WHO NEEDS TO DO ESTATE PLANNING?
Many may think that they are not old enough or wealthy enough to warrant doing any estate planning. However, if a person is over the age of eighteen, no matter how small his estate is, it is advisable to begin the process. All persons 16 years and older are competent to make a Last Will and Testament, in order to determine how their estate should devolve upon their death (where applicable).
- Where an estate planner is “at” in life, will determine his/her strategic plan for his/her estate, and which techniques to use in order to implement in the plan. An estate planner may be single, married, divorced, or separated. He/she may have minor children or adult children. He/she may be married for a second or third time, with children from previous marriages. He/she may own assets with a strong growth potential
- Each plan will be unique and structured according to an estate planner’s own unique set of circumstances, goals and objectives, and reviewed regularly to take account of personal and legislative changes
Who should be involved?
- The estate planner should work together with an estate planning team, which usually comprises a set of professionals, including an accountant, attorney, and financial adviser
- The professional team should assist the estate planner with developing and reviewing his/her estate goals, providing direction on various strategies and tactics, performing cost-benefit analyses, providing advice on the tax implications of various strategies and tactics, and most importantly liaising with other professionals on the estate planning team
- The attorney may assist with drawing up legal documents such as the Last Will and Testament and an inter vivos trust deed. The financial adviser may assist with ensuring the estate is liquid, and the accountant may typically assist with tax planning. Family members, more specifically, a spouse, should also form part of the team, especially where more complex plans are contemplated
ESSENTIAL REQUIREMENTS FOR A VALID TRUST.
- The founder must have a serious intention to create a trust
- The key element of the trust arrangement is the transfer of control of the trust assets from the founder to one or more trustees, who hold the trust assets, not in their personal capacities, but for the benefit of the trust beneficiaries. The trust is essentially an arrangement that allows someone to hold assets for the benefit of the trust beneficiaries. The Trust Property Control Act defines a trust as “…a structure into which property is transferred, which is then administered by trustees, on behalf of one or more beneficiaries, in accordance with the trust instrument…”
- The trust property must be clearly identified
- The trust object (which could be personal or impersonal) must not be vague, but must be clearly stated and lawful
- There must be a binding obligation on the trustee(s) to administer and manage the trust property
- The trustees must be authorised and have legal capacity (for example, in South Africa, when you turn 18, you are free to contract and conduct your own affairs without your parent or guardian’s assistance)
- There must be at least one beneficiary
- The trust beneficiaries must be clearly identified or easily identifiable
- Note that the Trust Property Control Act does not specify the requirements or procedures required for the formation of a valid trust in South Africa. The Master of the High Court might have issued Letters of Authority, and assigned a registration number to the trust, but this does not necessarily make the trust valid. Usually the validity of a trust instrument is only tested by its creditors, or the South African Revenue Service (SARS), or by a spouse in a divorce case
If you are considering the use of a trust please do not hesitate to contact us for professional advice in this regard.
RELATIONSHIP BETWEEN ANNUAL RETURNS, DEREGISTRATIONS AND RE-INSTATEMENTS.
All companies (including external companies) and close corporations are required by law to file their annual returns with the Companies and Intellectual Property Commission (CIPC) on an annual basis, within a prescribed time period. The purpose for the lodging of such annual returns is to confirm whether a registered business is still in business/trading, or if it will be in business in the near future.
Therefore, if annual returns are not filed within the prescribed time period, the assumption is that the business is inactive, and as such CIPC will start the deregistration process to remove the business from its active records. The legal effect of the deregistration process is that the juristic personality is withdrawn and the company or close corporation ceases to exist.
The company or close corporation may be re-instated after it was deregistered by the lodging of a Notice of Re-instatement. The request for re-instatement may be submitted by:
- the company or close corporation,
- its duly authorised representative or
- any third party
Upon the processing of the re-instatement application, the legal persona is re-instated, and all outstanding annual returns must be filed for the re-instatement to become effective. If you have any queries relating to the status of your business entity do hesitate to contact us for professional advice in this regard.
REMOVAL OF THE SUPPLEMENTARY DECLARATION FOR COMPANIES OR CLOSE CORPORATIONS (IT14SD) FORM.
What does this mean?
- When a company is identified for verification, you will be notified of the verification (the current norm) and will be requested to submit specific relevant documents based on the reason for the verification, or to submit a revised Corporate Income Tax (ITR14 return, by doing a request for correction)
- You still have the option of submitting one correction, which may or may not resolve the verification
- The revised ITR14 will also be subjected to a risk evaluation
- To comply, you need to upload the requested documents using eFiling, or any other submission channel, including SARS Online Query system. The uploading of the relevant documents will enable a SARS verifier to action the case. If the relevant documents are deemed insufficient, or additional documents are required, this will be requested from you
- You are still required to provide the relevant documents within 21 working days
- If you still do not comply with the request for relevant documents, SARS will raise a revised assessment to resolve the verification case, and will add back the related expenses, dependent on the specific relevant documents requested
Note: The verification of a company always requires the submission of a signed set of Annual Financial Statements as well as a detailed Tax Computation and the underlying supporting documentation/schedules.
If your company has been identified for verification or should you require further information in this regard please do not hesitate to contact us for professional advice in this regard.
Sincerely,
