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Thread: Company Shares in Personal Capacity Vs. Holding Co/Trust

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    Company Shares in Personal Capacity Vs. Holding Co/Trust

    Good day!

    I am an owner in a business whereby my shares are held in my personal capacity (50%) and my partners, in a holding company (50%).

    What are the pros & cons associated with both scenarios, or rather, shares held in personal capacity as apposed to a trust, and is there much reason for me to try restructure my holdings?
    The company is increasing in value over time and I do note that it is becoming more expensive to transfer my holdings due to the capital gains tax that will be triggered for the "sale".

    All I really want to understand are the benefits of an investment/holding company held by a trust as apposed to continuing to retain my shares in my personal capacity and if it is necessary
    to move forward with restructuring. I have heard that while trusts do lots to limit liability, this notion is slowly being eroded and the law is taking greater steps to sequestrate trusts if need be.

    Please accept my apologies with regards to any mistakes in trying to explain the above.


    Cheers!

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    Hi

    What type of shares are at issue and what was their cost to you? There might be capital gains issues to consider already.

    That aside, the advantage of having them held by a trust is that they will not form part of your deceased estate and thereby avoid estate duty, should there be any. Having a company own the shares has an advantage with regard to any dividends that may be declared in that they will not be subject to withholding tax, but the holding company's dividends to you (if any) will be subject thereto.
    I have heard that while trusts do lots to limit liability, this notion is slowly being eroded and the law is taking greater steps to sequestrate trusts if need be.
    Not really. However in practice you will almost certainly need a third independent trustee and that will almost certainly incur a fee.

    There are other issues to consider too and I'm sure there will be other input.

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