In order to withdraw from your unit trust fund, you need to give the unit trust management company or the investment platform a written instruction (which includes an electronic instruction).
If that instruction is received before the fund is priced for the day, your instruction will be processed the same day. It may, however, take up to 48 hours for the money to reflect in your bank account but usually it is quicker and most investors are paid out in 24 hours.
A money market fund typically pays out the next working day.
Don’t forget to set aside what you need to pay in capital gains tax if you have made a gain. Read more: How do I pay tax on my collective investment scheme?
What happens if I die?
You can leave your unit trust fund (bequeath it) to anyone you choose, but you must specify this in your will.
A unit trust investment can be divided equally between several heirs and the executor can give the heirs the choice of transferring the units into their own names or selling the units and taking the cash.
If you have made any capital gains, they will be taxable, unless you leave your investment to your spouse or life partner. A capital gains tax exemption of R300 000 applies in the year of your death. (How do I pay tax on my collective investment scheme?).
If you have not bequeathed your unit trust investment to anyone, the executor of your estate will instruct the unit trust management company to sell the units and pay the money into your estate’s bank account.
Can I use my unit trusts as security for a loan?
You can cede your unit trust investment as security for a loan, either partially or completely.
Make sure you cancel the cession in writing once the loan has been repaid. Also demand written confirmation that the cession has in fact been cancelled.
Never agree to an outright cession, which makes the person you are ceding to the new owner of your investment. Always use a security cession, whereby, if the debt is repaid, the ceded rights revert back to you.
If you absolutely have to sign surety for someone else’s loan using your unit trust investment, make sure the cession is for the one loan only. Never agree to an open-ended surety, whereby your investment is used to cover future loans without your knowledge.
