BrightRock Life Insurance Examines Recent Tax Reforms and Their Effect on Trust Structures Question of Trust

There’s been a lot of noise in the market around recent tax reforms that aim to clamp down on the misuse of trust structures


Pretoria, Gauteng -- (SBWIRE) -- 07/08/2013 -- South African Minister of Finance, Pravin Gordhan, stressed in his budget announcement in February that trusts have been used to “hide” the assets of high net worth individuals and reduce their estate duty liability. The reforms will also target the misuse of the flow-through principle, where capital gains and income are passed onto beneficiaries to cash in on the lower tax rates applicable to individuals in certain circumstances. The market is still waiting to see exactly how these proposed reforms will be implemented.

At BrightRock, we do see a fair number of trusts – either in the capacity of policy owner or beneficiary, or both – especially among clients who’ve taken out business cover with us.

Trusts are a means to allow business owners to ring-fence their exposure, allowing them to separate their personal and business interests through separate trust structures. The longevity of a trust also helps individuals reduce the administrative burden and complexity of winding up a deceased estate.

Trusts therefore remain a popular vehicle for the ownership of assets, especially fixed property and shares. This is despite the removal of some of the tax benefits and the recent amnesties offered by SARS to encourage people to transfer their residential property out of trusts and other legal structures into their own names.

Despite the changes to how trusts will be taxed going forward, legal and tax experts alike expect trusts to adapt and comply, continuing to provide clients with protection, both for their estate and their dependants. We do recommend that clients and financial advisors always get sound legal and tax advice to ensure they’re making appropriate and effective use of trust structures.

Where clients haven’t made use of a trust vehicle and the costs of transferring their assets into the trust are prohibitive, there are other cost-effective options available to your clients to cover their estate duty liability.

For example, BrightRock offers the last death option on our death-related needs cover. With this option, the pay-out of cover is deferred following the death of the first spouse to the death of the last surviving spouse. It’s possible for cover growth to continue following the first spouse’s death, providing the ability to enhance the value of a beneficiary trust, for example. This can be used not only to fund estate duty, but support legacy planning as well.

The only true certainties in life, the saying goes, are death and taxes. However, with appropriate advice from the experts and the right estate planning tools, including the right risk cover, it is possible to protect families affordably and appropriately against the financial impact when death and taxes converge.

About BrightRock
BrightRock was started with the goal of creating insurance products that truly meets consumers’ and financial advisers’ needs. It offers truly individualised life insurance cover that’s built around your specific needs at the outset, and is specially designed to change with you as your needs change. And because BrightRock’s cover is flexible and changes appropriately when your needs change, it’s more efficient. This means both your cover and your premiums remain relevant, and more affordable, throughout your life. BrightRock (Pty) Ltd is an authorised financial services provider, underwritten by Lombard Life Ltd. For more detail please visit,