If you have the intention of becoming reasonably wealthy, then you should form your trust now, or as soon as you can afford it. The cost is currently R12 400 and you’ll also need a company for R1 980. But why the urgency? The answer lies in s56(2)(b) which allows all natural persons to donate up to a total of R100 000 each tax year free of Donations Tax.

Now, you and your spouse may not have R100K just lying around waiting to be donated, but you can still donate (before 28 February each year) and owe the money to the trust. The fact is that you can build up a sizeable loan owed to the trust over a fairly short time, then the trust can buy stuff from you using the loan, thereby wiping it out and getting your belongings into the trust and out of the hands of your creditors. This whole process helps to mitigate the effect of s42C, loans to trusts at low interest rates.

So, the sooner you form your trust the better. The only cost is that of forming the trust and the company that it needs to own, currently R14 380. We will not charge independent trustee’s fees for the first 12 months or until the company buys something. That means there are minimal maintenance costs (just company tax returns and CIPC annual returns) until the company becomes active. You actually don’t have to form the company yet if cash is a problem. That will save the immediate cost of the company and the occasional cost of the returns. You can owe the money to the trust and we can do a s42 asset for share swap later to get the loan account into the company, which is where it ultimately needs to be.