CASE STUDIES

The following financial case studies showcase how we work with our Clients
to help them achieve their financial objectives

Estate duty saving of R 1.5 million

Our Client’s parents passed away and the Trustees wanted to wind up the trust by cashing in the investments and distributing the funds to the deceased’s two children.

After studying the Trust Deed we recommended to the Trustees that they cash in half of the trusts’ assets and pay the proceeds to the one child, and that we take over the trusteeship of the trust.  In this example we saved CGT and estate duty of R 1.5 million, which will increase the longer our client lives.

Pension fund payout….. taxable?

A pension fund cashed in from a deceased estate paid income tax of over R 1 million and paid out the balance to the beneficiary.

PW Harvey & Company challenged the pension fund trustees and indicated to them that the beneficiary should have had an option to transfer the pension lump sum to a Living Annuity which would have resulted in a tax/estate duty saving of over R 2.5 million, increasing during the lifetime of the beneficiary.

Going forward, this pension fund has changed its rules to accommodate situations similar to this.

The beneficiary is waiting to be refunded and reinstated.

Use of an endowment for family trusts – CGT/Income tax saving

Trusts pay income tax at 41% from R 1 million and CGT at 33%.  If one invests funds in a five year endowment (it is flexible as you can make one withdrawal and one loan during the five year period), the endowment pays a withholding tax on behalf of the trust at the following rates:

Income tax at 30% – a saving of 11%

CGT at 12% – a saving of 21%