides for other matters such as the termination of the trust.

Matters Practical On Trusts

There is no law in the Zimbabwe statute books that specifically governs trusts, so one must normally turn to common law for guidance.

In ordinary trust, the person will be the trustee in whom Put simply before the law the assets of the Trust are deemed to be under the ownership and control of Trustees. As the lawyers would put it – the dominium or ownership of the trust property resides in the trustees.


Let me provide comfort to would be founders of trusts by clearly stating that, – control, ownership and management of the trust property vest in the trustees for purposes of administration, but as trustees, they have no beneficial interest therein. This derives from the fact that, – a trust is an arrangement whereby assets are transferred by one person (the donor or founder) to another person (the trustee) who must administer them for the benefit of a third person (the beneficiary). The trustee, in his representative capacity, is the person in whom the assets vest, subject to his dealing with them in the manner set out in the trust deed or will.


The founder of the trust has a lot of power to determine the terms, function and scope of the trust, and so it is crucial that the document establishing the trust be well executed by a lawyer to clearly and accurately reflect the founder/settlor’s wishes. The trust deed itself usually gives wide powers to the trustees but even where the powers are limited or are very specific, the trustees cannot derogate from what is contained in the trust deed or will – they must abide by its terms strictly and not take any liberties with the property entrusted to them in the exercise of such powers. The trust is a self-regulating entity. The trust deed is given great weight, being regarded in the same manner as a constitution would be. Therefore disputes that may arise rarely require judicial intervention, and even then, the courts are loathe to vary the terms of the trust deed or will and prefer to construe them very narrowly so as to uphold the sanctity of the document since it is the first point of reference in ascertaining the nature of the agreement between the parties and to give legal effect to the wishes of the founder (or testator in the case of a will trust).


The underlying concept of trusteeship is that while the legal dominium of the property is vested in the trustees, they have no beneficial interest in it but are bound to hold and apply it for the benefit of some person or persons or for the accomplishment of some impersonal object or special purpose.




The formation of a trust is a relatively simple matter, and the trust itself is a flexible vehicle for use in various applications. There are no complicated procedures or formalities to be followed and no authority or approval is required from the State or any state official for the establishment of a trust, unlike the making of applications to the Registrar of Companies. There are really no statutory requirements and restrictions or qualifications or criteria for trustees – it is left to the founder to determine this if he so desires, unlike with a company and its directors who are subject to the provisions of the Companies Act.


Another important advantage of the living trust is that it enables one to preserve secrecy concerning the identity of his heirs, their respective portions and the terms on which they inherit. This is accomplished by bequeathing the estate, not directly to the heirs, but to the existing trust in which the heirs figure as beneficiaries. The heirs thus inherit through the inter vivos trust instead of directly under the will. Unlike company documents or a will, an inter vivos trust deed does not become a public document.


As we have seen, one of the overriding advantages of a trust is flexibility of purpose as well as adaptability and convenience. Another is that the rules that govern a trust are by and large the same whatever the purpose for which it is employed.

Other advantages include ease of formation and maintenance, low costs of formation and maintenance, and suit


Remember that the fundamental principle of trusts is the separation of ownership through the Trustees and enjoyment by the beneficiaries.

Critical Matters for Trustees are:

  • They should know and understand the duties of trustees arising from both the Common Law
  • They should comply with all the administrative requirements of the Deed, especially those regulating what the trustees are empowered to do and how the decisions of the trust are to be made;
  • The Settlor should ensure that independent trustees are appointed to the trust and that the independent trustees are party to all trust decisions;
  • The Trustees should keep a minute book recording all the decisions of the trustees and books of account recording the trust’s financial dealings.


I acknowledge assistance on legal matters from Mrs Sharon Wekwete, a brilliant legal mind from Outbox Consultancy, in this posting.

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  • Reply drtaffie October 29, 2010 at 1:42 pm

    Very interesting. I australia a trust is registered just like a self campany. Most professionals turn to tursts to reduce tax. Thier consultation fees are paid to the trust and they as beneficiaries get paid, however the money they are paid by the trust is taxed. So one just has to keep accuring assests to delay paying tax. What are the tax advatanges of the PBC and trusts in Zimbabwe?

    • Reply nurturingchampions October 29, 2010 at 2:38 pm

      Zim and RSA have really tried to close with newer legislation a lot of tax benefits. Trusts income is taxed either as income in the hands of the trust or in the hands of the beneficiary at disbursement. However the Trust is critical useful at creating multigenerational wealth in the sense that at the death of the settlor there is no estate duty, there is no delay in accessing the resources for the family and other benefits we shall discuss. But tax benefits have been eroded. The PBC is taxed just like the corporate tax in the course of doing business.

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