Harbour & Associates

The vast majority of South Africans should not form a family trust. They fall into five categories. So, if you fall into group 1 or 2 below or all of groups 3, 4 and 5, don’t waste your time, energy and money. Don’t form a family trust if – You are not expecting to be reasonably wealthy (having income producing investments of R12m upwards) by the age of 65 or You cannot afford the fees to pay for a professionally designed Trust Deed or You don’t care if SARS takes between 32% and 60% of your wealth when you die…

What happens to the trust income when you retire? Now it’s you that needs the money. In our ideal trust structure, the trust owns the investment company, which pays 28% tax, then re-invests the 72% to build the investment portfolio. Maybe the company must declare dividends to its shareholder, the trust, and these can then flow to you as a beneficiary, like this – Let’s add up the taxes on say, R100 000 taxable income. Take off 28% Income Tax paid by the company and that leaves R72 000 available for dividends which will be taxed at 20% or R14 400.

Did you hear that heartrending advert on the radio? It was a recently retired couple who finally found a bank that cares for them. Now they can take that dream cruise that they’ve talked about for years and they can retire comfortably knowing that their capital is guaranteed safe. Why? Because the bank guarantees them a whopping 7 1/4% return. Now, if real inflation was 6% (wishthink) that would mean that they have 1 1/4% available to spend, so if they want to retire on, say, R60 000 before tax (and the way they are talking about cruises etc. they…

How can you plan to retire one day if you don’t know how much income you’ll need? You need to write a retirement budget. It’s actually pretty straightforward, but, in my view absolutely essential, unless you’re another Donald Trump with a few billion US$ to play with. Here’s how you get started. Ignoring inflation, picture yourself ready to retire. You have no debts and the kids are off your hands and supporting themselves. So all you need is enough after tax income to support your lifestyle and replace things like computers, motor cars and washing machines as and when they…

retirement

Who should not form a trust?

How to draw income from your trust when you retire

Cash is not king

Write a Retirement Budget

Do you want to leave your cart?