This document discusses trusts, including what a trust is, benefits and disadvantages of trusts, taxation of trusts, and examples. Some key points covered include:
- A trust is a contract where a donor transfers assets to trustees to hold for the benefit of beneficiaries.
- Benefits of trusts include preservation of wealth across generations, protection of people and causes, and reduction of taxes like capital gains tax, estate duty tax, and donations tax.
- Disadvantages include the donor losing control over assets and costs of establishing and maintaining the trust.
- Taxation includes income tax and capital gains tax in the trust at rates of 40% and 20%, and distributions to beneficiaries may be taxed depending on rules.
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On Friday the 12th February Gordon presented to clients of MRA. The topic under discussion was the possible impact of the Davis Tax Committee on estate planning as we currently know it. The presentation also looked at updates made in a Webinar held between the DTC and the South African Institute of Tax Practioners.
On 12th November 2014 Gordon Stuart presented at the Kruger Lowveld Chamber of Business and Tourism networking breakfast. The topic under discussion was “Trusts and Wills – ‘A legacy or Liability’ - Pitfalls in Estate planning.
On Friday the 12th February Gordon presented to clients of MRA. The topic under discussion was the possible impact of the Davis Tax Committee on estate planning as we currently know it. The presentation also looked at updates made in a Webinar held between the DTC and the South African Institute of Tax Practioners.
On 12th November 2014 Gordon Stuart presented at the Kruger Lowveld Chamber of Business and Tourism networking breakfast. The topic under discussion was “Trusts and Wills – ‘A legacy or Liability’ - Pitfalls in Estate planning.
What is a QDRO and how do I get one in a Texas divorce?Adam Kielich
Fort Worth employment and divorce lawyer Adam Kielich discusses QDROs and how QDROs are obtained in a Texas divorce. Learn more about these critical orders and how they affect the property division in a divorce.
The Kielich Law Firm
2205 Martin Drive, Suite 200-K
Bedford, Texas 76021
P: 817-857-1123
W: www.kielichlawfirm.com
Developments in Personal Insolvency & BankruptcyJim Stafford
Discussion of developments in Irish Personal Insolvency & Bankruptcy legislation with a particular focus on Personal Insolvency Arrangements and the treatment of pensions.
What is a QDRO and how do I get one in a Texas divorce?Adam Kielich
Fort Worth employment and divorce lawyer Adam Kielich discusses QDROs and how QDROs are obtained in a Texas divorce. Learn more about these critical orders and how they affect the property division in a divorce.
The Kielich Law Firm
2205 Martin Drive, Suite 200-K
Bedford, Texas 76021
P: 817-857-1123
W: www.kielichlawfirm.com
Developments in Personal Insolvency & BankruptcyJim Stafford
Discussion of developments in Irish Personal Insolvency & Bankruptcy legislation with a particular focus on Personal Insolvency Arrangements and the treatment of pensions.
What are your rights when you're a beneficiary of a trust? What if you're NOT the trustee, but only the beneficiary, and you are having trouble getting information from the trustee. You see the trustee is responsible for administering the trust on behalf of the beneficiaries - not for themselves, unless the trustee also happens to be a (or one of) the beneficiaries too. Are they as beneficiary confusing their duty as trustee and vice versa.
IRS Payroll Tax Debt can be collected against business entities and individuals who are responsible for the financial obligations of a business. Just because a business is a Corporation, Limited Liability Entity or Non-Profit. This does not mean that the IRS cannot pursue collection against others under the Internal Revenue code 6672.
Many business owners, officers, investors, directors, members are under the belief that if the business Incorporates, is a limited company that they are protected individually for the business and financial obligations of the entity. NOT FOR PAYROLL TAX DEBTS. Payroll debts not dischargeable in a Bankruptcy either. Read the slideshare presentation for more information.
Let us assist with all your BBE Trust Administration & Compliance Affairs!
According to the Commissioner of the Broad-Based Black Economic Empowerment more than 50% of transactions involving Trusts are not compliant with the Code of Good Practice issued in terms of the BBBEE Act, which sets out certain minimum qualifying criteria for each type of trust.
How about getting you on the right side the law!
The number of stocks available to shareholders, (share capital), generates a number of associated legal issues. Gannons talk about the current issues and trends in share capital. They tackle key concerns such as pre-emption rights; share buy-backs, as well as the requirements linked to altering share capital.
Transfer penalties for VA claimants are expected to be implemented in February 2016. What does that mean for your trust drafting services? Will we need to change the language in our trusts? Or, worse yet, start using totally new trusts? Attend the upcoming VA Tech School Training with Dave & Victoria on December 2nd at 12 EST on Drafting Trusts After the Laws Change.
where can I find a legit pi merchant onlineDOT TECH
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US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
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Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to sell pi coins in all Africa Countries.DOT TECH
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I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
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BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
3. What is a Trust?
• A Trust is NOT like a company or cc
• A Trust is a contract – a stipulatio Alterii
• Some basic terms that will be used in the
discussion’
– Founder
– Donor
– Trustee
– Beneficiary
4. Benefits of a Trust
• A trust should not be set up purely to avoid tax
• Preservation of wealth
– Example: a farm or holiday house passed from one
generation to the next. – EDT and CGT
• Protection of people and promotion of causes
• Continuity
• Death Duties made up of
– Deemed CGT
– Exec fees
– Estate duty tax
5. Example
• Client purchased a property in Plett in 2003
for R1,8m. The property is now valued at
R8m.
• Savings so far are;
– CGT – R6,2m x 10% = R620,000
– Exec fees – saved R6,2m x 3,99% = R247,380
– EDT – R6,2m x 20% = R1,240,000
– Total saving of R2,107,380
6. Benefits of a trust
• Income tax, Capital gains tax and donations tax
• Donations tax.
– If a natural person makes a donation greater than
R100k then donations tax.
– From a trust then no donations tax.
• Income Tax and capital gains tax in the trust –
discuss at a later stage.
7. Disadvantages of a trust
• In order for a valid trust to come into existence the
donor must hand over ownership and control to
the trustees.
• The trustees become owners of the asset.
• Decision making is now made in terms of the deed
and not by 1 trustee ie the original donor.
• Costs: Banks normally charge between 1 – 2% of
capital. Sentinel at R11k per R10m tranche
8. Examples
• Jordaan v Jordaan & Badenhorst v
Badenhorst
• These are examples where the donor did not
relinquish control of the assets.
9. Taxation of Trusts
• Income tax and capital gains tax
• Distribution to beneficiaries – Sect 25B &
para 80
• Attribution – Sect 7 & para 68 - 72
• Taxation in the trust at 40% and 20% CGT
10. Example
• Ian and his wife Leigh-Ann have 3 children, namely Lisa
20, Paul 18 and Greg 16. Ian and Leigh-Ann are both
employed and both earn in excess of the maximum
marginal rate of 40%. Lisa and Paul are both at university
and have no source of income and Greg is still at school.
In order to minimise his death duties and on the advise of
his tax advisor Ian established an inter vivos trust. He
transferred R5 million in cash and other growth assets to
the trustees and they in turn invested it in various
portfolios. At the end of the financial year the trust had
earned R120,000 in taxable income.
11. Example continued …
• Before the Act changed the tax position would have been as follows;
• If the trustees had distributed the income to any or all of the children
then the full amount distributed would have been taxed in Ian’s hands
at 40% ie R120,000 x 40% = R48,000. Ian would then pay the
university education with this post tax income ie R72,000
• If the trustees had distributed the income to Ian or Leigh-Ann then the
income would have been taxed in their hands at 40% and Ian or
Leigh-Ann would still have to pay the university education with this
post tax income.
• If the trustees had elected to retain the income in the trust then owing
to the attribution rules of section 7(5) the full R120,000 would still
have been taxed in Ian’s hands.
12. Example continued …
• After the 1 July 2007 the tax position is as follows;
• The trustees can now distribute income to Lisa and Paul as
they are both over 18. They would each receive R60,000
which they need to declare in their tax returns. Owing to
the fact that they receive no other income their tax
liability would each be R3,060. Therefore their combined
tax liability amounts to R6,120 which is R41,880 less than
if it was taxed in Ian’s hands. Both Lisa and Paul can now
use these funds to pay for their education.
• There is now no need to distribute to Ian or Leigh-Anne or
to retain the income and tax it in the trust.
13. Trusts and your will
• Don’t take it for granted that you can
automatically bequeath assets to your IV trust. If
the definition of beneficiaries are too wide the
bequest could fail Braun v Blann & Botha.
• Leaving the primary abatement to an IV trust.
• Nominating a replacement trustee
• Great opportunity to transfer fixed property as
there are no transfer duties.
• Section 9(4) of the transfer duty act
14. Inter Vivos v Testamentary
• Pro-active planning v Re-active planning
• Testamentary trust is more ridged and it
cannot be altered
• IV Trust is normally open ended with regards
to vesting date whereas a TT usually has a
fixed vesting date
• TT could be classified as special trusts and
taxed at the beneficiaries tax rate (must be
below 21)
15. Existing trusts
• Dynamic document that must be reviewed
regularly. Tax laws and trust laws change.
• Experience at least 9 out of 10 trusts either
have wrong clauses or are missing clauses.
16. Examples
• The trust deed is drawn up in such a way that the trustees are
subject to the control of the founder in exercising their duties. The
result is that, although the founder gives up control in form, in
substance this is not the case.
• i) “The trustees have the authority to nominate and appoint
additional trustees of their own choice subject to the following:
– During his/her life Mr A has the exclusive right to nominate trustees for
the trust of his choice or to remove trustees at his discretion.”
• The mere fact that a founder has the right to appoint or remove
trustees should not in itself indicate that the founder/donor never
intended to give up control of the trust assets. As long as the
appointment is in the best interest of the beneficiaries, and not to
protect the interests of the founder/donor, then the substance of the
trust should not differ from its form.
17. Examples
• “Notwithstanding anything to the contrary
herein contained, for as long as Mr B acts as
a trustee he shall be entitled to veto any
resolution proposed by the trustees.”
• Where the veto right is structured
positively in the sense that one of the
trustees (who is also a beneficiary) can
overrule the rest then this will have negative
implications with regards to income tax,
capital gains tax and estate duty tax.
18. Examples
• “All resolutions by the trustees will be taken
by a majority vote provided that the vote of Mr
B is one of the majority votes.”
• Where the right is structured as a ‘negative
veto right’ it appears as if this right does not
bring section 3(3)(d) or section 7(6) and
section 71 into operation.
19. Example
• “Mr C has the right to act alone in all matters
concerning the trust without consulting the
other trustees.”
• Once again this veto right is positively
structured in the sense that one of the
trustees (who is also a beneficiary) can
overrule the rest. This will have negative
implications with regards to income tax,
capital gains tax and estate duty tax.
20. Example
• “ It is determined specifically that Mr D will have the
right to, in his will, prescribe the formula for the
distribution of Trust assets amongst the principal
beneficiaries at the termination of the trust, and this
indicates which part of the assets will go to which
beneficiary and these allocations need not be equal
in size, value or extent.”
• If Mr D is the donor/founder, trustee and also a
beneficiary (especially a capital beneficiary) then it
appears as if this clause falls within the scope of
section 3(3)(d).
21. Example
• Testamentary clauses often have the following supplementary
clauses added to neutralize the estate duty tax implications.
• “Notwithstanding anything else to the contrary stated in this
deed, no trustee shall at any time qualify as an income or capital
beneficiary of this trust or receive any benefits as such for so
long as he is competent to dispose of trust property for his own
benefit or for the benefit of his estate in the spirit and wording of
section 3(3)(d) of the estate Duty Act No 45 of 1955 or any later
amendment thereof.
• “The reservation of the testamentary power shall never be
interpreted in such a way that the conclusion be drawn that the
donor/founder/trustee (who is given the right) has the right to
allocate the trust income or capital to himself or his estate.”
• Although the above clauses will neutralize the estate duty
implications they do not have the same effect with regards to the
income tax and estate duty tax implications.
22. Getting assets into a trust
• Donate but will attract donations tax at
20%.
• Interest free loan.
• Bequest in terms of a will
23. Trust and Divorce
• If a spouse has received a benefit at any time
in the past then they become a party to the
stipulatio alterii.
• This means that the trustees cannot
unilaterally remove.
• Trustees were removed due to animosity
between trustees & beneficiaries. Erasmus &
Others v Venter & Others.
• Control of trusts: Jordaan & Badenhorst
24. Role of independent trustee
• Now required in terms of decision of
Land & Agr bank v Parker
• Shouldn’t just appear in name
• Must be party to all decisions and
should attend all trustee meetings
• His/her conduct could show if the trust
is a bona fide trust or a sham
25. Roles and duties of a trustee
• ensure that the trust property is adequately insured
• funds are properly invested by measuring fund managers performance
to approved benchmarks
• determine the short, medium and long term income and capital needs
of the beneficiaries
• ensure that the provisions of the trust deed are complied with and
upheld at all times
• ensure that all the trusts’ statutory requirements are complied with
• prepare and maintain a trust asset register (investments and fixed
assets)
• conduct trustee meetings (annually, bi-annually or quarterly)
• record minutes of the trustee meetings and investment decisions
• maintain and safekeep the minute book
• ensure loan agreements are kept