How to Legally Establish a Trust in Ghana: What You Need to Know
Understanding trusts and their uses is essential for anyone looking to secure assets, plan their estate, or make a philanthropic impact. This guide provides insight into how trusts operate in Ghana, their types, and the practical steps to set one up.
What is a Trust
A trust is a legal arrangement where one party, the “settlor,” transfers property or assets to another party, the “trustee,” who holds and manages them for the benefit of a third party, known as the “beneficiary.” Trusts are versatile tools, often used to transfer property or assets while maintaining control over their distribution.
Trusts involve three primary roles:
• Settlor: The individual establishing the trust and transferring assets.
• Trustee: The appointed individual(s) or organization responsible for managing the trust.
• Beneficiary: The person(s) or entity receiving the benefit of the trust’s assets.
Types of Trusts in Ghana
There are several ways to create a trust, each tailored to different needs and goals. In Ghana, trusts are commonly created in two forms:
1. Living Trust (Inter Vivos)
A living trust is established by the settlor during their lifetime and can either take effect immediately or upon the settlor's death. The settlor often retains the right to make changes to the trust instrument while alive. Alternatively, a living trust may be set up as irrevocable, meaning the terms cannot be changed once established.
2. Testamentary Trust (Trust Postmortem)
A testamentary trust is created by the settlor while alive, but it only comes into effect upon their passing. These trusts are especially useful when the beneficiaries are minors or require specific management provisions. Testamentary trusts can be structured in multiple ways, such as creating separate trusts for each child, allowing for tailored asset distribution and individualized management.
Key Advantages of Setting Up a Trust
Trusts offer unique benefits that make them an ideal tool for estate and wealth planning:
1. Asset Protection
One of the significant advantages of a trust is its ability to protect assets from creditors, legal claims, and even family disputes. Trusts are an effective method for preserving wealth and ensuring assets are safeguarded for future generations.
2. Controlled Asset Distribution
Trusts offer precise control over when and how assets are distributed, allowing the settlor to outline specific conditions or phases for inheritance. This feature is particularly beneficial for family wealth planning, as it enables conditional inheritance and supports responsible financial habits among beneficiaries.
3. Privacy
Unlike wills, which are often made public through probate, trusts offer complete privacy. Trust assets and distributions remain confidential, shielding the settlor’s financial affairs and beneficiaries’ inheritance details from public view. Additionally, trusts avoid the probate process in court, which can be lengthy and costly, allowing for a more efficient transfer of assets.
4. Flexibility
Trusts are highly adaptable, allowing for unique provisions that can align with specific family, financial, or charitable objectives. A trust can be amended or, in the case of a revocable trust, even dissolved. For example, a business owner might use a trust to ensure children receive their inheritance in stages—perhaps at 25%, 50%, and the balance by age 35. This approach encourages financial responsibility while protecting against creditor access.
5. Philanthropic Opportunities
Trusts are also powerful tools for philanthropy. By establishing a charitable trust, settlors can support causes that align with their values and extend their charitable impact beyond their lifetime.
Managing a Trust
Once a trust is created, it is administered by the trustee, who manages the assets according to the settlor's wishes. The trustee can be an individual, a group of individuals, or a professional entity. They are responsible for overseeing distributions, managing investments, and ensuring the trust operates in the best interest of the beneficiaries, while also aligning with the trust’s goals and legal requirements.
Setting Up a Trust with Scribe Advisory
Establishing a trust can seem complex, but with the right expertise, you can maximize its effectiveness and security. At Scribe Advisory we provide comprehensive trust management services to help you set up and administer your trust with confidence. Our team is here to guide you through the process, ensuring your trust meets all legal requirements and aligns with your financial and personal goals.
Creating a trust is a lasting step toward protecting assets, ensuring thoughtful inheritance, and advancing philanthropic objectives. Contact us today to learn how a well-structured trust can help you achieve these goals securely and effectively.