Page 23 - Trusts & International tax class slides

TRUSTS

Taxation reasons for the formation of trusts

• In disposing of his "growth" assets, the planner must ensure

that, for Estate Duty purposes, any assets donated prior to
his death, will not be reflected in his estate at the time of his

death (for example, there must be no revocation clause in
the deed of donation), so that he can protect the capital

growth in the asset from the time of the donation to the
time of his death from Estate Duty.

• Trusts are used primarily for:

• estate planning, (as opposed to saving income tax).

• Trusts can also be used for other purposes such as trading
(business) in the same way as a company does. Trading trusts,
however, are seldom used because they have several
disadvantages, the most important being the unfavourable rate of
tax to which they are subject – a 45% flat rate as opposed to a 28%
flat rate in the case of a company.

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