Why a Trust? | @ Wealth (Pty) Ltd.
For the purpose of this writing there are two types of trusts that are important: 1. Testamentary alexandra Trust: Traditionally a Testamentary Trust use minor children's inheritance to receive on their behalf to manage until they reach a certain age have. A disadvantage of a traditional testamentary trust is that the assets, once the beneficiaries a certain age, be dissolved alexandra and the assets then transferred into the estates of the beneficiaries. Such assets remain so in the estate tax and capital gains tax cycle whenever inheritance occurs. This disadvantage could be solved by the Testamentary Trust set up to function alexandra as an Inter Vivos Trust. 2. An Inter Vivos Trust (Inter Vivos = Latin for among the living). It is also known as a living trust. The first (and perhaps most important) benefit of an inter vivos trust is the protection of assets from creditors. If the full ownership of an asset in an Inter Vivos Trust establish such asset falls within the estate alexandra of the trustees or the beneficiaries. So skuldeisters not a claim against sodangie asset (there are exceptions). Secondly, there is a trust also tax benefits. This benefit is on the level of estate tax, capital gains tax and income tax. Thirdly, there is a trust and certain benefits relating to executors, alexandra transfer costs and transfer duty. Because the tax benefits is technical in nature, I want only theoretical information about the tax advantages of a trust:
1.1 Any bequest to a spouse made is not subject to estate tax. The problem is that the spouse shall be severely alexandra enlarged and may at his / her death is normal estate tax applicable (then a much larger estate); The first 1.2 R3, 500,000 from bequests to persons / entities (other than a spouse) is not subject to estate tax. Any inheritance that fall outside these rebates are subject to 20% estate tax on the value of the bequest. 2. Capital Gains Tax: A primary residence (in a natural person / name registered) with a value / purchase price under R2, 000,000 is not subject to capital gains tax. If the value / purchase price over R2, 000,000, apply a discount of R1, 500,000 on the capital gains. Capital gains above R1, 500,000 on the primary residence is subject to capital gains tax. The definition of a primary property is the property which the person actually lives. Any other property / ies in an estate is fully subject to capital gains tax on death or alienation (sale). Capital gains tax is calculated as follows: Profit, less an annual rebate alexandra of R20, 000 X 25% X the person's marginal tax rate (ie a maximum alexandra of 10% if the individual's tax rate is 40%). As an Inter Vivos Trust "die", there is the death of a trustee no capital gains tax will apply. On disposal of a property (sales), capital gains tax if the property to a trust should. The calculation is as follows: X gains 50% X 40% (ie 20% of the profit). This gain is double the maximum capital gains tax of a natural person. By making use of the conduit principle, the profit of the trust, alexandra however alexandra afgewendel to all beneficiaries each R20, 000 per year discount has further calculated at their individual tax rates. So by this beleibuisbeginsel using less capital gains tax paid in an individual's name or in a trust. 3. Nkomstebelasting I: A natural person is liable to tax on any income in his name draw (with some deductions permitted). The calculation of the tax is applied on a sliding scale determined by the person's total income in a given tax year. The highest income tax rate for individuals is 40% income tax on the portion of income above R580, 000. Income in the trust vest is taxed at a flat rate of 40%. If the conduit principle applied and trust income to flow through to beneficiaries, the tax on such income is also distributed with associated tax savings. 4. Ksekuteursfooie E: The normal rate of executor is charged 3.5% (+ VAT = 3.99%) on the value of an estate. If assets are not a natural person's estate is settled, but in the Inter Vivos Trust this costs money because such trust will not die. 5. Transfer Pricing and Duty: The costs (with certain alexandra exceptions
For the purpose of this writing there are two types of trusts that are important: 1. Testamentary alexandra Trust: Traditionally a Testamentary Trust use minor children's inheritance to receive on their behalf to manage until they reach a certain age have. A disadvantage of a traditional testamentary trust is that the assets, once the beneficiaries a certain age, be dissolved alexandra and the assets then transferred into the estates of the beneficiaries. Such assets remain so in the estate tax and capital gains tax cycle whenever inheritance occurs. This disadvantage could be solved by the Testamentary Trust set up to function alexandra as an Inter Vivos Trust. 2. An Inter Vivos Trust (Inter Vivos = Latin for among the living). It is also known as a living trust. The first (and perhaps most important) benefit of an inter vivos trust is the protection of assets from creditors. If the full ownership of an asset in an Inter Vivos Trust establish such asset falls within the estate alexandra of the trustees or the beneficiaries. So skuldeisters not a claim against sodangie asset (there are exceptions). Secondly, there is a trust also tax benefits. This benefit is on the level of estate tax, capital gains tax and income tax. Thirdly, there is a trust and certain benefits relating to executors, alexandra transfer costs and transfer duty. Because the tax benefits is technical in nature, I want only theoretical information about the tax advantages of a trust:
1.1 Any bequest to a spouse made is not subject to estate tax. The problem is that the spouse shall be severely alexandra enlarged and may at his / her death is normal estate tax applicable (then a much larger estate); The first 1.2 R3, 500,000 from bequests to persons / entities (other than a spouse) is not subject to estate tax. Any inheritance that fall outside these rebates are subject to 20% estate tax on the value of the bequest. 2. Capital Gains Tax: A primary residence (in a natural person / name registered) with a value / purchase price under R2, 000,000 is not subject to capital gains tax. If the value / purchase price over R2, 000,000, apply a discount of R1, 500,000 on the capital gains. Capital gains above R1, 500,000 on the primary residence is subject to capital gains tax. The definition of a primary property is the property which the person actually lives. Any other property / ies in an estate is fully subject to capital gains tax on death or alienation (sale). Capital gains tax is calculated as follows: Profit, less an annual rebate alexandra of R20, 000 X 25% X the person's marginal tax rate (ie a maximum alexandra of 10% if the individual's tax rate is 40%). As an Inter Vivos Trust "die", there is the death of a trustee no capital gains tax will apply. On disposal of a property (sales), capital gains tax if the property to a trust should. The calculation is as follows: X gains 50% X 40% (ie 20% of the profit). This gain is double the maximum capital gains tax of a natural person. By making use of the conduit principle, the profit of the trust, alexandra however alexandra afgewendel to all beneficiaries each R20, 000 per year discount has further calculated at their individual tax rates. So by this beleibuisbeginsel using less capital gains tax paid in an individual's name or in a trust. 3. Nkomstebelasting I: A natural person is liable to tax on any income in his name draw (with some deductions permitted). The calculation of the tax is applied on a sliding scale determined by the person's total income in a given tax year. The highest income tax rate for individuals is 40% income tax on the portion of income above R580, 000. Income in the trust vest is taxed at a flat rate of 40%. If the conduit principle applied and trust income to flow through to beneficiaries, the tax on such income is also distributed with associated tax savings. 4. Ksekuteursfooie E: The normal rate of executor is charged 3.5% (+ VAT = 3.99%) on the value of an estate. If assets are not a natural person's estate is settled, but in the Inter Vivos Trust this costs money because such trust will not die. 5. Transfer Pricing and Duty: The costs (with certain alexandra exceptions
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