Offshore legacy planning
By Willem van der Merwe, Global Solutions Specialist
The South African Revenue Service (SARS) recently made a significant announcement regarding the distribution of funds from South African trusts to offshore trusts. This update has opened new avenues for estate planning, particularly for South African clients looking to optimize their wealth management strategies.
Key points of the announcement
Historically, South African trusts faced stringent regulations when attempting to distribute funds to Offshore trusts. These restrictions were primarily enforced by the Financial Surveillance Department of the South African Reserve Bank (SARB), which required prior approval for such transactions. For South African clients who are beneficiaries of a local trust wishing to externalise funds from South Africa, the only option was to use the annual foreign investment allowances afforded to South African individuals.
The local trust would need to make a distribution or loan to the beneficiaries for them to do this. However, the recent announcement by SARS marks a shift in this practice.
SARS has now clarified that it will consider approving the release of funds directly from South African trusts to offshore trusts under specific conditions. This approval will therefore not impact the annual investment allowances of the individuals who are linked to the trusts.
These conditions include:
Estate planning opportunities
This development presents a valuable opportunity for South African clients to enhance their estate planning strategies.
Here are some key benefits:
Practical steps for clients:
To take advantage of this opportunity, clients should:
Key take-away
By leveraging this opportunity, South African clients can optimize their estate planning strategies, protect their assets, and ensure a smooth transfer of wealth to future generations.
FNB Fiduciary (Pty) Limited Registration Number 1986/003488/07- A subsidiary within the FirstRand Group of Companies. An Authorised Financial Services Provider.
