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Estate Planning is a Must

When looking to secure your family’s inheritance, establishing a trust could mean significant savings.

Bryan Hirsch




Advocate Tony Davey is one of my colleagues who regularly previews my articles and is often heard to quote “…One takes a lifetime to build an estate, but how much time does one take to protect it?” In a previous article, I briefly mentioned that setting up an Intervivos Trust could help to reduce death duties in the future.

Minimising estate duty is not really complex and there are several options available to you. The level of estate duty in South Africa currently stands at 20%, which is much lower than other countries that impose tax on death. Estate duty may not yield large amounts of revenue and, in the last budget, the minister announced that estate duty may be revisited or even abolished. At this stage it remains unchanged and no further information has been provided in the latest budget notes.

It’s never too late

Currently, upon death, assets left to a spouse are exempt from any duty. This is really only a deferment of payment because, once children inherit the assets, on the death of the remaining parent, duty is payable once lawful deductions have been made.

When children inherit they will receive a total of R7 million free of death duties. Previously each individual spouse only received a maximum entitlement of R3,5 million and some estate planners argue that it is no longer necessary to set up elaborate trust structures to deal with anything less than this amount. I disagree with this view because the future growth of these assets is being overlooked. The transfer of assets to a trust ensured that both spouses used their R3,5 million deduction. Now the unused amount will be available for the second deceased.

To illustrate this further:
A spouse inherits R3,5 million in a share portfolio but already has assets in excess of this figure. Over the next 15 years these assets grow to approximately R14 million (10% compound). The increase in the inherited assets is R10,5 million and, at current rates of duty, the estate would be liable for R2,1 million. If this amount had originally been left to a trust, R2,1 million would have been saved! One argument put forward is that the deductions are likely to increase over the years, but I have used a conservative rate of return and assumed that the current rate of estate duty will apply. In Europe, the UK and the USA rates vary between 33,3% and 55%.

I often meet individuals who have formed a trust but never transferred any assets into it. Assets that should go into a trust are growth assets such as equities, unit trusts, linked endowment policies and shares in private companies. I do not recommend transferring investment properties into a trust, because of the transfer fees involved, and certainly not your primary residence because you will lose the gain of R1,5 million allowed as an abatement for Capital Gains Tax (CGT) purposes. Other than estate planning, there are many other reasons for using a trust, but I will discuss these in a future article. Fortuitously, there is no better time for considering the transfer of equities, including unit trusts, because values are substantially lower. You will have to pay 0,25% tax if you transfer from your personal name into a Trust. This cost is insignificant when compared to paying estate duty. You will also have to pay CGT, but this tax is always inherent in the value of your assets and is payable whenever an asset is sold. There are a few other ways to reduce estate duty.

Maximising reductions

1. Donations. Everyone is entitled to donate R100 000 annually free of donations tax and too few people make use of this concession. Married couples who donate R200 000 a year to their children for 10 years, will save over R700 000. Over 20 years, they will save R2,5 million in death duties (investment return 10% per annum compounded).

2. Trusts. Create an Intervivos Trust during your lifetime and allow the growth to accumulate outside your estate. In my opinion, fears that trusts may be outlawed sometime in the future are unfounded as trust law has been around for over 1 000 years, since the Crusades. During your lifetime, you may not be saving anything yourself by using these options, but you will benefit your heirs. Not only will you have created an estate but also protected it. Prior to embarking on any of the suggestions made herein – and with special reference to those planning to emigrate – it is essential to consult with qualified professionals in this field.

BRYAN HIRSCH has been in the financial services industry for 47 years and is a director of Bryan Hirsch Colley & Associates. He has written two books, the first Bryan Hirsch’s Guide to Personal Finance and more recently, Steps to Financial Freedom. Bryan has written for many of South Africa’s top financial and business publications, has been a weekly guest on Radio SAFM for 18 years, and has his own weekly TV show You & Your Money on Summit TV.

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Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.




Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.


Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.



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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel




Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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