Personal Structures for Succession Planning

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Personal Structures for Succession Planning2020-05-20T19:57:09+02:00

Many of us have accumulated assets or have plans to accumulate assets, the often overlooked part of the plan is how to set up the correct structure to own the wealth to protect the wealth if under financial threat, how to ensure tax savings are achieved and to save massive costs, duties and taxes on death.

No one wants to fail or lose their wealth but we certainly will all eventually die and a lack of planning results in many people losing assets, assets having to be sold or assets not succeeding to intended heirs when they die due to the costs, duties and taxes that are triggered on death.

In order to ensure that the above scenario does not transpire a number of key issues must properly be dealt with. It is therefore imperative that you ensure that the following issues are addressed, namely:

  1. Ensure that estate freezing is avoided or that estate freezing will not cause hardship for their family.
  2. Any minor children are appropriately dealt with, e.g assets in a testamentary trust, guardianship.
  3. List specific assets that are to be bequeathed to intended beneficiaries.
  4. How the remainder of the assets are to be distributed and to whom.
  5. Are specific assets only to be used by certain beneficiaries or heirs for a period but the ownership is for a different person.
  6. Ensure that capital gains taxes are eliminated or minimised. The maximum rate is currently 18% but through proper planning this can be minimised or even eliminated.
  7. Nominate an executor that knows the family and the estate and attend to an agreed fee or percentage to wind up the estate. The maximum legislated rate is 3.5% plus VAT (if the executor is a VAT vendor) and 6% on any income that accrues to the deceased estate.
  8. Attend to minimise or avoid estate duty. Currently estates under R3.5 million qualify for the abatement and are duty free. Any net estate in excess of R3.5 million but under R30 million will trigger duty at a rate of 20% and any net estate in excess of R 30 million will be subject to tax at 25%.

The simple solution is to establish the appropriate structures to ensure that you do not own the assets, the goal is in fact to own nothing. If you own nothing all of the above issues will be successfully eliminated.

The challenge is how to navigate the complex legal, tax (capital gains tax, transfer duty, VAT etc) and the costs of setting up the correct structures and moving the assets as inexpensively as possible.

Treasury and SARS have attempted to minimise succession planning structures BUT there are a myriad of options legally available to achieve the above objectives.

Delgado & Associates Inc has innovated structures that are legally compliant and we are at the forefront of our industry in assisting clients to transfer assets to the optimal structures without triggering taxes or transfer duties. This allows for any one to restructure their affairs at very low costs.