Trusts have become a popular planning tool for wealthy South African families to manage their fortune, but constantly changing tax laws and a greater scrutiny of trusts by tax authorities worldwide mean that South African trust structures need to be reviewed regularly. This is particularly important if family members have left SA to live abroad and they receive income or other benefits from the local trust. Herman Troskie, MD of private clients at global advisory and administration firm Maitland, says there may be adverse tax consequences for individuals who are beneficiaries of a trust, depending on the country where they are tax-paying residents. Cheryl Howard, the MD of Maitland Family Office, cites an example of a local family where a daughter is a beneficiary of an SA-registered trust. Because she is a naturalised citizen and tax resident of the US, her distributions from the South African trust are taxed in the US. The US does not differentiate between income and capital gains...

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