Further benefits of estate structuring will be:
Protection of MinorsIn SA Law a minor cannot be the registered owner of property, therefore the asset is liquidated and the proceeds invested in the Guardian Fund at 3% interest rate. Assets are also protected against spendthrift children, who will not be able to reduce the assets to zero.
Multi-ownership of assetsSome assets can not be divided, for example businesses, farms or other property. By placing these assets in a trust, the heirs can be the beneficiaries of the income generated by these assets.
ConfidentialityUpon the death of an individual a will becomes a public document on your death. A Trust does not form part of your estate and thus the assets of the trust remain confidential.
Benefits of a Property Shareholding Trust and a Company Structure
|Income Tax||41%||41%||28% 15% Dividends withholding tax (effective tax rate if dividends are paid is 38,8%)|
|Capital Gains||41% x 666,65 = 13,65%||41% x 666,65 = 27,31%||28% x 66,6% = 18,65%|
|Death of an individual||At deaeth the individual is liable for:||The Trust continues and is therefore not liable for the same tax/costs as at a death of an individual||The Company continues and is therefore not liable for the same tax/costs as at a death of an individual|
|Accounts are put on hold when an individual dies||N/A||N/A|
|Protection||No protection against creditors||Protection if structured properly||Protection if structured properly|
|Funding||Process is simplified||Trust registration required||Shelf companies are available but shareholding needs to be transferred to the trust|
|Can get up to 100% finance||New Trust up to 80%||New Company up to 80% A delay in trust registration may result in a potential transfer duty or CGT liability|
|TAX||N/A||Flexibility in tax planning i.t.o the conduit principle
Trustees have a discretion
|Lowest Income Tax
All shareholders receive same dividend
|Administration||One Tax Return||Trust return is complex||No Audit required|