What is a Trust?
A trust is a legal arrangement in which one person, known as the founder (or settlor), transfers assets to another person or persons, the trustees, who hold and manage those assets for the benefit of named or identifiable persons, the beneficiaries. Although the trustees become the legal owners of the property, they do not own it for themselves; they hold it on behalf of the beneficiaries and must administer it strictly in accordance with the terms set out in a written document called the Notarial Deed of Trust.

The law of trusts in Zimbabwe is not contained in a single statute. Instead, it is a mixture of English law, Roman-Dutch law, Scottish trust principles and Zimbabwean common law, reinforced by case law and by the Deed Registries Act [Chapter 20:05]. Following the Deeds Registries Amendment Act of 2017, a dedicated section of the Act now governs the registration and administration of trusts, partly in response to a rise in the abuse of trust structures for tax evasion, money laundering and the concealment of assets.

For a trust to be valid in Zimbabwe, the courts have consistently required four essential elements drawn from the leading authority of Richards v Nichol 1996 (4) SA 253 (C): an intention on the part of the founder to create a trust; the expression of that intention in a manner capable of creating a legally binding obligation; trust property defined with reasonable certainty; and an object of the trust defined with reasonable certainty, whether that object is a person, a class of persons or a lawful impersonal purpose. Although it is technically possible at common law to create an oral trust, the only practical and enforceable route in Zimbabwe is a written Notarial Deed of Trust prepared by a Notary Public, signed by the founder and trustees before that notary, and lodged with the Registrar of Deeds in either Harare or Bulawayo.

How a Trust Is Set Up
Setting up a trust begins with a clear conversation between the founder and a legal practitioner who is a registered Notary Public. The founder must settle on a name for the trust (most commonly a family surname, for example “the Moyo Family Trust”), identify the trustees (a minimum of two is required, and they must be at least eighteen years of age and capable of contracting), identify the beneficiaries (who can include unborn children and grandchildren, and need not all be named individually if they are described as a clearly ascertainable class), and define the lawful objectives of the trust.

The Notary Public then drafts the Deed of Trust, which sets out the founder’s contribution, the powers and duties of the trustees, the rules for their appointment, removal and remuneration, the manner in which beneficiaries are to benefit, the circumstances in which the trust may be amended or wound up, and the law that will govern its administration. The deed is signed before the notary, sealed, and then lodged with the Registrar of Deeds in triplicate together with the prescribed registration fee. Once the Registrar is satisfied that all formalities have been complied with, the deed is registered and the trust comes into existence as a separate legal arrangement.

It is important to appreciate that registering the trust deed is not the same as funding the trust. The trust only owns property that has been formally transferred to it. Where immovable property is involved, this requires conveyancing and the issue of a fresh title deed in the name of the trust; where shares or businesses are involved, it requires share transfers; and where movable assets such as vehicles or bank accounts are involved, the appropriate cession or transfer documentation must be completed. A common and costly mistake is to register a trust and then leave family assets in the personal names of the founders, in which case the protection that the trust is supposed to provide simply does not exist.

Practical Advantages and Common Scenarios

Estate planning and protection on death
The most enduring benefit of a trust is perpetual succession. A trust does not die. When the founder or any of the trustees passes away, becomes incapacitated or emigrates, the trust continues to exist and to own its property, and a new trustee can be appointed in accordance with the deed. Property registered in the name of the trust does not form part of the founder’s deceased estate. It therefore does not have to go through the often slow and expensive estate administration process supervised by the Master of the High Court, and it is not exposed to estate duty, capital gains tax on transfer to heirs or the disputes between widows, children, half-siblings and relatives that so often arise during the winding-up of estates in Zimbabwe.

For a parent who wants to ensure that school fees continue to be paid, that the family home is preserved, or that a business is not torn apart by an inheritance dispute, a properly funded family trust is one of the most powerful tools available.

Asset protection from creditors
Because the assets in a trust no longer belong to the founder or to the beneficiaries personally, but are owned by the trust itself, they are generally beyond the reach of personal creditors of the founder, the trustees or the beneficiaries. This is particularly attractive to business owners, professionals such as doctors and lawyers who may face professional liability claims, and farmers exposed to fluctuating commodity prices and bank financing. The protection is, however, only as strong as the timing and good faith behind the transfer; assets shifted into a trust on the eve of insolvency or in the face of an existing claim can be unwound by the courts.

Property transfers and family wealth preservation
A trust is an efficient vehicle for holding immovable property, businesses and investments across generations. Rather than passing title from parent to child to grandchild, with conveyancing fees, capital gains tax and rates clearance certificates triggered at each step, the trust simply continues to own the property while different generations of beneficiaries enjoy its use and income. This is especially useful where a family wishes to keep an ancestral home, a farm or a commercial building intact for the long term.

Marriage and divorce
This is the most commonly misunderstood scenario. Under the Matrimonial Causes Act [Chapter 5:13], a Zimbabwean court distributing the assets of spouses on divorce considers all property of the parties, including assets acquired before the marriage, and applies the principle of direct and indirect contribution to arrive at a just distribution. As a general rule, property genuinely owned by a third party, including a trust, is not part of the matrimonial estate and is therefore not available for distribution between divorcing spouses.

A trust can therefore protect family wealth from being eroded by the breakdown of any one marriage, particularly where the trust was set up well before the marriage in question, where the trustees genuinely act independently of the spouses, and where the property in the trust has never been treated by the parties as their own. It can also be used legitimately to ring-fence inheritance from one side of the family, business interests built up before a marriage, or assets that the parties wish to preserve for their children rather than for each other.

What a trust cannot do is operate as a last-minute hiding place for marital assets. Where a court is satisfied that a trust is in truth merely an alter ego of one of the spouses, it will look behind the trust structure and treat the assets as if they were personally owned. This brings us to the most important warning attached to trust planning in Zimbabwe.

Prohibitions and the Sham Trust Doctrine
Zimbabwean law does not permit a trust to be used to defeat the rights of creditors, of a spouse, of the tax authorities or of any other person to whom the founder owes a legal duty. The object of every trust must be lawful, and the trustees must in fact exercise independent control over the trust property. Where these requirements are not met, the courts will treat the trust as a sham, set it aside, and deal with the assets as the personal property of the founder.

A trust is most likely to be ruled a sham where the founder continues to use the trust property as if it were their own; where the trustees are nominees who simply do as the founder instructs and never hold genuine meetings or keep proper records; where the trust was created or assets were transferred to it shortly before a divorce, an insolvency or a tax investigation; where the funding of the trust is undocumented or fictitious; or where the founder retains powers under the deed that effectively allow them to revoke the trust at will and reclaim the assets. The reported jurisprudence around high-profile divorce litigation in Zimbabwe, including the much-publicised Chombo divorce, has illustrated how courts will not hesitate to look behind trust structures where there is evidence that they were used to conceal matrimonial assets or to deprive a spouse of a fair share.

The Deeds Registries Amendment Act of 2017 has tightened these rules considerably. Trustees must now keep up-to-date records of the identities and addresses of all parties to the trust, must disclose information about every financial institution and designated non-financial business or profession that provides services to the trust, and must notify the Registrar of Deeds in writing of any change of trustee within one month. Failure to comply with these obligations is a criminal offence. A trust must also be registered with the Zimbabwe Revenue Authority (ZIMRA) and must comply with income tax, capital gains tax and, where applicable, value-added tax.

A further category of prohibited trusts are those whose objects are themselves unlawful, for example trusts established to hold the proceeds of crime, to launder money, to evade exchange control or to circumvent indigenisation, mining or land laws. Such trusts are void from the outset and expose both the founder and the trustees to criminal liability.

In practical terms this means that a trust is a powerful tool but a poor hiding place. It will protect what has been honestly placed within it and properly administered; it will not protect what has been smuggled into it on the eve of a court case.

How Swallowane & Co. Assists Clients
Swallowane & Co. assists individuals, families and businesses to establish, fund and administer trusts that are robust, compliant and fit for the purpose for which they are intended. The firm is licensed with the Zimbabwe Revenue Authority (ZIMRA) to provide tax advisory and tax compliance services, and is licensed with the Companies Registry Office to provide company secretarial services. This positions Swallowane & Co. as the financial, tax and structuring partner for clients setting up trusts, working alongside an established network of independent legal partners who attend to the strictly legal and notarial aspects of the transaction.

Each engagement begins with a confidential consultation in which the client’s circumstances, family structure, asset base and long-term objectives are fully canvassed, so that the trust that is eventually established reflects the client’s real intentions rather than a generic template. Where a Notarial Deed of Trust is required, the deed is prepared and notarised through the firm’s independent legal partners, while Swallowane & Co. acts as the financial and structuring advisor — modelling the Capital Gains Tax, stamp duty and income tax consequences of each proposed transfer, recommending the most efficient sequence in which assets should be moved into the trust, and ensuring that the deed itself reflects the agreed financial logic. The legal partners then lodge the deed for registration at the Deeds Registry in Harare or Bulawayo and follow it through to issuance of the registered deed, while the firm coordinates the conveyancing and cession work required to transfer immovable property, businesses, shares and other assets into the trust, so that the trust is genuinely funded and the protections it offers are real rather than theoretical.

Beyond setting up the trust, Swallowane & Co. provides ongoing support to trustees in the form of corporate secretarial services, drafting of trustee resolutions and minutes, registration of the trust and of its tax obligations with ZIMRA, preparation and filing of annual income tax and CGT returns, calculation and remittance of any CGT triggered by transfers in or out of the trust, applications for CGT Clearance Certificates, advice on amendments to the trust deed, and assistance with the appointment, removal and replacement of trustees. Where disputes arise between trustees, beneficiaries or third parties, the firm coordinates representation through its legal partners. It also assists, again in conjunction with those partners, with testamentary trusts incorporated into wills, with charitable and educational trusts, and with the orderly winding-up of trusts that have served their purpose.

Above all, the firm advises clients candidly on what a trust can and cannot lawfully achieve, and structures every arrangement in a way that will withstand scrutiny by ZIMRA, by the Master of the High Court and, if it ever comes to it, by a divorce or insolvency court. A well-drafted, properly funded and honestly administered trust is one of the most enduring gifts a person can leave to the next generation, and Swallowane & Co. is committed to ensuring that each trust it helps to establish is exactly that.