MENTAL HEALTH AND BUSINESS OWNERS: THE HIDDEN STRUGGLES OF RESILIENCE On Mental Health Awareness Day, it is crucial to address the unique mental health challenges that business owners face. Although business owners are known for their resilience, optimism, and a “can-do” spirit, these traits often mask the significant mental health struggles they endure. In this article, we will explore why business owners are particularly vulnerable to mental health issues, the impact of these struggles on both the individual and the business, and practical strategies for maintaining mental health while leading a company. Unique Mental Health Challenges for Business Owners Business owners bear a unique combination of stressors that many salaried employees may not encounter. Firstly, they experience an unpredictable and often variable income. Unlike traditional employees, they cannot rely on a consistent income and may face substantial financial risk, which is a significant stress factor. Coupled with the responsibility of making critical decisions that can impact the livelihoods of their employees, business owners carry a weight that others might not fully understand. In addition, business owners often lack support systems typically found in traditional work environments. While salaried employees might have managers or mentors to lean on, business owners often have no immediate superiors or colleagues to share their concerns with. This isolation can lead to a sense of loneliness and difficulty finding someone who truly understands their challenges. Furthermore, if they struggle with mental health issues, it can affect the entire company. A mentally burdened business owner can inadvertently create a stressful environment for employees, leading to a vicious cycle of stress that negatively impacts the business. The Business Impact of Neglecting Mental Health For business owners, ignoring mental health can have immediate and long-lasting effects on the company. Anxiety and depression can lead to impaired decision-making, decreased creativity, and a reduced ability to handle risk effectively – all essential skills for successful entrepreneurship. If left unaddressed, mental health issues can result in burnout, a state of emotional, mental, and physical exhaustion that can be debilitating for both the business owner and their team. According to recent studies, business owners are significantly more likely to experience symptoms of anxiety, depression, and burnout compared to the general population. Unfortunately, societal expectations often make it difficult for entrepreneurs to openly acknowledge these struggles. This denial not only harms the individual but can also lead to decreased productivity, a toxic work culture, and even higher employee turnover, as employees mirror the mental health standards set by their leaders. Strategies for Business Owners to Maintain Mental Health Recognizing and addressing mental health challenges is essential for business owners to build sustainable and resilient businesses. Here are some practical steps to support mental health in the high-pressure world of entrepreneurship: Cultivate Self-Awareness: Understanding one’s mental and emotional state is critical. Self-awareness enables business owners to recognize early warning signs of stress, anxiety, or burnout. Developing this awareness often involves regular reflection, whether through journaling, mindfulness practices, or speaking with a therapist or coach. Delegate and Trust: Business owners often struggle to delegate tasks, either because they fear a loss of control, or they doubt others’ capabilities. Learning to delegate effectively not only lightens the workload but also empowers employees and builds a more resilient team. Additionally, trusting others with responsibilities allows the business owner to focus on strategic decisions and take necessary breaks to avoid burnout. Set Boundaries: Creating a clear distinction between work and personal time is essential. Setting boundaries can be as simple as designating “off hours” or having certain days where no business activities are conducted. For many business owners, this boundary-setting is challenging, but it is crucial for long-term mental health. Taking time to unwind and recharge is not a luxury – it is necessary for sustainable success. Connect with Other Entrepreneurs: Finding a community of peers who understand the pressures of running a business can be incredibly beneficial. Entrepreneurial networks, business support groups, and even regular check-ins with a trusted mentor can provide a safe space to share challenges and insights. This connection with other business owners helps reduce feelings of isolation and provides practical advice from those who have faced similar challenges. Prioritize Physical Health: Mental and physical health are interconnected. Regular exercise, a balanced diet, and sufficient sleep are foundational to mental well-being. While these basics are often overlooked in favour of business priorities, investing time in physical health can lead to increased energy, better focus, and a more positive outlook – all of which can directly improve business performance. Plan for Mental Health Days: Unlike typical sick days, mental health days allow for proactive rest and recuperation. Business owners should consider scheduling these days into their calendars just as they would any other critical meeting. Taking a mental health day periodically can prevent burnout and improve overall resilience in the long run. Insights from Our Director Our own director, Jaco Barnard, has long navigated the unique challenges of mental health while leading a business. He shares his approach: “Taking care of my mental health has been one of the most challenging yet vital aspects of running a company. I’ve come to realize that self-awareness is essential. Understanding my limits, knowing when to delegate, and not hesitating to seek advice from trusted partners has had a positive impact on both my well-being and the business. Having loved ones who remind me to slow down or make healthy choices is invaluable. Every Tuesday, I take time in the morning to work from home, attend a Pilates class, walk on the beach, and enjoy an extra cup of coffee with my wife. I still catch up on some work, but it allows me a slower start to the day after typically busy Mondays. On Wednesdays, when possible, I also take the afternoon off for a mid-week round of golf. My weekly BNI meetings with fellow business owners provide a sense of connection with others who understand my circumstances. I also believe in the power of maintaining perspective, and

MAKING PROVISION FOR MINOR CHILDREN IN YOUR WILL While it is never pleasant to consider our own mortality, ensuring the well-being of our loved ones, particularly minor children, is essential. Life’s unpredictability makes it crucial to plan ahead and safeguard their future. This article explores the key considerations for including provisions for minor children in your will in South Africa. Guardianship and Parental Rights Understanding Guardianship Biological parents are generally the co-holders of parental rights and responsibilities in respect of their children. This includes the rights of guardianship as set out in Section 18 of the Children’s Act 38 of 2005. Guardianship rights include: Administering and safeguarding the child’s property and property interests. Assisting or representing the child in administrative, contractual, and other legal matters. Giving or refusing any consent required by law in respect of the child, including for marriage, adoption, departure from the Republic, passport applications, and dealing with the child’s immovable property. Nomination of Guardians A parent can nominate one or more people as the guardian of their child in their will. This nomination becomes effective if the parent dies while the child is still a minor, and if the nominated guardian accepts the appointment. The surviving parent typically becomes the sole guardian of the child unless the will specifies otherwise, and the court approves the nominated guardian. Estate Planning and Minor Children Bequeathing Fixed Property Minor children can inherit immovable property with the assistance of their legal guardian. However, there are risks: If the estate has liquidity issues, the executor may need to sell the property to cover costs. The legal guardian will manage the property until the child reaches 18, but their powers are restricted and require approval from the Master of the High Court for significant decisions. To mitigate these risks, setting up a testamentary trust in your will is crucial. The property is transferred to the trust upon your death, and trustees manage it until the child is old enough to handle their affairs. However, ensure your will is valid to prevent the trust from being invalidated. Life Insurance Proceeds Life insurance policies are useful for providing immediate funds to beneficiaries. But, when planning for minor children in your will, it’s important to manage life insurance proceeds carefully. Minors under 18 can’t directly inherit cash, so if they’re named as beneficiaries, their legal guardian will manage the funds until they reach adulthood. To better protect these funds, consider naming a testamentary trust as the beneficiary, ensuring the proceeds are managed within the trust until your child is of age. Additionally, be aware that if your estate is the beneficiary, the insurance pay-out could be used to settle debts before any inheritance reaches your child. Retirement Fund Benefits Beneficiary nominations on retirement funds are regulated by Section 37C of the Pension Funds Act. The fund trustees distribute the benefits to dependents based on their financial dependence. This means that even if a minor child is nominated, they might not receive the full benefits if other dependents are identified. Living Annuities Living annuities allow for beneficiary nominations ensuring that minors receive their benefits. However, legal guardians decide how the benefits are received. Practical Implications and Recommendations Nominating a Guardian Nominating a guardian in your will is crucial. If no guardian is named or if the named guardian cannot accept, someone must apply to the court, which is a time-consuming and costly process. It is advisable to nominate alternative guardians to avoid complications. Guardians Living Abroad If the nominated guardians reside outside South Africa, the minor children may need to relocate, which can be challenging. Additionally, accessing South African trust funds and dealing with tax obligations in another country can be complex. Discussing with potential guardians beforehand ensures they are prepared for the responsibility and any changes in circumstances can be addressed promptly. Regularly Reviewing Your Will Regularly review and update your will to reflect any changes in circumstances. This ensures that your wishes for your minor children’s education, care, and inheritance are up-to-date. Writing a letter of wishes can provide additional guidance to guardians regarding specific instructions for your children’s upbringing and inheritance. Legal and Financial Considerations Testamentary Trusts One effective strategy to prevent a cash inheritance from being paid to the Guardian’s Fund is creating a testamentary trust in your will. A testamentary trust is established in your will and commences upon your death. Trustees manage the trust’s assets for the benefit of the minor children. This ensures that funds are utilised solely for the children’s maintenance, upbringing, and welfare as specified in your will. Trust Provisions A testamentary trust typically includes: Naming the trust and appointing trustees. Outlining the rights, duties, and powers of trustees. Nominating beneficiaries. Establishing the trust’s purpose. Determining when the trust will terminate and distributing proceeds upon termination. By creating a testamentary trust, you can control the purpose for which the funds will be used and ensure they are accessible to your minor children when needed, bypassing the administrative burdens of the Guardian’s Fund. Oversight and Management Appointing multiple trustees can provide additional oversight. It is crucial to ensure that trustees are willing to accept their appointment and understand their duties. Regularly updated contact details for trustees will help to avoid delays during the trust registration process. CONCLUSION Making provisions for minor children in your will involves careful planning and consideration of various factors. By understanding guardianship rights, effectively managing assets through testamentary trusts, and regularly updating your will, you can ensure that your children’s future is secure. Consulting with a professional can help navigate these complexities and create a comprehensive estate plan that safeguards your minor children’s interests. The Wills & Estates division at TDP PE specialises in the drafting, execution, and safekeeping of wills. Please feel free to contact us should you require professional assistance with regard to the execution or updating of your will, especially when there are potential minor children who will benefit from your estate, by sending an email to wills@tdpsa.co.za or give

ADDRESSING FINANCIAL CHALLENGES FOR WOMEN: INSIGHTS FOR WOMEN’S MONTH   In 2024, despite significant advancements, women still face unique financial challenges that can hinder their economic progress. This is particularly true in South Africa, where disparities in pay and other financial issues remain prevalent. Understanding these challenges and how to overcome them is crucial for women striving for financial independence. Here are the top five financial challenges women face and practical steps to address them.   The “Invisible” Glass Ceiling   The glass ceiling is a significant barrier for many women, limiting their career advancement and earning potential. In South Africa, women hold only 29% of senior management positions, highlighting the need for more representation and support in leadership roles.   TIP: Seek out female mentors and supportive networks that can provide guidance and opportunities for career growth. Building relationships with other professional women can help you navigate and overcome workplace challenges.   The Gender Pay Gap   The gender pay gap remains a critical issue. South African women earn, on average, 23% less than their male counterparts. This disparity not only affects their current income but also has long-term implications for retirement savings and financial security.   TIP: Advocate for fair pay by being informed about your industry’s salary standards and negotiating assertively during job interviews and performance reviews. Additionally, consider enhancing your skills through further education or professional certifications to increase your market value.   Overlapping Duties and Unpaid Labour   Women often juggle multiple roles, including unpaid labour at home, which can impact their financial well-being. In South Africa, women perform the majority of unpaid household and caregiving work, which can limit their time and energy for paid employment and career advancement.   TIP: Share household responsibilities with family members and consider hiring help if affordable. Time management and setting boundaries between work and home life can also help balance these overlapping duties.   Inadequate Financial Literacy   In South Africa, studies show that women are less likely than men to have formal financial education, impacting their ability to manage money effectively.  Therefore, many women lack sufficient financial literacy, which can lead to poor financial decisions and increased vulnerability to debt.   TIP: Invest time in financial education. There are numerous resources available, including online courses, workshops, and books. Understanding budgeting, saving, investing, and debt management can empower you to make informed financial decisions.   Fear of Ambition   Societal expectations often discourage women from being ambitious, impacting their financial growth. Ambitious women may face criticism or be labelled negatively, which can deter them from pursuing higher-paying jobs or entrepreneurial ventures.   TIP: Embrace your ambition and set clear financial and career goals. Surround yourself with supportive individuals who encourage your aspirations. Remember, your ambition is a strength, not a liability.   Overcoming Financial Challenges: Practical Steps   Achieving financial independence requires a proactive and informed approach. Here are five steps to help women overcome financial challenges:   Step 1: Create a Realistic Budget   A well-planned budget is essential for tracking income and expenses. It helps you identify areas where you can cut costs and allocate funds towards savings and investments.   TIP: Use budgeting tools or apps to simplify the process and ensure you stick to your financial plan.   Step 2: Build an Emergency Fund   An emergency fund provides a financial cushion during unexpected events, such as job loss or medical emergencies. Aim to save at least three to six months’ worth of living expenses.   TIP: Start small and gradually increase your savings. Automate your savings to make consistent contributions.   Step 3: Start a Side Gig   A side hustle can provide additional income and help you achieve financial goals faster. It can also offer a sense of financial security and independence.   TIP: Choose a side gig that aligns with your skills and interests. Online platforms and freelance opportunities are excellent places to start.   Step 4: Hire a Financial Advisor   A financial advisor can provide personalized advice and help you develop a comprehensive financial plan. They can assist with investment strategies, retirement planning, and risk management.   TIP: Research and choose a certified financial advisor who understands your specific needs and goals.   Step 5: Seek Support and Advice   Do not hesitate to ask for help when needed. Financial challenges can be overwhelming, but support from professionals, family, and friends can make a significant difference.   TIP: Join financial literacy groups or networks that offer advice and support for women.   Conclusion   Despite the unique financial challenges women face, it is possible to achieve financial independence with the right strategies and support. By understanding these challenges and taking proactive steps, women can secure their financial future and contribute to a more equitable economic landscape. If you have any further questions or need assistance for your business, please do not hesitate to send an email to info@pe.tdp.co.za.   In celebration of Women’s Month, we are excited to announce a competition for women to share their best practical financial advice to educate and inspire other women. Share your advice in the comments section of our social media post advertising this blog. The prize includes a spa spoil – an hour’s back, neck, shoulder, scalp, and face massage, as well as a gel manicure OR pedicure at Hidden Beauty.  Our director, Jaco Barnard, will adjudicate the best piece of financial advice. The competition closes on Monday, 26 August, and the winner will be announced on Wednesday, 28 August. Let’s inspire and help each other towards financial success!

NAVIGATING WILLS AND MAINTENANCE IN COMPLEX FAMILY STRUCTURES: A GUIDE FOR FATHERS   When drafting a will, several critical issues must be addressed, especially for fathers in complex family situations. These include considerations for those married in community of property, fathers in second marriages with children from both marriages, and the inheritance and maintenance of minor children when a father passes away. This article will explore these intricacies and provide guidance on how to manage them effectively.   WILLS IN COMMUNITY OF PROPERTY MARRIAGES   When married in community of property, all assets and liabilities are shared equally between spouses. This means that each spouse owns an undivided 50% share of the joint estate. When drafting a Will, a father in such a marriage can only bequeath his 50% share of the estate. The surviving spouse is automatically entitled to their 50% share, irrespective of the Will’s stipulations.   For instance, if a father wishes to bequeath a farm to his son, he can only deal with his 50% share. The mother’s 50% share would need to be addressed separately, often requiring her consent to transfer her share to the son. The Will must include provisions for massing, where both spouses agree to treat their combined estates as one, and the surviving spouse must adiate (accept) the will after the death of the first spouse.   JOINT WILLS   A Joint Will can simplify estate planning for married couples, whether married in or out of community of property. This single document can cover three scenarios: the husband passing away first, the wife passing away first, or both spouses passing away together. Many legal advisors recommend Joint Wills as they provide a comprehensive approach to estate planning, ensuring that both spouses’ wishes are documented together.   However, in second marriages, some individuals prefer separate Wills to manage their estate planning independently. This is particularly common when there are children from previous relationships. Each spouse can then address their assets and financial wishes without the complications that might arise from blended family dynamics.   ADDRESSING THE MAINTENANCE OF MINOR CHILDREN IN WILLS   A critical aspect of drafting a Will is ensuring provisions for minor children. When a father passes away, his Will must cater to the possibility that some of his children might still be minors. South African law allows for freedom of testation, but it also imposes obligations on parents to provide for their minor children.   Parents can award assets to their children through beneficiary nominations or special bequests in their Will. For minor children, it is essential to consider their age and legal capacity. Any assets bequeathed directly to a minor Will be managed by their guardian. If no specific instructions are given, the cash assets might be paid into the Guardian’s Fund, administered by the Master of the High Court.   One potential issue is ensuring that the funds are used for the child’s benefit. In some cases, guardians might not be financially astute, leading to the mismanagement of the child’s inheritance. To mitigate this, parents can set up trusts to manage these assets until the child reaches the age of majority or another specified age.   MAINTENANCE CLAIMS BY ADULT CHILDREN   Even after reaching the age of majority, children may still require support. South African law mandates that a parent’s duty to support their child does not end with the parent’s death but continues until the child becomes self-supporting. This includes claims for maintenance by children over 18, particularly if they are still studying or are unable to support themselves financially.   In such cases, the child must provide proof of their need for support, such as invoices for tuition or accommodation. Maintenance claims by children rank above other claims against the estate, including those of heirs and legatees. This means that a child’s maintenance needs must be satisfied before any other bequests can be distributed.   BLENDED FAMILIES AND SECOND MARRIAGES   Fathers in second marriages with children from both marriages face additional challenges. Ensuring that children from a previous relationship are adequately provided for while also addressing the needs of the current spouse can be complex. It is not uncommon for conflicts to arise if the current spouse is not the biological parent of all the children.   For instance, a father might leave a life insurance policy to a child from a previous marriage, assuming this Will provide for the child. However, this does not negate the child’s right to maintenance from the estate. The child’s guardian can claim maintenance on their behalf, and this claim must be honoured before other bequests.   If the current spouse is financially dependent on the deceased, they may also have a maintenance claim under the Maintenance of Surviving Spouses Act. The executor must balance these competing claims, potentially reducing each proportionately if the estate cannot cover all demands.   CONCLUSION   Drafting a Will that addresses all these issues requires careful consideration and professional advice. Fathers must ensure their Wills comply with legal obligations and reflect their wishes while providing for the needs of their minor and adult children, especially in complex family situations. Consulting with a fiduciary specialist can help ensure that your estate planning is thorough and legally sound.   For expert and trusted advice, contact our Wills and Estates division at TDP. You can reach us by phone at 0414508799 or by email at wills@tdpsa.co.za.   The first 10 fathers who contact us after this article’s publication are eligible for a 50% discount on the cost of drafting their Wills. To see if you qualify, please ask to speak with Monique or Maurice.

YOUR MEDICAL PRACTICE: LEGAL ENTITIES AND TAXES Navigating the complexities of structuring a medical practice is crucial for determining how your income is taxed and ensuring compliance with legal frameworks. This topic often sparks lively debates among medical practitioners. One of the most common questions I get from clients is whether they should operate as a sole proprietor or incorporate their practice. The answer is not straightforward and depends on several factors, particularly the amount of taxable income being generated and the number of partners in the practice.   PROFESSIONAL GUIDELINES   The Health Professions Council of South Africa (HPCSA) and other professional bodies have laid down specific principles to also keep in mind:   Personal Liability: Every healthcare practitioner, be it a doctor, nurse, or specialist, must take personal liability for their services. This means they are directly accountable for their actions. Employment Restrictions: Except for nurses, practitioners cannot be employed by anyone other than the government, HPCSA-approved entities, or another practitioner in the same field, i.e., GPs employing other GPs.   Given these rules, the legal structures available for medical practices are quite specific:   Sole Proprietorships Partnerships, Groups, and Organizations Associations Personal Liability Companies Franchises (typically for optometrists)   These structures ensure that practitioners remain personally liable and are not separately employed. Even if a doctor works at a hospital, they operate their own practice.   LEGAL ENTITIES TO CONSIDER   Let us dive into the different options available and why you might choose one over another:   Optometrists and Franchises: If you are an optometrist, franchises can be a great choice. They offer name recognition, which means you get customers from day one. Plus, franchises help you with setting up and running the practice – everything from buying equipment to billing software. Sole Proprietorships: For many other practitioners, starting as a sole proprietor is the simplest and most cost-effective route. As a sole proprietor, you essentially are your business. You can potentially expense parts of your personal expenses (like your vehicle or phone) if they are used for business purposes. Partnerships: These can be tricky. While partnerships can work, they often mean shared debt responsibilities. To avoid this, many prefer setting up an incorporated entity with shareholders or crafting a formal partnership agreement, which can be more expensive. Incorporated Entities: Ideal for smaller and larger practices. Incorporating can offer significant tax advantages and help protect your personal assets. More about this option later.   LIABILITY COVER   As pointed out previously, healthcare practitioners cannot completely shield themselves from liability through incorporation. To protect yourself:   Ensure you comply with financial reporting responsibilities. Follow HPCSA rules diligently. Secure comprehensive insurance and malpractice cover. Consider setting up a trust for personal wealth protection, which separates your personal liability from your assets.   TAX CONSIDERATIONS   Tax is another area where the right structure can make a big difference. Medical practitioners need to handle various tax obligations, such as individual income tax, VAT, employee taxes, provisional taxes, and company taxes.   You can claim a range of business expenses to reduce your taxable income, including phone, internet, transport, and salaries for practice staff.   Let us explore some specific tax considerations to keep in mind:   Small Business Corporation (SBC) Tax Benefit If your practice employs at least three full-time, unconnected staff, is a legal entity, and does not exceed R20m in turnover, you can also benefit from SBC tax rates, potentially saving around R100,000 annually.   Dividend Arbitrage for High Earners Some practitioners earn more than the highest individual tax bracket (currently R1 817,000 as of 1 March 2024). Beyond this level, the personal income tax rate is 45%, while the highest corporate tax rate is effectively 41.6%. This difference of roughly 3% makes incorporation potentially advantageous for high-earning practitioners.   You can benefit from this in addition to the SBC if you meet the necessary criteria. For instance, according to the SARS tax tables for SBC’s, if your taxable earnings (profit) are R660,000, you would owe SARS R87,398 in tax. If the company were to be taxed at the regular company tax rates, taxable earnings (profit) of R660,000 would amount to R178,200 in tax.    This approximately represents the 27% turning point for consideration. Determining the optimal tax position between a sole proprietorship and incorporation requires careful tax planning with an experienced advisor. Various other factors and personal circumstances must also be considered. From the example above, if your expected taxable income exceeds R1,500,000 per annum, incorporation might be more beneficial from a tax perspective.   Estimating Provisional Taxes Medical practitioners often pay taxes semi-annually. To avoid a financial crunch, it’s wise to estimate and set aside tax payments monthly or bi-monthly.   VAT for Doctors Once your practice bills over R1m annually, VAT registration is mandatory. Incorporating at this point can simplify your personal tax situation and leverage SBC benefits.   Dividends Tax Delaying Incorporated entities only pay dividends tax when dividends are declared. Delaying this can improve cash flow management.   Asset for Share Transaction/Closing Practitioners can transfer their sole proprietorship or partnership into an incorporated entity without tax consequences, making the transition smoother.   It’s perfectly legal to plan and minimize your tax liability within the law. However, stepping outside legal boundaries constitutes tax evasion. At TDP PE, we advocate for a conservative approach to taxes, ensuring our clients use all legal advantages without risking non-compliance.   In addition, in partnership with Optima Consulting, we also offer specialised medical legal services to healthcare professionals. Whether you require assistance with medical malpractice defence, regulatory compliance, healthcare contract negotiations, or any other legal matter within the medical field, Optima Consulting has the knowledge and experience to protect your practice and reputation.   Navigating the right structure for your medical practice involves careful consideration and planning. Whether you are just starting out or looking to optimize your existing practice, understanding these elements can help you make informed decisions and maximize your benefits.   Contact me, Jaco Barnard,

WHAT IS THE RELATIONSHIP BETWEEN FAMILY TRUSTS AND WILLS?   Introduction Understanding the intricate relationship between family trusts and wills is crucial for effective estate planning. While both serve as essential tools in managing assets and distributing wealth, they operate differently and offer distinct advantages and disadvantages. A will, a legally binding document, outlines how your assets will be distributed after your death. It becomes effective only upon your passing, and its provisions must be carried out accordingly. In contrast, a trust is focused on asset and property management and can be active both before and after death. Trusts require funding and ongoing management during your lifetime to ensure they fulfil their intended purpose. New reporting obligations aim to enhance transparency and accountability, but have also increased administrative burdens for trustees. In brief, the new rules: require trusts to establish and record the Beneficial Ownership of a Trust; effectively make trustees third-party data providers for SARS. Compliance is essential to avoid non-compliance. Let us first consider the advantages and disadvantages of a will and a trust. Advantages of a Will Streamline processes for family and loved ones following death. Protect inheritance for heirs of your estate. Allocate money or assets to trusts. Plan living will in the case of incapacitation or physical deterioration. Prepare for coverage of burial costs and necessary taxes. Advantages of a Family Trust Creditor protection – Assets are not owned by the trustees or beneficiaries and the creditor, therefore, has no claim against them. Protection against relationship property claims – If your assets are owned by a trust, or are given to your trust on death, your children can continue to benefit from those assets, but the assets do not form part of their personal property, and therefore cannot be subject to claims by your children’s partners. Protecting property from or for beneficiaries – You may be reluctant to simply give your assets to your children during your life or on death if you have concerns about their ability to manage their financial affairs. If you give your assets to a family trust, then the trust can provide a vulnerable child with income and/or capital to meet their cash requirements as they arise. Protecting assets for future generations from potential tax law changes – Family trusts may provide protection against various forms of tax. For example, R100 000 earned by a trust can be split between five beneficiaries so that they earn R20 000 each. If they earn no other income, they will pay no tax as this amount is below the threshold. This is the so-called split income principle, i.e., income tax is levied against the trust, but income distributed is taxed in the hands of the beneficiary. Despite these advantages, both wills and trusts come with their own set of challenges: Disadvantages of a Will Possible challenges – Although it’s possible that someone could challenge your will, if you have followed all the proper procedures in its creation, your will and its provisions will likely stand. It is public record – A will becomes public record once it is filed for probate, which means anyone can search for it and see its contents. May not fully address tax concerns – A will that is not carefully planned out could leave your estate open to paying estate taxes or your beneficiaries to paying hefty inheritance taxes. Disadvantages of Family Trusts Loss of ownership of assets – If you transfer your personal assets to a trust, then the trustees of that trust will control the assets. Although you can retain some control by holding the power to appoint and/or remove trustees, or even by being a trustee yourself, it is important to remember that assets you transfer to the trust are no longer your own. If you continue to treat the assets as your own, any trust could be open to challenge as a sham. Additional administration – If you establish a trust, you need to allow for the time and cost involved with meeting the trust’s annual accounting and administrative requirements. Cost of formation of the trust and the transfer of assets – There are costs involved with establishing a trust. These will depend on the complexity of your trust and the nature of the assets to be transferred. Future law changes – Possible changes to legislation of trust law may remove or effect some of the original objectives for the trust formation. Wills or Trusts? Determining whether to establish or maintain a trust alongside a will hinges on several factors, such as family dynamics and individual circumstances. Revisiting the founder’s intentions and the objectives of the trust is essential in making this decision. However, despite the complexities involved, there are clear benefits to opting for a trust over a will when it comes to distributing your estate to beneficiaries. Estate duty savings and asset protection: Trusts can potentially save on estate duty and protect inheritances from beneficiaries’ creditors, ensuring that assets remain accessible to beneficiaries without being subject to creditor claims. This preserves family wealth for future generations. Preservation of capital for disabled beneficiaries: Trusts provide a reliable means to preserve capital and cover expenses for beneficiaries with disabilities, ensuring their long-term financial security. Efficient administration for minor beneficiaries: Trusts can administer assets for minor beneficiaries without court intervention, avoiding delays and costs associated with the Guardians Fund. This allows for smoother management and allocation of assets for the benefit of minors. Continuity and perpetual succession: Trusts continue to operate even after the death of the founder, ensuring minimal disruption in benefit enjoyment for beneficiaries. They can span generations, providing continuity in estate planning for the family. Protection for surviving spouses with limited financial skills: Trusts safeguard the interests of surviving spouses who may have limited financial expertise, ensuring their financial well-being and security. Asset protection and facilitation of divorce settlements: Trusts offer protection against creditors and divorce claims, preserving assets for the maintenance of spouses and children while safeguarding property for their

UNDERSTANDING THE IMPORTANCE OF ESTATE PLANNING: WHAT HAPPENS WHEN YOU DIE WITHOUT A WILL?   Ensuring that your assets are distributed according to your wishes after you pass away is a crucial aspect of estate planning. In South Africa, our legal system allows individuals the freedom to dictate how their estates will be divided among loved ones, friends, and charitable organizations through the creation of a will. However, failing to create a valid will or neglecting estate planning altogether can have significant repercussions for your family and beneficiaries.   Implications of Dying Intestate: When an individual dies without a valid will, they are considered to have died intestate. In such cases, the distribution of their assets is governed by the laws of intestate succession. This often leads to complications and disputes among family members, and the consequences can be emotionally and financially taxing for those left behind.   Key Considerations in Intestate Succession: Appointment of an Executor: In the absence of a will, the government appoints an Executor to oversee the distribution of the deceased’s estate. This process can be time-consuming and may result in delays in settling the estate. Matrimonial Property Regime: For individuals married in community of property, only the deceased’s share of the joint estate is subject to intestate succession. This can impact the distribution of assets between the surviving spouse and other heirs. Guardianship of Minor Children: In the event of your death, the state may appoint a guardian for your minor children if the other parent is unavailable or deceased. This may not align with your preferences for your children’s care. Rules of Intestate Succession: The Intestate Succession Act of 1987 outlines a strict order of inheritance for surviving relatives, with spouses and children taking precedence. However, the distribution may not align with your wishes or familial circumstances.   Special Cases and Calculations: Spouse and Descendants: The surviving spouse inherits a portion of the estate, with the remainder divided among descendants. The calculation of the inheritance portions depends on the presence of surviving children and the value of the estate. Parents and Extended Relatives: In the absence of a spouse or descendants, parents and other blood relatives may inherit the estate based on predefined rules of succession. Guardian’s Fund: Assets inherited by minor children from an intestate estate are administered by the Guardian’s Fund, which may lead to complications and delays in accessing funds.   Additional Considerations: Retirement Funds: The distribution of retirement fund interests is determined by the fund’s trustees, with consideration given to nominated beneficiaries and financial dependents. Cohabiting Couples: Cohabitating partners have no legal standing in South African law, making it essential to draft a will to ensure your partner is provided for. Professional Will Drafting: While simple wills can be self-drafted, complex circumstances require professional assistance to ensure validity and adherence to legal requirements.   Estate planning is a vital aspect of financial and familial security, ensuring that your assets are distributed according to your wishes and minimizing the risk of disputes among heirs. Whether you choose to draft your own will or seek professional assistance, it is essential to plan ahead and consider the implications of intestate succession for your loved ones.   At TDP, we specialize in providing comprehensive estate planning solutions for individuals seeking to safeguard and preserve their wealth for themselves and their families. Our approach involves collaborating closely with you to thoroughly understand and address intricate legal, financial, and familial considerations.   Our modern will structures, which incorporate discretionary testamentary trusts, significantly enhance the value of inheritances by empowering beneficiaries to mitigate various taxes (estate duties and other taxes) while simplifying the process of securing their inheritances against potential claims from creditors or spouses. This ensures that assets can be preserved and passed down within the family with ease.   Additionally, TDP offers comprehensive support for the administration and winding up of deceased estates, acting as executors of estates or working closely with the nominated executor or executrix under a duly appointed mandate. We also assist trustees in the deregistration of trusts through the appropriate channels with the Master of the High Court of South Africa.    To gain further insight into estate planning and will drafting, arrange a consultation with TDP by calling 0414508799 or emailing wills@tdpsa.co.za.   VERSTAAN BOEDELBEPLANNING: WAT GEBEUR AS JY STERF SONDER ‘N TESTAMENT?   Om te verseker dat jou bates volgens jou wense verdeel word nadat jy oorlede is, is ‘n kritieke aspek van boedelbeplanning. In Suid-Afrika laat ons regsisteem individue toe om te bepaal hoe hul bates verdeel sal word onder geliefdes, vriende en liefdadigheidsorganisasies deur ‘n testament op te stel.  Deur te versuim om ‘n geldige testament op te stel of om boedelbeplanning heeltemal te ignoreer, kan aansienlike gevolge hê vir jou gesin en begunstigdes.   Die Implikasies van Intestaat Sterfte: Wanneer ‘n individu sonder ‘n geldige testament sterf, word hulle beskou as intestaat. In sulke gevalle word die verdeling van hul bates beheer deur die Wet op Intestate Erfopvolging.  Dit lei dikwels tot komplikasies en geskille tussen familielede, en die gevolge kan emosioneel en finansieel uitmergelend wees vir diegene wat agterbly.   Belangrike Oorwegings in Intestate Erfopvolging: Aanwysing van ‘n Eksekuteur: In die afwesigheid van ‘n testament, stel die regering ‘n Eksekuteur aan om die verdeling van die oorledene se boedel te bestuur. Hierdie proses kan tydrowend wees en kan lei tot vertragings in die afhandeling van die boedel. Huweliksgoederebedeling: Vir persone wat binne gemeenskap van goedere getroud is, is slegs die oorledene se helfte van die gesamentlike boedel onderhewig aan intestate opvolging. Dit kan die verdeling van bates tussen die oorblywende gade en ander erfgename beïnvloed. Voogdyskap van Minderjarige Kinders: In die geval van jou dood, mag die staat ‘n voog vir jou minderjarige kinders aanstel as die ander ouer nie beskikbaar is nie of reeds oorlede is. Dit mag nie strook met jou voorkeure vir die versorging van jou kinders nie. Reëls van Intestate Erfopvolging: Die Wet op Intestate Erfopvolging van 1987 skets ‘n

YOUR RELATIONSHIP WITH YOUR ACCOUNTANT   For our final poll during Relationship Month, we focused on your relationship with your accountant. On Facebook and LinkedIn, 95.8% of participants felt that their accountants could add value beyond simply handling their taxes.   While it is widely acknowledged that accountants, lay a pivotal role in the success of organizations. The International Federation of Accountants conducted research on the topic by summarizing findings from over 90 academic papers on the relationship between accessing accountancy expertise and business performance.   The findings suggest that there is a continuous and bi-directional relationship between accessing accountancy expertise and business performance. Organizational development and performance lead to increased utilization of accountancy expertise, while accountancy expertise, in turn, leads to superior performance and development.   Accountancy expertise serves various roles in organizations, including organizing, analysing, and communicating information, providing decision-making support, managing risk and control, ensuring compliance, and creating value. So, how can you maximize your relationship with your accountant?   Treat your accountant as a business partner. Your accountant is more than just a number cruncher. Instead, view them as an active partner in your business, providing invaluable guidance on every decision you make. By adopting this approach, not only will your business benefit, but you will also establish a more collaborative and productive working relationship with your accountant.   Ensure your accountant is the right fit for your business. Accounting encompasses various specializations, and some accountants may be better suited to support your business needs than others.   Establish upfront how your accountant can support you. A fruitful relationship begins with defining a framework for how your accountant can assist you. Your accountant may offer support across a broader range of areas than you realize. Here are some key questions to ask them to determine how they can provide assistance:   How can you assist me in organizing and presenting paperwork? How can you advise me on critical business decisions? How can you simplify my workload? How can you help me save money? How can you assist me in setting up an effective record-keeping system? How can you aid me in managing my time? How can you help me develop a budget? How can you assist me in forecasting cash flow? How can you help me draft a business plan? How can you ensure compliance?   Having this discussion upfront ensures alignment and sets realistic expectations for the work to be delivered.   Collaborate on your business goals. Your business goals should be regularly revisited and refined. This is an area where your accountant can offer significant value. Not only do they possess detailed knowledge of your company’s financials, but they may also have experience with similar businesses at the same stage of development. This can provide valuable insights into long-term direction and necessary steps. Even if you prefer them to take a less active role, your accountant can rigorously assess each aspect of your business plan to ensure its financial viability.   Assist in organizing and streamlining your accounting processes. Technological advancements have revolutionized the world of accounting and bookkeeping.   Forecast cash flow and engage in scenario planning. Cash flow forecasting is crucial for businesses, particularly in today’s economic climate. It involves predicting cash inflows and outflows and identifying potential challenges and opportunities. Your accountant can utilize insights and tools to generate reports and offer recommendations. Collaborating with your accountant in this manner enables you to incorporate contingencies into your planning effectively.   At TDP PE we take pride in getting to know you and what your business is all about. Director Jaco Barnard thrives on adding value, whether in the form of implementing risk and control measures, making important business decisions and seeing your business succeed and grow.

NEW YEAR, NEW FINANCES: SEVEN RESOLUTIONS TO TRANSFORM YOUR MONEY MANAGEMENT   As the new year looms on the horizon, many individuals find themselves contemplating resolutions aimed at enriching various aspects of their lives. Common aspirations include hitting the gym, adopting healthier eating habits, achieving work-related metrics, and, perhaps most crucially, putting their financial house in order.   The task of organizing one’s finances can be overwhelming – here are some practical New Year’s resolutions designed to pave the way for a more financially secure future.   Calculate Your Net Worth   If you have not taken stock of your financial standing yet, the beginning of the new year presents an opportune moment to calculate your net worth. This essential step not only evaluates your financial health, but also serves as a foundation for setting and achieving your financial goals. The act of scrutinizing your assets and liabilities provides clarity on your current spending and saving habits, highlighting areas where adjustments may be necessary.   Draw Up a Budget   While occasional indulgences are acceptable, not having a budget can be detrimental to your financial well-being. Tracking expenses and holding yourself accountable are pivotal steps in avoiding the trap of consistently spending as much as you earn. Here’s a three-step guide to crafting a manageable budget:   Calculate your Net Monthly Income: After taxes and deductions. Identify Nondiscretionary Expenses: Such as housing, utilities, groceries, auto-related costs, and loan servicing. Separate Discretionary Expenses: Like dining out, vacations, entertainment, and subscriptions into another column.   The key is to ensure that your net income exceeds the combined total of nondiscretionary and discretionary expenses, allowing room for savings. Regularly review and update your budget to adapt to changing circumstances.   Assess any Major Purchases before Acting   In a world where tempting deals abound, it’s crucial to resist impulsive buying decisions. Take a step back to evaluate the impact of a significant purchase on your budget and overall financial goals. High-pressure sales tactics may push you to act emotionally, leading to regret. Resist the urge to succumb to phrases like “this deal won’t last” and make decisions based on careful consideration.   Utilize Tax-Advantaged Vehicles   Minimizing taxes is a common financial objective, yet many individuals engage in investment strategies that generate both income and capital gains taxes annually. For long-term financial goals, consider the benefits of compounding interest with tax-advantaged vehicles. Classic examples include retirement annuity accounts, and not participating in employer-sponsored plans can result in missed tax savings and compounding returns.   Diversify   Portfolio diversification is easily achievable and cost-effective. While investing in individual stocks may be enjoyable, a globally diversified portfolio of various securities, tailored to your time horizon and risk tolerance, can better serve your financial goals.  Talk to a reputable and experienced financial planner about your portfolio.   Review Life Insurance and Disability Insurance Needs   As you progress through your career, your life insurance and disability insurance needs evolve. Reflect on the protection you require and compare it to your existing coverage through your employer’s benefits package. Assess whether you need more, or less life insurance and determine whether term or permanent life insurance is more suitable. Additionally, review your disability insurance coverage to ensure adequacy.  Again, a specialist financial planner will provide good guidance.   Invest according to your Financial Goals   Define what you desire in life, list goals in order of priority, and quantify them. For example:   Eliminate credit card debt by 2027. Retire in 20 years on 80% of current income. Purchase a home in 5 years in X neighbourhood with a R2 million down payment.   To maintain financial resolutions, set realistic targets and remind yourself of the reasons behind each resolution when faced with temptation. Consider transferring money to a designated savings or investment account that is not easily accessible or automating a portion of your paycheque to be deposited directly into a savings account.   By implementing these resolutions, you can pave the way for a more secure and prosperous financial future. Remember, the key is consistency and a steadfast commitment to your financial well-being.

Dormant Dilemmas: Unravelling the Tax Challenges Faced by Inactive Companies in South Africa   The recent measures implemented by the South African Revenue Service (SARS) have brought to light the complexities surrounding late-submission penalties, impacting all registered companies, whether actively engaged in trade or lying dormant.   A dormant company, by definition, is one that has remained inactive throughout the full year of assessment. With no business activities generating revenue, it becomes surprisingly easy for such entities to slip into obscurity, often accompanied by the entanglements of administrative red tape.   The most recent development from SARS involves the imposition of penalties for late submission of income tax returns outstanding from 2007 to 2020. Effective from 1 December 2022, these penalties not only come into play upon submission delays, but continue to accumulate until the outstanding tax returns are filed. Ranging from R250 to R16 000 per month, these penalties are calculated based on SARS’s estimation of taxable income and persist even after the submission of tax returns.   For dormant companies that have not traded for several years and are behind on tax submissions, the repercussions can be substantial. SARS implements penalties based on the most recent tax return received. Even in the best-case scenario, where the company has neither made a profit nor incurred a loss, a penalty of R250 per month is levied.   De-registering a dormant company, however, does not absolve it of tax obligations. Directors and business owners are urged to verify their directorship status with the Companies and Intellectual Property Commission (CIPC) and engage tax practitioners to conduct a comprehensive tax status compliance check, confirmed by a tax clearance certificate.   Closing a dormant company in South Africa, while a relatively straightforward process, demands careful adherence to the correct procedures to ensure proper dissolution and compliance with all legal obligations. Here’s a step-by-step guide:   Check the Company’s Status: Verify that the company is indeed dormant, with no business activities or revenue generation in the past financial year. Notify the CIPC: Inform the CIPC of the intention to close the company via email or by submitting a form in person, with a turnaround time of approximately 6 months. Supporting Documents: Provide essential documents, including a resolution/letter on company letterhead signed by all directors, a tax clearance certificate, and certified copies of each director’s ID not older than three months. Pay Outstanding Fees and Taxes: Settle all outstanding fees and taxes owed to CIPC and the South African Revenue Service (SARS) before the closure request can be processed. File Necessary Documents: Submit required documents to the CIPC, including a ‘Notice of Intention to De-register a Company’ form and a ‘Notice of Resolution to De-register a Company’ form. Wait for Approval: The CIPC will review the request, and upon approval, initiate the de-registration process. Dispose of Company Assets: If the company owns assets such as property or equipment, dispose of them before full dissolution, either by selling or transferring to another entity. Notify Creditors and Shareholders: Inform creditors and shareholders of the de-registration through the Government Gazette or individual letters. De-register with SARS: Notify SARS of tax compliance and request de-registration through a letter, eFiling, or by setting up an appointment with a SARS consultant. It is crucial to note that de-registering with CIPC does not automatically de-register the company with SARS. Compliance with tax returns is a prerequisite, and professional assistance from an accredited tax practitioner is advisable to ensure full compliance and a seamless de-registration process. In conclusion, navigating the dormant company landscape in South Africa requires meticulous attention to detail and proactive measures to address potential tax pitfalls.  Do not hesitate to contact local TdP director, Jaco Barnard at jaco@pe.tdp.co.za for professional assistance.