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Trusts and Estate Planning

With the 2019 Budget speech behind us, Estate Duty has gone from 20% to 25% on the amount by which an estate exceeds R30m. That’s five new reasons for holding assets in a trust.

But really? Is anyone who’s sharp enough to accumulate R30m not going to have woken up to the idea of a trust? The answer, amazingly, is yes. There are such people out there. I’m currently finalising a business plan for a client who wants to buy a very profitable 28 year old dealership for, guess, R30m and the seller owns the shares in his company in his own name.

I guess that 28 years ago when he started the mom and pop business, he had no idea where it would end up and there was no event during its growth that triggered an awareness of the need for a trust and no auditor (yes, in those days companies had to be audited) who had the nouse to advise him properly.

So listen, all you moms and pops out there. When the second of you dies owning those shares, you will be deemed to have sold them to your deceased estate at market value, made a capital gain and become liable for Capital Gains Tax at 18% and your estate will also be liable for Estate Duty at 20% for the value up to R30m and 25% above that. So the total tax starts at 38% and jumps to 43% above R30m! And don’t forget the executor’s fees of 3,5% which takes those rates  to 41,5% and 46,5% respectively.


If the shares were held by a trust and you die, the trust does not die, so no taxes kick in. As simple as that, which is why our Minister of Finance can get away with it. Sure as heck he and the rest of our government worthies are wise to the benefit of trusts.



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Looking for even more informative content? Check out the books I have written which have proved to be very popular.

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