In today’s world, protecting your wealth and securing your family’s financial future is more important than ever. One of the most recommended tools for this is a family trust. You’ve probably heard that having a family trust is essential—it helps shield your assets from creditors, reduce estate taxes, and preserve wealth across generations.
But here’s where most people go wrong:
They make their family trust own assets or conduct business directly.
The Big Mistake: Making the Trust Own Assets Directly
Yes, the trust is a great tool. It ensures that your loved ones are protected even when things go wrong. But the problem comes when you start placing properties, companies, or shares directly under the trust.
Let’s say you’re in real estate and own several properties. If those properties are directly under the trust’s name, then the trust is considered to be trading or actively holding assets. In the event of any tax complications, ZIMRA or other authorities will come after the trust directly. That exposes your entire wealth structure and defeats the purpose of asset protection.
The Correct Structure: Trust > Company > Assets
Instead of having the trust owning assets directly, here’s a smarter, more secure structure:
- Register a company for each business venture (e.g., real estate, retail, etc.).
- Make your family trust the shareholder of those companies.
- Let the companies hold the assets, trade, and generate revenue.
- The trust then benefits passively as a shareholder—not an active trader.
Why This Structure Works
- Risk Protection: If something goes wrong in the company (debts, lawsuits, taxes), your trust is shielded because it’s not the entity trading.
- Efficient Tax Planning: Companies can better manage tax planning and compliance than trusts.
- Wealth Transfer: The trust can still distribute wealth to beneficiaries without being exposed.
- Creditor Shielding: Creditors go after what’s legally liable—your operating company, not the trust itself.
Bottom Line
Owning a family trust is wise—but using it the wrong way can be dangerous. Never allow your trust to own assets or trade directly. Set up companies to do the work, and make sure those companies are owned by your trust. That way, you get the best of both worlds: protection and control.
