Having a trust is essential for property investors. Trusts keep your assets safe, reduce risk factors, streamline your tax benefits, and form the core of a strong property investment strategy. The IGrow Group of Companies offers a range of property investment services that fall under the greater IGrow Wealth Investments umbrella, including IGrow Trusts.
IGrow Trusts and IGrow Wealth Investments are arms of this umbrella where the IGrow team provides expert guidance and tailor-made investment strategies to help you achieve financial success. In this post, we delve deeper into why trusts should be the cornerstone of property investment portfolios, and how they add to your overall wealth creation strategy.
A trust explained
A trust is a legal entity that looks after its beneficiary’s assets. The trust setup involves three critical roles:
- The settlor is the elected person who creates the trust and moves the assets into it.
- The trustee is the elected person who manages the assets found in the trust and handles trust logistics.
- The beneficiaries are the people who benefit from the assets in the trust.
According to PM Attorneys (South Africa), “The legal landscape in South Africa is supportive of property trusts, encouraging both local and foreign investors to leverage this powerful asset protection tool. Trusts provide an effective buffer against personal liability, insulating the trust’s assets from the individual’s financial missteps or legal challenges. This feature makes them an attractive choice for many South African property investors.”
Trusts managed by trustees differ from personal ownership. They offer flexibility and asset protection, and the dedicated trustee manages the trust and distributes assets tied to the property within the trust.
How will this benefit the average property investor? Trusts come with numerous benefits, these are seen when you partner with trust experts, such as IGrow Trusts.
What are the advantages of trusts in property Investment?
1. Guaranteed asset protection
A key advantage of trusts is that assets held in the trust are protected. If there is any financial turbulence, such as creditors making claims on your assets or issues with business liabilities, the trust keeps the property safe, so it can’t be taken.
This means your property investments remain safe, even when faced with unpredictable financial troubles. So when IGrow Wealth Investments help you select properties with high long-term income generation potential, IGrow Trust’s’ team will create trusts that lead to your long-term financial goals being met!
2. Estate planning and the preservation of wealth
Trusts are handy tools in estate planning. With the right structuring, assets within your trust will form part of your estate. When your properties are placed in a trust, investors can rest easy knowing their assets can be easily transferred to their beneficiaries without the hassle of time-consuming and expensive probate procedures. This has great implications for preserving wealth for multi-generational property estates.
A trust entails clear and legally binding documents detailing how assets will be managed and transferred to beneficiaries. With the trustee handling your investment portfolio, your family can live off the property portfolio indefinitely. IGrow Trusts also aids its investor clients in estate planning to safeguard wealth and ensure that it grows into the future.
3. Optimal tax efficiency
Investors in property come across serious tax implications when self-managing their portfolios. Trusts offer significant tax benefits helping you optimise your tax returns.
This can be seen as follows:
- Trusts mean you can enjoy income splitting between beneficiaries, which could potentially lower each person’s income tax obligations.
- In certain instances, trusts can lower capital gains tax and estate duties.
- A trustee helps generate more efficient claims related to property management decisions and expenses.
IGrow Trusts’ team ensures investors use these tax advantages and helps them boost their financial situation.
4. Streamlined property management
Managing many properties in one portfolio can be difficult, especially if investors have diverse property portfolios. Trusts enhance property management by creating a central legal “package” that holds and manages property assets.
5. Risk mitigation is managed well
Property investment isn’t without risk. Economic landscapes, tenants defaulting on rent, and legal issues will impact your property portfolio. With a trust in place, personal liability is limited. Only your assets in the trust face risk, and not you, personally.
The IGrow team helps investors create trust setups that offer extra security. Risk mitigation is crucial to ensure asset protection in the long run!
(Please note: We also offer tenant management and insurance options through IGrow Rentals to manage these risks in the first place!)
Having a trust in place rather than personal ownership
Personal ownership looks like a simpler route but exposes investors to risks and fewer tax advantages. An IGrow trust specialist drew up this table to compare personal ownership to trust ownership.
You can see here that personal ownership is more risky than trust ownership. Creating a trust allows investors to enjoy tax benefits, easily transfer assets to beneficiaries, and protect assets.
A personally managed property leaves the investor vulnerable to creditors and provides little tax relief and increased personal liability. Trusts are therefore seen as worthwhile setups for a multitude of reasons.
Investors who want to build their wealth through property portfolios and protect it, enjoy the protection seen in trusts. IGrow Wealth Investments allows property investors to grow and build their portfolios for the best outcomes.
IGrow assists in trust establishment
Creating a compliant trust requires legal and financial expertise. IGrow Trusts excels at guiding you through the trust setup and management journey. IGrow, a leader in property investment, helps you set up a trust that meets your requirements.
IGrow trust management services mean you are provided with expert advice and help in structuring your trust portfolio. Tax planners create seamless strategies that aid your tax benefits via the trust in place. Property management teams in the IGrow Rentals division handle smooth daily operations. IGrow Wealth Investments aim for wealth preservation and asset growth.
According to the IGrow Trusts team, “Our aim at IGrow Trusts is for investors to control all their wealth in trusts and company structures, rather than to own assets in their personal capacities. The objective for investors is to ensure financial freedom and, more importantly, to enjoy peace of mind while creating and protecting their hard-earned money.” (Source)
What is the long-term outlook on trusts for property investors?
Trusts safeguard your current asset portfolio, and also help you accumulate wealth. They:
- minimise tax burdens
- streamline estate planning
- provide asset protection
- leave room for investors to expand their portfolios
In addition, you can make use of IGrow’s Rental division to take care of tenant and property maintenance, making your investment work for you and create wealth and a family legacy with the minimum of fuss.
If you are new to property investment, or if you have been an investor for years, adding a trust to your property strategy is a wise decision! IGrow offers expertise and guidance to help you make the right decisions for your property portfolio.
Final thoughts
Trusts help investors add an extra layer of protection to their assets and easily transfer money to beneficiaries. Assets are protected, your tax returns are optimised and risk mitigation is taken care of with a trust.
If you use the services of IGrowTrusts, IGrow Rentals, and IGrow Wealth Investments, the IGrow properties you purchase for your property portfolio will be properly managed and generate long-term wealth for you and your loved ones.
If you are looking to grow your property portfolio, make use of a sound investment strategy, and look into trust creation, today. You have come to the right place at IGrow Wealth Investments!
We will help you protect and grow your wealth through property investment strategies that reap excellent rewards.
