Harbour & Associates

There are two potential benefits – asset protection and estate planning I’ve dealt with the first in another article, so what about estate planning? Two taxes kick in on your death (or that of your spouse dying second if you have bequeathed everything to each other). Estate Duty at 20% or 25% is taxed on you net assets at the time of death. There’s an allowance of R3,5m each and that is often enough to leave the house untaxed. You are deemed to have sold your assets to your deceased estate at the moment of death…

There are three things in life that are certain – death, taxes and uncertainty! I spend lots of time advising about the first two, but what can we do about the uncertainty? I’ll frequently find myself in a meeting with a youngish entrepreneur, say 28 years old. We’ll be setting up a trust, planning his or her investment strategy, avoiding taxes on death, protecting assets against creditors and generally trying to avoid making the numerous mistakes that I’ve made in my life. Actually, planning…

Some trust advisors advocate having three (and, more recently, four) trusts. Great for them, dumb for you! They want you to buy these trusts from them (and it is amazing how many otherwise clever people fall for it) – 1) Your family trust. This one is to hold your family goodies, like toys-for-boys, jewellery etc. to protect them from creditors and to avoid the taxes on death. 2) Your property trust. To hold your investment properties. 3) Your share trust. To hold the shares in your business and any listed shares. 4) Your primary residence trust. This is their latest idea.

Donations Tax is levied at 20% on all donations (except to Public Benefit Organisations) by companies totalling in excess of R10 000 per annum and by individuals totalling in excess of R100 000 per annum, but how is this declared to SARS? The reason this comes up is that although this is very relevant to trusts and estate planning, we have never, during our 45 years in practice, submitted a Donations Tax Return on behalf of a client, so I actually had to Google it to find out what the return looks like. It is called an IT144 and is…

What? You don’t even have one? Shame on you. You battle all through your life trying to build up a bit of wealth and then you don’t even exercise your right to say what will happen to it when you die. That’s a bit like not bothering to vote in our new democracy So what happens if you die without a will (known as dying intestate). Then your assets will be distributed according to a rather complicated formula which we all learned at university then promptly forgot. It’s called “per stirpes”. From what (little) I remember it works like this…

We form a lot of trusts and never cease to be amazed at how the founders let them fall asleep. It is a common misperception that once you’ve paid for something you can forget about it. We find this with trusts, wills, bookkeeping, tax returns and a whole bunch of the services that we offer. You need to understand that when you form a trust or buy a shelf company, that’s only the beginning. But we even have great difficulty just getting our clients to the point where we can actually form their trust or change the directors of their…

So you set up your trust for asset protection and estate planning. Are there any other benefits? Two that I can think of. One I love the other I dislike intensely. The one I love is that it can be the means whereby one of your companies can qualify as a Small Business Corporation for tax purposes (potential tax saving of R95 000 per annum). In order to qualify, one of the requirements is that the shareholder/member is only a shareholder/member of that particular company. This is a problem if you have other business interests, so what we do is…

There are plenty more, but here are the most obvious top ten – First, the Do’s 1. Engage an independent professional (accountant or attorney) as one of the trustees. Otherwise you risk breaking down the firewall between your creditors and the trust assets. 2. Ensure that you are one of…

There are two principle reasons for forming a family trust (known as an inter vivos trust because it is formed during your lifetime). Firstly, the trust is a valuable estate planning tool as when you die, the trust does not die, so there is no Estate Duty payable on the trust assets and no CGT event. Secondly, the assets of a well formed and administered trust cannot be attacked by your creditors in the event of your bankruptcy. This diagram demonstrates both uses of the discretionary trust. Note that since this article was published, CGT for individuals has increased…

Estate Planning

Is there a benefit if I put my house in a trust?

Five things you can do to plan for an uncertain future.

Why you don’t need more than one trust

Donations Tax Returns

When did you last re-visit your Will?

Don’t let your trust or shelf company go to sleep

What else can my trust do for me?

4 do’s and 6 don’ts with your family trust

All about Trusts

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