Trust allows payout of policies directly for the benefit of minors

Sanlam Trust’s Guardian Trust administers the financial needs of policy beneficiaries who are still minors. Policy holders, who nominate their children as beneficiaries of their policy benefits, can have the assurance that when they die, their children’s guardian will receive maintenance benefits immediately after the policy benefits have paid out, while the capital funds will be managed and utilised professionally by Sanlam Trust.

Berrie Botha, chief executive of Sanlam Trust, says, “The Guardian Trust accommodates the needs of clients who might not want their children’s guardian to be solely in control of their policy payout. There is always the risk that the guardian could make poor financial decisions, or that the funds are not used to the benefit of the minor, or even get mixed up with the guardian’s personal assets and end up in the hands of the guardian’s creditors. The intended beneficiaries could then lose their funds before they come of age. Rather, the trustee of the trust will work in consultation with the guardian to make sure the money is managed and invested independently and professionally in accordance with the minor’s unique needs and circumstances.”

Appointing the Guardian Trust is advantageous as it is registered and in existence already. Minors can therefore benefit from the payment of policy funds immediately after the client’s death, as there isn’t the delay usually associated with the creation of a trust. The trustee of the trust will analyse the financial needs of the minors, after which regular maintenance payments will be made. Income tax returns are also handled on behalf of the minors. And to make sure that important expenses, such as school fees, medical accounts and clothing purchases, are covered, payment will be made electronically directly to third parties on behalf of the minors.