September 9, 2022

Distributing retirement fund death benefits

Making benefit allocations equitably and fairly AS PER Section 37C of the Pension Funds Act, once trustees have identified dependants of a deceased member, the next step is to allocate the death benefit in a proportion they deem fit.  This article highlights some of the key factors in making this determination. Section 37C grants trustees at least 12 months to search for dependants, but the timeframe for allocating benefits depends on the completeness of the information provided, as well as the response time of the dependants and nominees.  While trustees should aim to distribute the death benefit as quickly as […]
December 9, 2021

Who qualifies for a special trust and how is it taxed?

Unlike “conventional trusts” that are taxed at a flat tax rate, a special trust is taxed on the same sliding scale applicable to natural persons. The Income Tax Act provides for two types of special trusts: a so-called type-A and type-B trust. In essence, a type-A trust is created for a person (or persons) having a disability, while a type-B trust is created on a testator’s death and can exist only while it has a minor as a beneficiary. The distinction between a type-A trust and a type-B trust is vital because a type-A trust qualifies for specific relief from […]
October 14, 2021

Deceased’s document not considered a valid will, despite clear wishes

The Wills Act sets out the requirements for a valid Last Will and Testament. For a will to be valid, it must be signed and witnessed. What happens if the wishes of the deceased are clear, but the document does not meet the requirements of a valid will? This was the heart of the matter in Estate Late Elaine Ilsia Williams and Others v Hendricks and Another, heard in the Western Cape High Court. In this matter, the close relations of the deceased sought an order directing the Master of the High Court to accept as a will for the […]
June 4, 2021

Can losses be distributed out of a trust?

On 18 March 2021, the Supreme Court of Appeal delivered judgment in the case of Massmart Holdings Limited v The Commissioner for the South African Revenue Service. The case dealt with losses which were incurred within the broader Massmart group in respect of the investing of equity instruments as part of an employee share incentive scheme.  The mechanism of the scheme was that shares allocated to the designated employees would be purchased from a share Trust with funding from Massmart Holdings. Upon distribution of those shares to the designated employees, the share Trust could either have losses in respect of the distribution, or taxable gains.  Over several years of assessment, the Trust realised losses on the distributions on the vesting of those shares in the designated employees for a cumulative amount of R954 million. Rather than claiming […]
July 28, 2020

Safeguard your children’s inheritance

Ensuring their children are cared for when they pass away is one of the primary reasons people draw up a will. But what happens when the best interests of the children that are left behind are not at the forefront when an estate is administered and maintenance needs to be paid? This is, unfortunately, a question that many minor beneficiaries and their guardians have had to come face to face with over the years in their dealings with the Guardian’s Fund. The Guardians Fund is a Government entity, regulated by the Master of the High Court, that is responsible for […]
September 8, 2017

ESTATE PLANNING FOR YOUNG ADULTS

It is very important for you to plan your estate, which could include a living will, a last will and a living trust. This can help families prepare for difficult times when you are no longer around to assist or advise them. Our lives get busier and more complicated by the day, so estate planning for young and old becomes increasingly important. Young people should consider preparing certain estate planning documents. When to start with estate planning? At the age of 18 a young man or woman officially becomes an adult in the eyes of the world. This means that […]
April 11, 2017

RENTEVRYE LENINGS EN TRUSTS

Die onlangse invoering van Afdeling 7C tot die Wet op Inkomstebelasting1 het die belasting van trusts, en spesifiek die befondsing daarvan, opnuut onder die soeklig geplaas. In kort, Afdeling 7C beoog die heffing van skenkingsbelasting op lenings verskuldig deur trusts aan verbonde partye (tipies die begunstigdes of maatskappye wat dit beheer). Tot die mate waartoe rente nie gehef word nie, word ‘n donasie geag as deur die krediteur gemaak wat jaarliks gelykstaande is aan die verskil tussen die werklike rente gehef (indien enigsins), en rente wat gehef sou word indien ‘n koers van prima minus 2.5% van toepassing was. Baie […]
October 10, 2016

VOORGESTELDE WYSIGING AAN DIE BELASTING OP TRUSTS

Die Nasionale Tesourie het sy langverwagte voorgestelde jaarlikse wysigings aan belastingwetgewing in Julie gepubliseer. Hierdie jaar is daar verwag dat die voorgestelde wysigings duidelikheid sou bring rakende die Tesourie se voorstelle oor hoe om die merkbare misbruik van die trustvorm aan te spreek met die oog op die toekoms, veral met verwysing na die nou bekende “leipyp”-beginsel (in terme waarvan inkomste ontvang in ‘n trust mag “vloei deur” die trust en eerder in die hande van die trustbegunstigdes belas word). Vele skrywers in die media, sowel as praktisyns, het wyd kommentaar gelewer en die allerweë verwagte beëindiging van hierdie goedverskanste […]
July 5, 2016

THE IMPORTANCE OF THE INDEPENDENT TRUSTEE

A well-known court case, Land Bank of South Africa vs. JL Parker and Two Others (the Parker case) irrevocably changed the requirements for independent trustees to be appointed and placed renewed focus on the duties and responsibilities of all trustees. As a result of the Parker case, most Masters of the High Court now require an independent trustee to be appointed in addition to the trustees who are beneficiaries of the trust, and therefore will not issue a Letter of Appointment without at least one independent trustee being appointed. An independent trustee will be a person who is not related […]
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