Explore how trusts can play a crucial role in global estate planning, offering benefits such as asset protection and tax efficiency. Discover the various types of trusts and learn how to effectively manage your wealth across generations.
The transfer of assets between generations is often a complex process, and many individuals don’t have appropriate structures in place to preserve their wealth for the next generation. To what extent are trusts – both South African and offshore – still relevant in estate planning? What is their role in ensuring you leave an accessible legacy and don’t unintentionally create a burden for those who come after you?
Many South Africans today hold assets both locally and offshore, and trusts offer an efficient and flexible way to consolidate, preserve, protect and manage those assets. Establishing a trust has a range of benefits, not least of which protection against claims by creditors, and since the assets in the trust (depending on how they were transferred) won’t form part of your estate, estate duty of 20% (or even 25%) in South Africa won’t be payable on your death.
Trust structures can also help beneficiaries avoid the delays typically associated with deceased estate administration, as well as executors’ fees of up to 4.03% on assets. They may further protect against capital gains tax (CGT) arising from deemed disposal rules of effectively up to 18% on the capital gains on your growth assets on death. Trusts can also avoid situations where assets held in your own name are frozen on death, leaving surviving family members without access to liquidity to cover immediate expenses.
