provide for future generations, trusts are often established with the expectation that they’ll continue serving the family for decades.

But families don’t stand still. Children grow up, move overseas and often become tax residents in other countries. When that happens, it’s worth asking whether your family’s South African trust is still working as intended.

The good news is that trusts remain valuable estate planning tools. However, recent changes to trust taxes mean that if your beneficiaries now live abroad, it may be time to review your trust to make sure it still suits your family’s circumstances.

Top three takeaways for South African expats with family trusts

If you have a trust fund in South Africa and your children have emigrated, here are the three most important things to know:

1. Emigration can change how your family trust is taxed. Once beneficiaries become tax residents in another country, the tax treatment of trust distributions to non residents and capital gains may be very different to when the trust was first established.
2. A trust review isn’t just about tax. As your family grows and becomes more global, it’s worth checking that your South African trust still supports your estate planning goals, protects your legacy and remains practical for beneficiaries living in different countries.
3. Regular reviews can prevent costly surprises. Revisiting your trust in South Africa before making distributions or major financial decisions can help you identify potential tax risks, avoid unnecessary complexity and ensure your trust continues to work for future generations.

Is your family trust still fit for purpose?

Many families spend a lot of time setting up a trust in South Africa, completing the trust registration process and making sure everything is structured correctly from the beginning. Once the trust is established, however, it’s easy to assume that nothing more needs to be done.

In reality, a family trust in South Africa should be reviewed whenever there are significant changes in your family’s circumstances.

One of the biggest changes affecting South African families today is emigration. Trusts that were created when all beneficiaries lived in South Africa may no longer provide the same tax or estate planning benefits once beneficiaries become tax residents in other countries. Reviewing your trust fund in South Africa is an opportunity to make sure it still reflects your family’s needs and continues to achieve the purpose for which it was created.

What changes when your children move overseas?

More South African families now have children living and working abroad. While your family trust doesn’t become invalid because a beneficiary emigrates, the tax treatment of the trust can change significantly once that person is no longer a South African tax resident.

Recent changes to South African tax legislation have made this even more important. From March 2024, income and capital gains distributed by South African trusts to non-resident beneficiaries are generally taxed within the trust itself, rather than flowing through to beneficiaries under the traditional conduit principle. In most cases, the conduit principle now applies only to South African tax resident beneficiaries.

This means families need to pay closer attention to South African tax on trust distributions to resident and non-residents beneficiaries. Depending on the circumstances, distributions to beneficiaries living overseas may now attract higher South African tax. In some cases, beneficiaries may also have tax obligations in the country where they now live, making professional advice essential to avoid unexpected tax consequences.

Read more: SARS crackdown alert: how the new trust tax penalties affect expats and beneficiaries.

Trusts in SA – don’t overlook the capital gains tax implications

Income distributions aren’t the only thing to think about when reviewing your family trust. If the trust sells property, shares or other investments, capital gains tax (CGT) can also have a significant impact on the amount of tax payable.

This is especially important if some beneficiaries now live overseas. Recent changes to the taxation of trusts mean that capital gains are not always treated the same way they were in the past. In some cases, the trust itself may be liable for the tax instead of the gain being taxed in the hands of a non-resident beneficiary.

Because trusts generally pay a higher effective capital gains tax rate than individuals, the overall tax bill could be higher than families expect.

Before selling assets or making distributions, it’s worth understanding how trusts and capital gains tax work and what the potential tax consequences could be for both the trust and its beneficiaries. A professional review can help you avoid unexpected costs and ensure your trust remains as tax-efficient as possible.

Read more: Non-resident beneficiary trust distributions – South African tax implications you should know.

Family trusts in South Africa – it’s about more than tax

Although tax is often the reason families review their trust, it’s only part of the picture. Many family trusts were established years ago to protect assets, preserve wealth or ensure that future generations would benefit from a family’s success. As children emigrate and families become increasingly global, it’s worth taking a step back to ask whether the trust in South Africa still reflects those original goals.

Sometimes the answer is yes. Other times, a review may highlight opportunities to improve tax efficiency, simplify administration or update the trust so that it better reflects where beneficiaries now live.

A trust review can also help families prepare for future generations. The more geographically dispersed a family becomes, the more important it is to ensure that estate planning keeps pace with changing circumstances.

Questions worth asking when it comes to trusts in South Africa

If your children or other beneficiaries have emigrated, now is a good time to ask yourself:

• Does the trust still achieve the purpose it was originally created for?
• Have any beneficiaries become tax residents in another country?
• How will future trust distributions to non-residents be taxed?
• Could future distributions create unnecessary tax costs?
• Should your family consider alternative planning strategies, including offshore trusts, as circumstances change?
• Are your annual trust tax return and trust income tax return obligations up to date?

There isn’t a one-size-fits-all answer to these questions and every family’s circumstances are different, which is why it’s important to review your trust as your family’s needs evolve.

Read more: Six smart reasons why South Africans should establish offshore trusts.

FinGlobal: cross-border financial specialists for expats

If your family trust includes beneficiaries living overseas, it’s important to understand how South African tax rules could affect your wealth planning. The right advice can help you avoid unnecessary tax, handle cross-border complexities and ensure your trust fund in South Africa continues to support your family’s long-term goals.

FinGlobal specialises in helping South Africans abroad manage their cross-border financial affairs. Whether you need guidance on tax residency, tax emigration, trust-related tax implications, retirement annuity withdrawal or international money transfers, our experienced team is here to help you make informed decisions.

Want expert help tailored to your specific situation? Simply leave your contact details below, and we’ll get in touch to talk through your options. Let’s make your next step a confident one.