What happens when you are no longer here to see that these
funds are properly looked after? Probably the best approach to meeting this need is to establish a trust for the benefit of your child.
A trust is an agreement between the founder of the trust
(you), and trustees (persons you select) to manage money or other assets on
behalf of your autistic child.
When the persons for whom a trust is established are regarded
by the South African Receiver of Revenue (SARS) as being disabled in terms of their
definition, the trust is called a “special trust”, and is given special tax
status.
This means that the income of the trust is taxed according to
the standard tax tables for individuals. Lower incomes are taxed 18% and this
rate of taxation increases in stages as income increases then eventually
reaches a maximum of 40%. A
trust that is not a special trust pays tax at 40% from the first Rand it earns,
so special trusts enjoy a significant reduction in tax.
A special trust can be established while you are still alive
or it can be written into your will so that it is founded when you die. The
choice will depend on quite a number of issues. Here are some to think about”
Cost
The cost of establishing a trust while you are alive would
be around R5500 at this point in time. SARS regards a trust as a “taxpayer”, so
you need to submit annual tax returns. If you will use professional services to
do this, that may cost you yearly fees. The cost of drafting a Will that
includes provision for a special trust is as little as R300.
Where you make use of professional trustees, they charge
fees in proportion to the value of the funds under management with a minimum
charge of around R8550 per year. This means that if you have only small amounts
to invest, the costs may erode your capital. These costs can be reduced by
various means if you feel the trust is important but you would prefer to avoid
the administration costs during your lifetime.
Continuity
One big advantage in favour of establishing the
special trust while you are alive is that funds in the trust are available
immediately in the event you die, which means it is more likely that your child
will experience as much continuity, stability and routine as possible at a time
when rather a lot of disruption is inevitable.
A much longer list of reasons could be produced, but for the
sake of space, a rule of thumb is that where the support network around your
autistic child is not very extensive and dependable, setting up a trust while
you are alive would be the more prudent choice.
I would be very interested to hear your questions about this
topic or any suggestions about other topics I could write on that would be
useful to you. Please feel free to comment on this blog or post questions on the
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