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Case study: managing an international estate

A wealth client who had established an international franchise was keen to ensure that his children benefitted the most from his business.
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Frank was a successful South African client with our sister company, Nedbank Private Wealth South Africa, and owned a franchise of popular restaurants, in South Africa and internationally, that he had established. Having built up significant wealth over the years, while a lot of the client’s wealth was international, it was all in his personal name and consequently still part of his estate.

The wealth structuring process

We sat down with Frank to establish his main financial goals and objectives, which were:

  • Succession planning – passing of assets to the next generation
  • Asset protection – due to the political and economic instability in South Africa
  • Diversification – income from the business had been invested, but was concentrated in too few funds
  • Estate planning – allow for inheritance tax planning and the fair distribution of the estate to his three children
  • Ease of administration – minimise the administrative burden for Frank to concentrate on his business and for his children in the future

The results

Following the discussions with Nedgroup Trust, Frank decided to establish a discretionary offshore Jersey trust and an investment company, which would initially benefit his three children, as well as any future generations to be born.

Frank  loaned the the majority of the funds and various assets ‘in specie’ to the trust at a commercial rate of interest. From the Latin phrase meaning ‘in its actual form’, this method allows assets to be moved without selling any underlying investments, avoiding the associated costs and risks of selling and rebuying the assets, as well as remaining invested in the market throughout the transfer.

 

This transfer to the discretionary trust meant he was subject to tax in South Africa on the actual interest received or accrued from the trust. However, this then allowed an underlying company to be established to hold the assets of the trust and enable investments into UK situs assets.

Further to this, given the assets are held within the trust and do not form part of the client’s estate, it would not be subject to probate, although this is limited to value of assets that the client has loaned to the trust.

Should you require any further information, please do not hesitate to contact your usual Nedgroup Trust relationship manager who will be happy to discuss the topic with you.

 

Or if you wanted to find out more about how Nedgroup Trust, or Nedbank Private Wealth, can help you plan and structure your wealth for your family and for future generations, please get in touch using the links to the forms towards the end of this page.

The structures and wrappers used are provided for illustrative purposes only, and are not to be read as an invitation or inducement to buy a service. This content does not constitute advice or a personal recommendation. Individuals should seek professional advice, based on their jurisdiction and personal circumstances, before making any financial decision.

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