The trust is now registered and the bank account opened. The next step is to transfer those fully paid up assets and cash currently held in an individuals capacity so as to divest the individual of ownership and in so doing protect the assets from potential creditors. Assets can be sold or transferred to the trust. The value of assets or cash that may be donated, tax free, is currently R100 000.00 per person per annum.
Therefore, if the value of your assets exceed R100 000,00 they will need to be transferred to the trust by way of a sale agreement so as to avoid the imposition of donations tax. Even if your assets are below R100 000,00 it may still be advisable to transfer same through a sale agreement but for this purpose it is advisable to consult your accountant. The trust, at date of inception does not possess any money to reimburse the Seller and therefore, on the sale or transfer of the assets, a loan account will be created in favour of the Seller (usually the Founder) to the value of the assets transferred. This loan account is then reduced by yearly donations of R100 000,00. These donations occur by physical transfer and not set off so as to avoid the imposition of Capital Gains Tax.
The cost to transfer assets depends on the type of asset. Movable property such as household contents can be transferred at no cost. The value at which you transfer them will be a “cash converters” value. With assets such as paid up vehicles and the like, it is advisable to have these registered in the name of the trust, which costs would be the standard costs associated to transfer of ownership. On the transfer of shares a duty of 0.25% of the value of the shares is payable. Alternatively, the shares may be held by the donor (who is a trustee) in a nominee capacity in favour of the Trust.
It is imperative that the transfer of assets occur immediately on registration of the trust. In terms of the Insolvency Act, any transaction that has occurred within six months (twenty four months if it can be proved that you were factually insolvent at the time of transfer) of an individual being declared insolvent may be reversed. Therefore, to avoid the risk of your assets reverting back into your name and therefore being attached by your creditors, they need to be transferred immediately. Once the six months have passed from date of transfer, the assets are then one hundred percent secure.