Solutions

On or after retirement, one normally consolidates your assets and you want to explore what options you have in getting the most out of your life savings. In other words, you want your money to “work” for you. Although it is a time when many clients consider downsizing, the majority wants to maintain their standard of living, and their independence, and definitely follow through on that special dream that was always postponed, like a trip abroad or spending more time doing community work. It is also a time when clients consider the maintenance and ultimate distribution of their wealth for the security of their loved ones.

The main risk that needs to be addressed during this stage is the preservation of your estate.

Clients often misunderstand estate planning as only consisting of the drawing up of a last will and testament for the winding up of your estate upon your, and/or your spouse’s death. With the right planning, however, plans can be put in motion with proper estate planning methodologies to not only preserve, but also create wealth in your estate during your living years.

Although there are some uncertainties regarding the future of certain elements of the trust tax regime, National Treasury announced in the first half of 2013 that the proposed changes to tax legislation regarding trusts will not take place immediately. The proposed amendments aim to eradicate income splitting opportunities afforded through this principle, but should have no effect on special trusts, created for the care of children or family members that need special care and treatment.

At present, the conduit principle operating in trust tax law, allows for income that accrues in a trust to be taxed in the hands of the beneficiary.