As a consequence of the environment created over the past 10 years, many South Africans have either emigrated or are considering emigration. The highest concentration of emigrants can be found in the UK, followed by Australia the United States, New Zealand, Canada/Germany.

While there are many reasons why people leave, they are invariable based on the belief that they will be able to experience a better life in their new country of residence.

Of the many factors considered, the taxation system is often not a deciding factor, even although many of these countries have fairly high levels of personal tax.

As you are aware the South personal tax rate ranges from 0% to 45%. Taxes in the favoured destinations mentioned previously also range from 0% to 45%, with the majority having a maximum rate for either 33% or 37% which probably explains tax is not often not the deciding factor when emigrating.

Even although the tax rates in these countries may be lower than in South Africa, they are still quite high.

Nowadays, as most the tax regimes are based on your residence and you are taxed on your worldwide assets the method of calculating your tax probably will not change much.

However, when people emigrate, they often liquidate many of their assets or investments and transfer their “wealth” to their new country of residence.

If you are contemplating emigrating, instead of transferring all of your wealth to your new country, you may want to consider setting up a trust in a jurisdiction that has favourable tax rates to accommodate some of your wealth. As you may also access your retirement funds on emigration, setting up an offshore retirement fund may also be a consideration.

While there are many options available you should only consider jurisdictions that have a stable financial and political system, are transparent and have good governance.

You also need to be prepared to give up direct ownership of the assets transferred to the trust in favour of the nominated trustees. While you may consider this as being quite onerous, the benefit will be the growth in these assets which is not being eroded by punitive taxes.

Contrary to what you may believe, you do not have to be mega rich to consider this option and it makes a lot of sense, especially from an estate planning perspective.

The benefits of an offshore trust are many and include flexibility, effective tax and succession planning, saving on executor’s fees and asset protection. When you pass away while your assets in your personal estate are frozen during the finalisation of the deceased estate, trust assets are accessible at all times. To add to this, as mentioned above tax-efficient trusts offer the opportunity to reduce, or even avoid taxes – including estate duty, income tax, capital gains tax, donations tax and transfer duty.

So, if you are contemplating emigration and significantly reorganising your affairs, this may also be a good time to consider the establishment of an offshore trust. If you would like to know more about establishing an offshore trust, go to “Offshore Trusts – a sensible option”