Estate duty issue

[HR Solutions]

Can we move back to the estate duty question?

That is the answer. If your mother is the donor AND a Trustee then there is nothing to tie up with regards to the company and the loan. The Trust or the Company will/can just take over the loan/money if a resolution is written about it. The money "owed" does then not have to be paid back. So being a Trustee and the donor might just be your answer

A donor can be a trustee. The issue arises when the donor is the only trustee.

Totally correct

there is no independent Trustee

Also correct ..... normally it is an independent lawyer

Donors can't be trustees, thats how trusts work otherwise its simply an alter ego, its not a matter of whether you agree or not its simply how it works.

Its not a matter of whether I agree or not - it is not the way it works

[Basment Dweller]

Ok but if my mother donates the money to the trust then a donations tax will be due immediately as opposed to an estate duty when she dies correct? I don't see any scenario here where SARS doesn't get their cut of that money, it's just a matter of timing.

[EAB]

Basically yes, but it will be better to do a full reconciliation of which option will be the best.

It is not going to help a lot, based on the amounts you are talking about, but remember that for individuals there is a donation exemption of R100 000 per year. This could be used to lower the loan amount

[HR Solutions]

I think you should consult a proper Trust lawyer - you will find a lot of your questions answered and perhaps will find a solution to your problem.