Mastering cross-border estates and trusts
Advisers and financial planners will have to up their game to capitalise on the opportunities presented by interjurisdictional estates and trusts, and the associated tax and administrative complexities, as cross-border wealth becomes a defining feature of modern financial planning. FAnews attended Momentum Investments’ Global Citizen Masterclass to learn more.
Sculpting financial legacies
“What if the decisions you make today could shape your client’s financial legacy for the next 30 years?” asked Hugo Bezuidenhout, Head: Retail Investment Distribution Enablement at Momentum Investments, introducing a discussion on the key statistics shaping intergenerational wealth transfers worldwide. He set the stage for presenters to unpack practical strategies for structuring and protecting cross-border wealth.
“Our aim has always been to empower financial advisers and their clients to think and plan beyond borders,” said Robert Rhodes, MD of Momentum Wealth International (MWI), to start the chat. He said wealth managers had to understand how their clients view investments and legacy in an interconnected and evolving world. “Tax rules differ across jurisdictions; currency fluctuations can affect investment values; and succession laws vary widely from country to country,” he said, labelling this cross-border complexity as a strategic opportunity for advisers.
Adele Bothma, a Regional Manager with MWI, was invited to the virtual platform to offer some supporting statistics. “I have seen my share of investors investing their hard-earned cash and then failing to do the required estate planning,” she said. This is an alarming observation given how many South Africans have emigrated over the past few decades. For example, Stats SA’s most recent migration report estimated around 914 000 South Africans were living abroad by the end of 2023.
Cross-border capital flows on the rise
Bothma added that Currency Partners, an authorised foreign exchange dealer, had recorded approximately R10 billion in emigration-linked capital transfers (form BOP 530) from South Africa in 2024. “This was almost double the annual average for the preceding eight years,” she said. Inheritance-related capital flows reflected under the SARB BOP 409 form have been trending higher too, as more offshore domiciled estates remit to local beneficiaries and vice versa.
The reason for these cross-border flows is that South African high net worth (HNW) individuals have added ‘facilitation of intergenerational wealth transfer’ and ‘management of tax liabilities’ to ‘protection against currency depreciation’ as motivation for investing offshore. “It has become extremely important that individuals who wish to invest offshore not only consider safe and solid jurisdictions, but also select solutions that can cater for intergenerational wealth transfer,” Bothma said.
Bezuidenhout weighed in at this juncture, saying that advisers had to have offshore investing discussions with their clients, and sell the role that offshore trusts play in protecting assets and building wealth for multiple generations. He then invited Sharon Hamman, Senior Legal Advisor at Momentum Distribution Services; Lauren Walker, Business Development Director at Currency Partners; and Eugene Taljaard, another Regional Manager at MWI to participate in a panel discussion on cross-border financial planning, trusts and wealth transfer.
Mechanisms for moving cash offshore
Walker noted that the flow of funds under South Africa’s two annual allowances, the single discretionary allowance (SDA) and the foreign capital allowance (FCA), had consistently increased over the past decade, with a record R160 billion in outflows in 2025. Local taxpayers can move R1 million (increased to R2 million in Budget 2026) in a calendar year under the SDA and need only meet FICA requirements to do so. The FCA is limited to R10 million in a calendar year, for which taxpayers must get an approval for international transfer (AIT) from the South African Revenue Service (SARS).
“There is a special approval process for those who want to externalise more than R11 million,” Walker said. This is a two-step process involving an application to SARS for a letter of tax compliance plus an application to the South African Reserve Bank (SARB). The SARB will request the SARS letter and details of which country you intend to send the funds to. The presenter said that both the FCA and special approval process could be fulfilled within 12 months of an application being granted, meaning there were potential transfer overlaps in a given year.
An interesting snippet from this part of the presentation, and something that financial planners should note, is that your clients do not have to use their annual offshore allowance to pay for their children’s university fees. “If you get an invoice from the university, and you pay them directly, it does not form part of your annual allowance, which means you have an opportunity to do more capital investments,” Walker said. As a ‘feel-good’ aside, there has been a big uptick in inward remittances for foreign students studying in South Africa in recent years.
Different investor categories
Hamman asked Taljaard to expand on the different investor categories through which South African HNW clients may access offshore investments, including individuals investing directly abroad; individuals investing via an offshore trust; South African trusts investing via an offshore trust beneficiary; and South African trusts or individuals investing via asset swap arrangements.
“10 years ago, the flows were predominantly into the flexible, open-ended type of products … over the last few years, there has been a migration across to the endowment or wrapper products,” Taljaard said, explaining the shift in the context of advisers and clients realising the ease of tax administration and wealth transfer in such structures. He added that MWI was fielding many questions from advisers and clients asking about jurisdictions and platforms for investments into offshore trusts.
Hamman noted an uptick in the use of offshore trusts as advisers and clients place greater emphasis on controlling intergenerational wealth transfers while still alive. She asked Walker whether there was any difference in the approval process where the end investor was an offshore trust. It seems the starting point remains the South African resident externalising their funds. Individuals can use their SDA and FCA to transfer capital into an offshore trust structure, and since 2022, use the special approval process to externalise larger sums.
Due diligence for complex onboardings
Taljaard said the use of offshore trusts introduced additional onboarding complexity from a client due diligence point of view. He noted that MWI had to assess both the appointed trust company, which provides the legal instruction to establish the structure, and the trust itself, including the settlor and named beneficiaries. This results in more extensive documentation requirements, though upfront planning and correct structuring should help avoid complications later in the investment lifecycle.
The use of offshore trusts in intergenerational planning was covered extensively during the Masterclass. Hamman cautioned that while such structures could be effective estate planning tools, they were not suitable for every client. Establishing an offshore trust typically involves relinquishing a degree of control over the underlying assets to appointed trustees, often guided by a letter of wishes and, in some cases, a protector. Advisers must ensure that clients understand the implications upfront, including jurisdiction-based cost layers and the manner in which the trust is ultimately funded, whether by way of a loan or donation.
From a product perspective, Bezuidenhout noted that the choice of investment wrapper could materially influence the tax outcome where an offshore trust had been established. Investments made on a voluntary basis may still expose the original funder to taxation on income and capital gains generated within the structure. By contrast, the use of an offshore endowment could act as an attribution blocker, with the insurer becoming the taxpayer rather than the individual client. In such cases, the interplay between funding method and product selection becomes a critical consideration in structuring offshore investments.
New financial planning opportunities
Recent regulatory developments allow South African trusts to externalise funds directly to bona fide non-resident trusts, creating new financial planning opportunities. Walker noted that such transactions were administratively intensive, requiring tax compliance verification across all linked natural persons and entities before approvals by both SARS and the SARB. In practice, the level of disclosure and complexity of the application process means that such transactions are pursued at higher investment values.
As an alternative, Taljaard pointed to asset swap arrangements that allow investors to access offshore exposure without externalising capital. These investments remain rand-denominated and are treated as South African assets for regulatory purposes, but they may offer a practical solution for clients who are unable or unwilling to navigate the formal approval processes associated with direct offshore investment and trusts.
Writer’s thoughts:
Trusts and offshore trusts have always felt ‘out of reach’ for your typical mid- to high-income client. How do you decide whether to steer a client into trusts? Is the decision always about assets or wealth, or are there other key considerations? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
