Your wealth structures:

time to declutter?

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Marteen Michau

Head of Fiduciary and Tax

At the start of a new year, we’re always encouraged to declutter – the house, garage, garden, office desk and laptop – even our minds. Although we’re already into February and most of us have by now forgotten our resolve to tackle those cupboards, it’s still an excellent time to declutter our financial affairs. We should at the very least consider a thorough review of our wealth structures – such as trusts – and update our most important documents.

The year 2018 was certainly eventful. We saw US president Donald Trump triggering a trade war, escalating warnings about the impact of climate change, the #MeToo movement, a British royal wedding, the closing down of some Sears and Toys ‘R’ Us stores, a super blue blood moon, and the launch of a NASA mission to ‘touch’ the sun.

Closer to home, we talked about Jacob Zuma resigning as South Africa’s president and being succeeded by Cyril Ramaphosa, the possibility of property being expropriated without compensation, and the VAT rate going up by 1%, to 15%.

At the start of 2019, we have no idea what this year will bring. We have a national election just around the corner. Zimbabwe is in turmoil, South Africans are emigrating, and ever-increasing amounts of capital and skills are leaving the country.

On the tax front, we don’t know whether the inclusion rate for capital gains tax purposes will be increased once again, whether the estate duty basic exemption amount will be increased, or whether the estate duty exemption for bequests between spouses will be taken away together with the exemption from donations tax for donations between spouses.

In the face of so much uncertainty, how can we best prepare from a wealth perspective? We believe it’s an excellent time to simplify our financial matters and wealth structures as far as possible and ensure we keep our most important documents updated, such as wills and trust deeds.

The following questions will assist in deciding what actions to take in a wealth structure review and overhaul:

  • Have you reviewed your will over the past 24 months?
  • Do you have a separate will that deals with your assets outside South Africa?
  • Have you reviewed your trust deed over the past 24 months?
  • Is there an independent trustee in office on the trusts in your financial structure?
  • Do you own immovable property outside South Africa?
  • Are there too many trusts in your financial structure?
  • Have you negotiated a discounted fee with your nominated executor?
  • Do you have a living will?
  • Have you nominated a guardian of your choice for your minor children?
  • Have your children received investment training from your investment advisers?
  • Have your adult children received trustee training in anticipation of becoming trustees of the family trust?
  • Have you registered the trust for tax purposes?
  • Does the trust have a bank account?
  • Are the trustees signing resolutions for trust transactions?
  • Are your children considering studying, working or living outside South Africa?
  • Do you clearly understand the purpose of each entity in your overall structure?

You may need assistance in answering these questions, or in deciding on the right course of action to declutter and reduce the complexity of your structures and your financial affairs – ensuring they’re correctly positioned for all (or at least most) eventualities. Please don’t hesitate to contact us at fiduciary@privatewealth.sanlam.co.za.

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