Question

My siblings and I would like to form a formal "body" to start buying and accumulating "assets" and we've already decided on buying shares as a first step. The thinking behind is that we can afford to buy as a group but not as individuals. We are thinking of registering a "family trust" but the more I read up on it I am not so sure it is the right vehicle for our current situation.

Firstly, we do not have any assets to start with and I read somewhere that one is looking at not less than R15000 to get a lawyer to register it.

I think it would be rather complex to try and do it ourselves. I would like to find out from you what else should we be looking at establishing. The set up cost should be relatively low plus we need to have an option to add on new members. What would you suggest?

Answer

FINANCE

A lawyer who specialises in property or perhaps the CA can also help you there. Look out for capital gain implications when you do sell a property and how each one of your own tax situations will be affected. If you buy in a CC and each is a member or in a company and each is a shareholder, every time a new member comes along you have to do amendments to the CC or company which can be an admin drag and will be costly.

A company has to be audited by a CA which is also more expensive. A CC and trust can be serviced by an accountant not a CA. The other negative about the CC and company is that you involve each member of shareholder's estate in the structure where with a trust you don't. In a trust you have to name or describe the beneficiaries before hand for example "the children of x and x and all their descendants" which means that every new member of the family (within that description) automatically is a beneficiary.

My first suggestion is to see a CA or person who can set out all the benefits and possible costs of each structure. If you cannot find anyone, email me for my fees at info@lemons.co.za.

- Charné van der Walt