Understanding Living Trusts: A Guide to Estate Planning

Gareth Collier of Crue Invest details the attraction of these trusts and how to determine whether having one would be right for you.

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Once the assets are in the trust, people need to remember that the trustees then become the custodians of those assets. Typically, you would consider this when you want to go through what’s colloquially called an estate-pegging technique. So that’s where, for argument’s sake, you’ve established a business that looks like it’s heading in a really, really good direction, and it’s going to accumulate a lot of value over time.

BOITUMELO NTSOKO: Gareth, there’s a lot of information around about how setting up a trust can help you save on tax. Is this true in practice? That is then taxed on a sliding scale between 18% and 45% effectively, you are in your personal capacity on the PAYE tables. So, as I mentioned earlier, you as an individual, or you and your spouse, may be the ones who initially bought it, but once you pass away you’ve got to pass it down through multiple generations – which may kind of disperse the ownership of that property. Whereas, if you establish a trust, obviously the trust entity then houses and owns the property and the beneficiaries will just change over the years but it doesn’t incur any estate-related expenses or taxes.

And then once the trust is in place it needs to be handled almost like a business. Annual financial statements need to be completed. Income tax returns need to be completed. And when it comes to the trustees, the trustees are meant to have annual meetings. Bear in mind when it comes to estate planning, we do have the abatement in place, and the first R3.5 million of any individual’s personal estate is not liable for estate duty to begin with.

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