There’s a simple answer to that one. You don’t!

There’s one bunch of attorneys who claim to be experts on trusts. And yet, they will try to convince you that you need four trusts, not just one.

According to them you need a family trust to hold your personal effects, a residence trust to hold your primary residence, a share trust to hold your shares and a property trust to hold your investment properties.

They argue that this is necessary in order to isolate risks, but they miss the point completely. Actually, I’m sure they know this, but, like Woolies, they’d rather sell you four of something than one.

Let’s take a closer look.

Check the diagram below, personal effects usually carry no riskand earn no income, and can therefore be safely held directly by the (one) trust.

Your primary residence is bonded and therefore carries risk. If that bothers you, then hold it in a company which is owned by the (one) trust. If not, then hold it in your own name and take advantage of the R2m band that is free of CGT each time you sell.

Your shares will not pull your trust down because a shareholder is only at risk of losing his shares and is not exposed to the liabilities of the company.

Your investment properties earn taxable income, so they must be owned by a company (or companies) at 28% tax rate and the shares then held by the (one) trust.

This structure not only isolates risk, but is also structured properly from a tax point of view, successfully avoiding the 45% tax on trusts.