Looking to Structure your Business or Family Wealth Offshore?

South Africans love South Africa!

That is an undeniable truth. The country has its problems - but it is our home.  And for many of us, leaving the country is just not an option. Our families are here. Our friends are here. Our businesses are here. Our lives and hearts are here.

The spate of unrest and subsequent looting that was triggered by the incarceration of Jacob Zuma has however demonstrated that our country is becoming increasingly vulnerable.  And while we live here, and continue to want to live here despite the challenges, there is no reason for us to be completely exposed to this vulnerability.  

It is entirely possible for a family or a business to remain in South Africa while benefiting from international income streams through a company or trust that is situated in another country.  In the case of Mauritius, it is possible for an individual or a family to obtain their residency through a company there as well.  While we all hope we never have to use it, it does provide us with peace of mind to know that we have a plan B in the unlikely event that we will need it.

It is somewhat of a misconception that setting up offshore is for the very wealthy or large corporations. A small business can also take advantage of the laws and regulations in a suitable jurisdiction

For many of us, the idea of creating a presence outside of South Africa is an exotic concept or it seems like a risky venture.  The reality is that it is a fairly straightforward process. And there are many laws and agreements with other countries which, in fact, encourage South Africans to do business outside of South Africa’s borders. And doing business and investing outside of South Africa opens up a whole new world of opportunity - quite literally.  To illustrate, the GDP of South Africa in 2020 was $ 306 billion.  The world’s GDP was $ 84.54 trillion.  That means that we limit ourselves to participating in only 0.36% of the world’s activity by not being part of the global economy.

Knowing how to structure your assets offshore could be the most important aspect of going offshore

The key to unlocking this world of potential is to structure your affairs in South Africa and abroad correctly.  Choosing the right partner to guide you every step of the way is therefore very important.

We can highly recommend a company based in Mauritius called Heimdall. They are unique in that they specialise in both the South African tax and exchange control issues, and trust and company set-up and operations in Mauritius. We have found that their depth of experience and professionalism enable our clients to easily create international family and business holdings.

If you would like to hear more about international investing, or offshore structuring, please contact us: This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.

Rutherford Model Portfolios (FAQ)

Rutherford Model Portfolios (FAQ)

Frequently Asked Questions

What is a model portfolio?

Our model portfolios are a professionally blended combination of market-leading unit trust funds which are designed to provide a broad diversification of asset classes and management styles to help investors consistently achieve their target returns.

Why are model portfolios now international best practice?

Many clients around the world experience poor investment returns even when stock markets have performed well, and this is usually a result of inconsistent fund selection. The professional approach of model portfolios provides more dependable investment returns.

How are Rutherford model portfolios different to what I have now?

Our model portfolios benefit from a rigorous fund selection process and ongoing rebalancing to ensure optimum asset allocation at all times. You should therefore enjoy better long term returns and lower volatility.

How will they lower my risks?

Our model portfolios are always aligned with your risk profile you do not have the risk of being over- or under-exposed to any one type of asset. You will essentially own a basket of assets which are well suited to your financial objectives and stage in life.

What performance can I expect?

Each model portfolio is designed to achieve a target return, taking into account a specified amount of risk as defined by your personal risk profile. This means that you will have a clear idea of the expected returns of the model portfolio before you invest.

How to achieve my investment goals?

Humans have evolved to follow the herd (and so we end up buying yesterday’s winners) and this behavioural bias leads to poor investing habits, which is why really disciplined investors like Warren Buffett are so famous. Model portfolios provide a professional and disciplined framework, which will help you achieve more consistent returns and reach your investment goals.

Why is diversification so important? 

One of the key benefits of our model portfolios is a high level of diversification.  The various asset classes (such as property or cash) perform very differently over market cycles. Our investors gain access to all the core benefits of multiple asset classes and fund manager expertise, with the added layer of diversification through our blend of fund managers.

Do I have to change my investment?

No. Using model portfolios is only a fund choice, so your existing RA, Living Annuity, Endowment or TFSA stays exactly the same – only the fund selected changes.

Developing Economic & Financial Trends

It has often been said that the onset of the Covid-19 pandemic brought with it a period of introspection where focus shifted from the wider world to the here and now.  We battened down the hatches and concentrated on family, trying to stay safe and working out how to continue earning a living. While we have been taking it one day at a time, it’s easy to lose track of the bigger picture and feel a growing disconnect with the outside world, financial markets and global economic trends.

Here are a few highlights of noteworthy developments on the South African front and further afield. As South Africans we are often hyper aware of all our problems, but give ourselves little credit for the positives.

The commitment of the Ramaphosa government to stimulate growth through structural reform is steadily shaping up.

Fast broadband is the backbone of a modern economy. Telkom and eTV are using the courts to block the opening up of additional spectrum needed to allow for widespread 5G, but they are clutching at straws and political and commercial pressure for the spectrum release is strong. Meanwhile MTN is spending R300 million on new fibre services and a Google and Facebook consortium are building new undersea cables that will encircle Africa and come into operation in 2022.

A stable power grid is essential for long term growth. Gwede Mantashe has appointed seven preferred bidders for the production of emergency power and further successful bidders will be announced later in the year which will cumulatively generate the 5000 MW deficit that is causing load shedding. Notwithstanding Government plans, private companies are also forging ahead in the energy sector – Gold Fields is finalising plans to construct a 40MW solar plant at its South Deep gold mine, which will comprise 116 000 solar panels and cover 118 hectares, roughly the size of 200 soccer fields. BMW, Amazon and Sasol are already sourcing electricity from independent power producers. Changes in legislation allowing for the generation of up to 10MW without a licence should see load shedding being resolved in the not too distant future.

Major upgrades of harbour and rural bridges are in progress. A new container harbour in Durban with a R100 billion investment over 10 years will increase efficiency and productivity significantly. Another R100 million is being spent upgrading Western and Southern Cape fishing harbours that have been neglected for years. The 41 rural bridges being constructed across several provinces will certainly make rural living easier.

The suspension of Ace Magashule has been somewhat of a political watershed and has already been well received on the international front.

On the political front, it does appear that the battle against state capture and corruption is at last bearing fruit. The recent suspension of Ace Magashule was a watershed and shows that President Ramaphosa’s position is steadily getting stronger. Below the high-profile headlines, it is important to note that an additional 68 ANC members from eight provinces, who are being charged with a range of criminal offences, must all step aside. Corruption is deeply embedded in SA but there are encouraging signs that the tide is now turning.

These structural and political reforms will release constraints in the economy, attract investment and perhaps most importantly of all, boost confidence on a national and international level.

In the US President Biden is moving fast on projects he has been passionate about for many years.

Joe Biden has reversed the US position on climate change from the Trump administration and signed the Paris Climate Agreement as one of his first acts as President. Since then, he has pushed through legislation limiting the use of fossil fuels and proposes ambitious policies designed to make the US a world leader in green energy.

In March Biden signed into law the $1,9 trillion American Rescue plan to counter the effects of Covid-19 for lower-income families. The Federal Reserve continues its own stimulus policies as it has for the past decade. He has proposed further massive government spending policies of $4 trillion to revive the US middle class and rebuild crumbling infrastructure.

The US national debt is now at 130% of GDP. The additional stimulus programmes will only increase this problem*. In order to start balancing its books, the Biden administration has resolved to substantially increase taxes on wealthy Americans by increasing marginal tax rates and closing tax loopholes. US company tax will also be rapidly increased, and those multinationals that use tax havens are firmly in the sights of the US tax authorities.

*(For interest, SA’s national debt is at 80% of GDP – similar to Germany’s.)

If passed into law this will be the largest raft of government spending programmes since Roosevelt’s New Deal of the 1930s. The swing from Trump’s highly conservative policies which largely benefitted the rich, to Biden’s far more socialist agenda, is happening with incredible speed. The repercussions will be felt throughout the world.

The Rand has been one of the world’s best-performing currencies over the past year.

We all like to follow the Rand, and it is a volatile currency. Currently, the Rand has strengthened to the R14.10 level against the US$ from as high as R19.00 last year and R15.80 five years ago.

Over the long term, the Rand/$ exchange rate is influenced largely by the commodity cycle and the broad US$ cycle, while political shocks in South Africa tend to move the exchange rate in the shorter term. For example, in 2011, the commodity cycle was strong and the US$ was weak, so the Rand strengthened to R6.00 to the US$. While in 2001 at the time of the Dot Com bubble, the commodity cycle was weak and the US$ was strong – so the Rand weakened to a high of R12 to the Dollar.  

This shows that the Rand is not a one-way bet, and many investors have had their fingers burnt as the Rand has strengthened and remained strong for several years at a time.

Beware Cryptocurrencies

Lastly, since cryptocurrencies are always in the news these days, this perspective from the Governor of the Bank of England, Andrew Bailey is relevant. “…..they have no value. I’m going to say this very bluntly again – buy them only if you’re prepared to lose all your money.”

The macro trends we have briefly discussed may not affect your investments this week, but over the long-run structural reform in both SA and the US will have a profound effect on the markets and your investment portfolio.

Your Will & Estate Plan

Let’s face it, it’s not an easy subject to broach, and planning for your death is intimidating and uncomfortable. But it is something you should prioritise for your loved ones’ sake. Death is inevitable, and its consequences affect your whole family, so it’s best to plan for those around you.

If you die without having a will in place, you leave important decisions up to the courts and the law of intestate succession

If you don’t have a valid will then you don’t have a say in who receives your property and other assets after your death. This means that someone you may never have wished to inherit might do so, while those who you genuinely care for and would want to benefit from might be left with no legal entitlement to your estate or assets.

Plus, not having a will can make it more difficult for your loved ones, both emotionally and financially at a time when the last thing they need is extra stress in their lives.

Your will is essentially a summary of your wishes regarding the distribution of your wealth and a framework to guide those charged with the winding up of your affairs. There are also many other benefits of having a will, such as the ability to appoint guardians for any minor children, keeping a helpful record of assets that surviving relatives might not be aware of, and limiting taxes payable on deceased estates to name but a few.

The importance of ensuring that your will is drawn up within the context of a comprehensive financial plan cannot be overemphasised

There are quite a number of statutory costs and other expenses involved in the winding up of an estate. It is therefore essential that your estate financial plan provides liquidity for such costs so as to avoid forced sales of estate assets, at a fraction of their true value, to cover costs.

These are some of the fees your family will need to cover when you pass away:

EXECUTOR FEES

These are the industry standard fees charged by the executor or assisting professional to wind up your estate. A maximum of 3.5% + VAT of your estate value may be charged. Example: An estate worth R3 million may pay R120 750 in fees.

CONVEYANCING ATTORNEY FEE

This is the fee charged by the conveyancing attorney when property needs to be transferred. Example: A home worth R1 850 000 being transferred to a beneficiary will cost R30 544 in fees to the estate.

TESTAMENTARY TRUST FEES

These are the fees charged by the trustees to administer the trust created in terms of your will, normally to look after the money you leave to your minor children. On average, 1.15% of the net asset value is charged to establish the trust, and 1.6% is charged annually for the ongoing administration of the trust. Example: The total cost with R1.5 million in assets over 15 years is R377 250.

MASTERS FEES

The fee paid to the Master of the High Court regarding the fulfillment of their role in the administration of your estate.

CORRESPONDENCE FEES

Fees associated with corresponding with the Master of the High Court.

CLEARANCE FEES

One of the requirements to transfer a property is obtaining a clearance certificate from the city council or municipality. This will be issued only if the rates and taxes are paid in advance. Some areas require up to 6 months paid in advance.

ADVERTISEMENT COSTS

Two advertisements have to be placed in a local newspaper and the Government Gazette. The costs can vary between R1 000 and R1 500 depending on the publication selected.

INHERITANCE TAX

Not only will all outstanding taxes have to be paid from the estate before it may be finalised, but the executor will have to determine whether capital gains tax (CGT) or estate duty is payable at death. In the event of off-shore assets, situs tax may be applicable.

ONGOING BILLS & OTHER EXPENSES

Bills such as medical aid, school fees, car insurance, water, lights, rates, etc. still need to be paid even though bank accounts are frozen. Costs associated with arranging a funeral such as catering, travel, and other expenses also need to be covered.

These taxes and fees eat away at the legacy you plan to leave behind. Specialised life assurance policies are now available to ensure that your estate has the liquidity required to meet all its financial obligations in the event of your death. Your financial adviser will be able to assist you with this or alternatively contact us at Rutherford on 021 870 1555 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Apart from having a valid will in place in the first instance, it is vital to revise an existing will when significant events, such as marriage or the birth of children take place in your life, so that beneficiary details, in particular, are kept updated.

Source: Capital legacy

Why you need to consider Gap Cover

Ever-increasing medical expenses are giving rise to bigger and bigger medical aid shortfalls. That is why you need to know the facts about gap cover.

Medical schemes have a medical scheme rate, which is the maximum amount they will pay for treatment. In many cases, this rate does not align with the rates charged by medical professionals, hospitals nor the cost of medication. Health professionals can charge up to 3 or 4 times the medical scheme rate in some instances, leaving you with significant unplanned medical expenses.

Gap cover helps to cover the shortfall between the rate charged by medical specialists and the rate paid out by a medical scheme. Moreover, gap cover assists with the fees associated with co-payments, sub-limits, and other medical expense shortfalls.

Gap cover is not an alternative to medical aid. It is a complimentary product to cover the difference between medical aid reimbursements of medical costs and the actual costs charged

Technically gap cover is a short-term insurance product, regulated by the Long-term and Short-term Insurance Act 1998 and is completely independent of your medical scheme.  If you change your medical scheme, your gap cover remains in place and vice versa. However, you cannot have gap cover unless you are a member of a medical scheme.

Gap cover often covers more than you realise

We tend to think of gap cover in relation to approved in-hospital specialist claims. However, many of the Gap plans also extend cover to specific out-patient procedures such as MRIs, CT scans, chemo, radiotherapy, and kidney dialysis.

10 month exclusionary waiting period on pregnancy and childbirth

Starting a family should be a period of great joy, but the medical expenses that typically accompany pregnancy, birth, and early childhood can cause a great deal of financial strain. If you are planning to start a family, it is important to note that gap cover providers exclude pregnancy and birth for a 10 month period. This means there could still be a problem, even if you were not pregnant when you signed up, and the baby was born early.

The example below from Stratum Benefits shows the true value of having gap cover. In the illustrated claim for childbirth, the Gap cover policy paid for 68% of the total claim – much more than the medical aid

Even if you are already pregnant, it’s never too late to sign up for Gap Cover

Ideally, you should have medical aid and gap cover in place before starting a family so that waiting periods are not an issue.  However, it’s not too late if you are already pregnant, because although the birth may be excluded, the baby will be covered on the parents’ gap cover policy from the date of birth provided that you inform the product provider within 90 days.

Interested in talking to us about Gap Cover?

Although everyone is trying to tighten the belt on expenses you cannot afford to be left unprotected in areas such as your family’s health care. Before buying gap insurance it’s a good idea to seek professional advice and make sure that it complements your particular medical plan and covers the gaps unique to your scenario for absolute peace of mind.

For more information and expert advice on Gap and Medical Aid products contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. on 021 870 1555 or email This email address is being protected from spambots. You need JavaScript enabled to view it.