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The below is a basic scenario I recently worked on for a client. The individual had around R7mil in the specific Retirement Annuity and needed R55k per month after tax as income from it. One of his concerns was if he should take the 1/3 lump sum allowed or if he should reinvest his entire retirement savings in a post-retirement structure. The below looks at these two scenarios. There are many complexities around structures, disallowed contributions, asset allocation and income percentages that are ignored and simplified in this example. Scenario 1: Invest full retirement savings in post-retirement product. First year income: R77 000 (R924 000 annually) After tax: R55 062 (R660 744 annually) Monthly tax payable: R21 938 Scenario 2: Take R900 000 in cash and reinvest in flexible investment. Lump sum after tax: R825 300 Voluntary income from lumpsum : R10 000 (R120 000 annually, no income tax on withdrawal) Retirement Lump Sum tax table:

Many South African investors choose to invest directly offshore by physically moving capital offshore through their annual allowances (R10 million foreign capital allowance and a R1 million single discretionary allowance). This is done for diversification or financial planning needs and can be full of pitfalls. One of these risks in offshore investing is probate. Offshore probate refers to the process of applying for the right to deal with a deceased investor’s foreign assets and proving their will as a valid legal document in the foreign jurisdiction. There are legislative differences in all jurisdictions and will most certainly provide complications on the investor’s death. Effectively there would be a deceased estate in the foreign jurisdiction and in South Africa. This could also imply that executor’s fees would apply in South Africa and the equivalent thereof in the offshore jurisdiction where it may not be as regulated and capped as in South Africa. If probate applies in the jurisdiction, the investor will need a will that will be legally considered in that jurisdiction and specifically mentions and gives instruction on the proceeds of the assets. This can typically make the already longwinded process even longer and leave dependents without access to assets. How can you avoid probate? Here are two options: Use an open-ended structure where the foreign assets are held by a local nominee company. Use a “wrapped” structure like a sinking fund or endowment policy where beneficiaries can be nominated. There are major differences between these two structures regarding tax and liquidity, making it very important to do effective financial planning around these variables. These structures are carefully designed with the specific jurisdictions in mind. If the requirements are met as set out by the product rules, the risk of probate may not apply. Importantly these structures provide a clear course of action on death and may give dependents access to capital if needed. This does not serve as financial advice* Ruvan J Grobler RFP™