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Newsletter 3

Newsletter 3


Happy New Year!
 
If you were away on an enjoyable holiday or just had a well-deserved rest over December, Welcome back!  If you had to work, while others were away on holiday, we hope you will take a break soon. 
 
For most of us the resting is now something of the past and we are looking forward to a fruitful and prosperous new year.  There is a lot to be said about a positive attitude.  Being the beginning of a new year, we can spend a little time on concentrating on a positive attitude.
 
If you are a keen golfer, you will know who Dr Bob Rotella is.  As a sports psychologist, golf guru, author and peak performance expert, he has a lot to say about attitude.  This is one of his sayings: 
 
“I tell people:  If you don’t want to get into positive thinking, that’s OK.  Just eliminate all the negative thoughts from your mind, and whatever’s left will be fine.”
 
Sounds simple enough, doesn’t it?

 
Everyone has a free will.  That includes the decision as to what will happen to all the earthly possessions and assets which were accumulated during one’s lifetime.  This is where your sound financial advice, planning and regular updating of your clients’ Wills play such an important role in preserving wealth for their loved ones. The decisions one make in one’s lifetime, affects the lives of those ones left behind.  The drafting of a Will is no quick, slapdash task, but one that needs a lot of careful consideration and planning.  One’s Last Will and Testament is probably one of the most important documents that will be drafted in one’s lifetime.
 
Your sound financial advice is your legacy to those left behind and a sure path for them to follow in future for advice and to have a Will drafted.
 
YOUR DECISIONS, YOUR LOVED ONE’S FUTURE – Part 1 
Read more in the next edition.
 
 
DO YOU KNOW WHAT THE BENEFITS OF TESTAMENTARY TRUSTS ARE?
 
  • In the event of one’s death, any inheritance payable to a *minor heir where no testamentary trust has been created, will be paid to the *Guardian’s Fund to be administered until the heir attains the age of 18.  In most cases, all the assets will be converted to cash.  Only in extreme cases (and with extreme measures) will the Guardian’s Fund accept the transfer of a fixed asset.
Under South African law minors cannot receive their inheritance directly.  To prevent funds from being deposited into the Government’s Guardian’s Fund, it is beneficial to create a trust for one’s minor beneficiaries in a Will.
  • In the event where there are major children from a previous marriage, a testamentary trust allows for the income of the trust to be utilized for the maintenance of a spouse from a second marriage (known as the *income beneficiary), while protecting the capital of the trust for the ultimate beneficiaries (known as the *capital beneficiaries).
  • A testamentary trust can be utilized to protect the inheritance of a vulnerable spouse/heir. 
A testamentary trust will qualify to be registered as a special trust with SA Revenue Services if:
  • Special Trust A:  This trust is created solely for the benefit  of a person who suffers from any illness as defined in Section 1 of the Mental Health Act or any serious physical disability, where such illness or disability incapacitates such person from earning sufficient income for the maintenance of such person.
  • Special Trust B:  This trust is created solely for the benefit of major and/or minor beneficiaries who are relatives of the deceased and who are alive on the date of death of the deceased (including any beneficiary who has been conceived but not yet born) and where the youngest of those beneficiaries are, on the last day of the tax year, under the age of 18;
 
Special trusts qualifies for tax advantages (income tax and capital gains tax) as these trusts are mostly taxed at the rates applicable to individuals (exceptions do occur).
 
Termination:
A testamentary trust termination date is a specific date chosen by the testator/testatrix whereupon the trust must terminate and the assets duly made over and/or paid to the capital beneficiary/ies.
 
Glossary
  • Minor heir – in terms of current legislation any heir under the age of 18 is considered a minor.
  • Guardian’s Fund – The Guardian’s Fund falls under the administration of the Master of the High Court.  It is a fund created to hold and administer funds on behalf of various persons, including minors, unborn heirs, missing or absent persons etc.
  • Income beneficiary – a person who will benefit from the income of the Trust.
  • Capital beneficiary – a person who will ultimately inherit the capital of the Trust.
 
It is essential to include a testamentary trust in one’s Will!
 
 
“WHERE THERE IS A WILL, I WANT TO BE IN IT!”
 
A Portuguese man died at age 42, unmarried, childless and had no living relatives.  The Portuguese state did not retain his estate, as was customary in such cases.   The reason being that he had made arrangement 13 years earlier:  his 12-room apartment, house, car and 25 000 euros were divided equally among 70 people whose names he chose at random from a Lisbon phone book.   Because it is rather unusual to have a Will in Portugal, many of his benefactors believed they were being scammed!
 
 
Until next time.
The Legatus Times Team
 
 

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