iProtect Exchange Services
Our cloud-based software significantly speeds up the process of administrating your deceased estate and gives you and anyone you choose full access to your up-to-date documents.
Last Will & Testament
iProtect is a leading service provider in estate and succession planning. A Last Will and Testament is a crucial document and must be correctly drafted to ensure that an individual’s wishes and intentions are properly recorded and executed.
Unfortunately, too many people do not obtain the correct advice or have Wills that are poorly drafted and in many cases invalid. This is the result of a DIY job or using the internet or unqualified assistance and but not limited to being au fait with the legal requirements for a valid will under South African Law.
In some cases there may be offshore assets and the local Will creates impediments, triggers unnecessary costs or taxes and avoidable hardships. In a number of instances unqualified persons draft the individual’s Will resulting in an invalid Will or not correctly recording the individual’s wishes.
Another major area of concern that we have noted is individuals not properly addressing the issue of minor children. A minor child is a person under the age of 18. Under South African law a minor cannot directly inherit and this can result in assets having to be sold and the cash administered by the Guardians Fund a division of the Justice Department. Assets may be held by a third party for the child but may be squandered. The area of guardianship is crucial for the security and wellbeing of how the children are to be raised and cared for.
Restrictions
In order to ensure that a number of key issues are properly dealt with it is imperative that a planner ensure that the following issues are addressed, namely:
- Ensure that estate freezing is avoided or that estate freezing will not cause hardship for their family.
- How are current expenses dealt with and from which accounts, e.g debit orders that may be unpaid as the bank account is frozen.
- Any minor children are appropriately dealt with, e.g assets in a testamentary trust and guardianship.
- List specific assets that are to be bequeathed to intended beneficiaries.
- How the remainder of the assets are to be distributed and to whom
- Are specific assets only to be used by certain beneficiaries or heirs for a period but the ownership is for a different person.
- Ensure that capital gains taxes are eliminated or minimised. The maximum rate is currently 18% but through proper planning this can be minimised or even eliminated.
- Nominate an executor that knows the family and the estate and attend to an agreed fee or percentage to wind up the estate. The maximum legislated rate is 3.5% plus VAT (if the executor is a VAT vendor) and 6% on any income that accrues to the deceased estate.
- Attend to minimise or avoid estate duty. Currently estates under R3.5 million qualify for the abatement and are duty free. Any net estate in excess of R3.5 million but under R30 million will trigger duty at a rate of 20% and any net estate in excess of R 30 million will be subject to tax at 25%.
iProtect is perfectly positioned to assist you in attending to execute a valid Last Will and Testament that correctly contains your wishes and intentions pertaining to your assets and intended beneficiaries and heirs.
Executorship
What is an Executor or an Executrix?
- An Executor (we will use this term for both genders) is a person or organisation that has been nominated by a Testator or Testatrix (we will use the term Testator for both genders) who has executed a Last Will and Testament.
- On the event of the demise of the Testator, the nominated person must apply to the Master of the High Court to be appointed to administer the deceased’s estate. In the event that the nominated person meets all the legal and the Master’s criteria and conditions a Letter of Executorship will be issued to the nominated person.
- Once the Executor has officially been appointed they effectively “step into the shoes of the deceased”. The Executor is now tasked with winding up the estate of the deceased in accordance with the Administration of the Estates Act 66 1965.
- There are many formalities that must be properly complied with in order to finalise and correctly wind up an estate. Due to the various formalities, obligations, compliance and possible liability issues, many nominated Executors face major challenges (and personal claims) that result in invalid acts, losses to the estate, excessive taxation being paid, assets not correctly dealt with and in many cases major delays that result in hardship and losses to the intended beneficiaries.
Enter iProtect Executor Exchange. This service has been created by iProtect to assist nominated Executors in dealing with any challenges that they may face in winding up a deceased estate.
iProtect Executor Exchange offers the following services:
- The nominated Executor can assume iProtect as an Executor or request that iProtect is appointed as the sole Executor at an agreed fee or rate.
- Agency services, the Executor will appoint and delegate iProtect to undertake specific or any aspect of the winding up process.
- Tax advice, tax filing and services pertaining to any aspect of the deceased estate or any specific transaction being undertaken on behalf of the deceased estate.
- Mediation services to resolve disputes between any party with an interest in the deceased estate.
- Legal services to attend to any legal issue arising in the winding up process.
- Attending to assist in the valuation and disposal on any assets held by the deceased estate.
- Administering and the reporting on any properties that are rented or leased (commercial and residential).
Personal Structures for Succession Planning
Many of us have accumulated assets or have plans to accumulate assets, the often overlooked part of the plan is how to set up the correct structure to own the wealth to protect the wealth if under financial threat, how to ensure tax savings are achieved and to save massive costs, duties and taxes on death.
No one wants to fail or lose their wealth but we certainly will all eventually die and a lack of planning results in many people losing assets, assets having to be sold or assets not succeeding to intended heirs when they die due to the costs, duties and taxes that are triggered on death.
In order to ensure that the above scenario does not transpire a number of key issues must properly be dealt with. It is therefore imperative that you ensure that the following issues are addressed, namely:
- Ensure that estate freezing is avoided or that estate freezing will not cause hardship for their family.
- Any minor children are appropriately dealt with, e.g assets in a testamentary trust, guardianship.
- List specific assets that are to be bequeathed to intended beneficiaries.
- How the remainder of the assets are to be distributed and to whom.
- Are specific assets only to be used by certain beneficiaries or heirs for a period but the ownership is for a different person.
- Ensure that capital gains taxes are eliminated or minimised. The maximum rate is currently 18% but through proper planning this can be minimised or even eliminated.
- Nominate an executor that knows the family and the estate and attend to an agreed fee or percentage to wind up the estate. The maximum legislated rate is 3.5% plus VAT (if the executor is a VAT vendor) and 6% on any income that accrues to the deceased estate.
- Attend to minimise or avoid estate duty. Currently estates under R3.5 million qualify for the abatement and are duty free. Any net estate in excess of R3.5 million but under R30 million will trigger duty at a rate of 20% and any net estate in excess of R 30 million will be subject to tax at 25%.
The simple solution is to establish the appropriate structures to ensure that you do not own the assets, the goal is in fact to own nothing. If you own nothing all of the above issues will be successfully eliminated.
The challenge is how to navigate the complex legal, tax (capital gains tax, transfer duty, VAT etc) and the costs of setting up the correct structures and moving the assets as inexpensively as possible. Treasury and SARS have attempted to minimise succession planning structures BUT there are a myriad of options legally available to achieve the above objectives.
iProtect has innovated structures that are legally compliant and we are at the forefront of our industry in assisting clients to transfer assets to the optimal structures without triggering taxes or transfer duties. This allows for any one to restructure their affairs at very low costs.
Broad Based Black Economic Empowerment Structures
BEE is a National Government objective to redress the inequalities of the apartheid past. Love it or hate it is here for the foreseeable future.
The Broad Based Black Economic Empowerment Act and the codes are continuously being tinkered with and amended that creates confusion as the goals are constantly being changed.
Further to the love it or hate it view taken by business owners, many are eager to implement BEE whilst some of you may begrudgingly be implementing BEE. That is not our concern but the challenge we note with most owners is that implementing BEE can be very costly and trigger major taxes and in many instances result in the business owner parting with a substantial part of their business for no value alternatively not receiving value for the implementation of BEE.
At iProtect we have pioneered and innovated methods and mechanisms to achieve BEE compliance in the spirit and letter of the law that do not trigger taxes and ensure that the BEE participants are empowered and the owner of the target business receives value for the implementation of BEE.
All the clients that we meet after introducing our proposals are willing and eager to implement BEE. We have effectively eliminated the love / hate relationship with BEE by ensuring that all parties rights are satisfactorily met.
Corporate and Business Structures
Do you have the optimal business structure?
Are you paying too much tax?
Will your business survive your death?
Can your business survive the creditors claim? These claims normally arise from circumstances outside of your control or planning.
Are your personal assets secured from your business exposure and failure?
Is your business secure from you? E.g other exposure, divorce, death etc.
iProtect and our affiliates have been assisting business owners since 1998 to secure their businesses and personal assets, ensure tax efficiencies and proper succession planning.
In our vast experience we note that most business owners have the incorrect structures that result in the business and their personal assets being exposed, voluntarily pay too much tax (YES, you read that correctly!) and on their death the business is shut down or if it survives the demise of the owner there are massive costs, executors fees, taxes and estate duties.
At iProtect we attend to assist our many clients to ensure that their assets are secure by making them financially bullet proof, they pay only the required taxes, in essence what the law stipulates and on their demise that all their assets are bequeathed to their intended beneficiaries without having to be sold due to high taxes (CGT 18%), executors fees 3.5% plus VAT) and estate duty (20% on assets in excess of R3.5 million and 25% on assets in excess of R30 million).
In order to achieve the above the objectives the following must be undertaken:
- To personally own nothing, this will protect any assets you have from business or other creditors.
- The business must be structured to ensure that an unforeseen claim or vagary will not result in financial ruin, accordingly the business and the assets must be properly secured.
- The business shareholding must be correctly structured to achieve tax efficiencies. This can result in savings of 17-20%.
- Once the business is correctly structured the death of an individual it will continue to operate and will not trigger any capital gains taxes (18%) executors fees (3.5% plus VAT) or estate duty of 20% on net values over R3.5 million or duty of 25% on net values in excess of R30 million.
The above objectives are everyone’s desire but we have noted that most business owners avoid taking action because they are under the impression or are advised that structuring their business and personal assets will cost a fortune in taxes, transfer duties and other costs.
At iProtect, we can move any asset, business or property without triggering VAT, any form of tax or transfer duty. There will only be legal costs to achieve the objectives stated above.
Property Structures
Are you considering buying a property? Do you own a property that you wish to restructure as it is not optimally held?
Dealing with or in property is a major decision due to the high value of property and it is a transaction involving many different parties, costs, taxes and duties. Accordingly, it is critical that you have all the right information at your disposal to ensure that you achieve your goal optimally.
The first factor to determine is whether the property acquisition is for personal use or whether the property is an investment that will generate a return and capital appreciation in the course of owning the property. A personal use property is your home, a holiday home or an alternative property for your family or your personal use, e.g lifestyle farm etc. An investment property is a property whether a residential property, guest house, agricultural, office, industrial, shops, malls, commercial, land etc. The distinction above is crucial as there will be differing tax consequences and ramifications on the acquisition of the property and during the ownership period. E.g is transfer duty or VAT payable, can I reclaim these costs from SARS?
The second key factor to assess is risk. What risk will you be exposed to by acquiring the property, e.g claims and damages by a tenant, SARS, a mortgage bond, loans etc? What are you exposed to that may result in you losing the property, e.g divorce, business failure or creditors attaching the property, other property exposure?The third major factor is taxation. What taxes will you be subjected to by owning the property, using the property, holding the property or selling the property? The tax rates vary substantially depending on whether you own the property, versus a Trust, or a Pty Ltd or Trust owned Pty Ltd. Further there are incentives and tax breaks from SARS depending on the type, quantity and value of property acquired. Know the difference it can mean paying zero tax to 45% tax.
Lastly, what happens to the property on your demise? Are there obstacles to the use of the property, e.g estate freezing? Who can use the property, benefit from rentals? How will the property succeed to my heirs, will it pass to my heirs? What taxes, costs and duties are triggered when you die because of your ownership of the property, e.g capital gains taxes (18%), executors fees (up to 4.025% of the gross value of the property) , estate duty (maximum 25%), conveyancing and transfer fees?
The above issues can have a major impact on how you achieve your objective for the property. These issues apply equally to property that you currently own. For most property owners who wish to change or restructure their property portfolio is a challenge due to the perceived high costs, taxes and duties that this ordinarily entails. We have solutions to achieve the change of ownership and restructuring tax and duty free, ask us how?
In order to ensure that the property is protected from creditors and risk, you pay as little tax as possible whilst you hold the property or when you sell the property or how the property is to succeed to your intended beneficiaries.