Thursday, September 24, 2020

Boko advises legislators to open trusts to dodge creditors

Leader of Opposition Duma Boko has advised fellow legislators to register their assets under a trust to avoid losing everything when creditors knock at the door. “It is very important for you to have trusts. If you do not, you must try and have a trust,” Boko said when debating the proposed Trust Property Control Bill in parliament last week.

He said a trust was a more relaxed legal vehicle that enables one to secure themselves and their property.

“You have property, some paid, some owing. In respect of the property that owes, when they attach, they will attach even the property that is not owing because it belongs to you. So you would need to have a trust into which you register all the property that is fully paid in order to secure it against attachment,” Boko said. “Then you have another trust that has property that is owing, that is still encumbered. When you do, when you have these two types of property trusts, there will be no attachment because the property now belongs to the trust, you become the beneficiary of the trust. If you owe, they cannot attach the trust property because it is not your property, you have immunized, or secured that property. It is important for you to do that.”

Boko said the other benefit of registering one’s property under a trust is that in the event that one dies, and their property must go to their beneficiaries, when the property gets transferred, the normal applicable transfer duties and other payments will not take effect. “If you have a trust, all that would need to happen is, now that the beneficiary is no more, there would have to be a replacement of the beneficiary, the property is still owned, held and controlled by the trust, so there is no transfer. So there is no transfer duty, there are no taxes payable.”

He said all that needs to happen is they now substitute your son or your daughter or whoever you may have bequeathed the property to. They become the beneficiary of the trust and as a result there is no attendant loss because one has died.

The LOO, who is always in his element when it comes to issues relating to legislation, was happy to address questions from the floor in relation to the proposed bill. “I am educating these folks madam, I need to take my time,” he said to the speaker Gladys Kokorwe before responding to Tati East Member of Parliament Moyo Guma who wanted to clarify if there would be any transfer duty should he wish to transfer his property into a trust. “Yes, there will be,” was Boko’s response.

He advised parliament that it was important to have a trust for the reasons he alluded to. The Umbrella for Democratic Change (UDC) leader went as far as citing the De Beers’ Harry Oppenheimer, who he said had only R53,000 in his personal when he died yet he was the richest person in South Africa at the time. The rest of his properties, Boko said, were protected in trusts. “The smartest, richest people understand these basic principles. So you folks, have trusts, encourage your constituents to have trusts because it is important to do so.”

When presenting the Bill Defense Minister Shaw Kgathi said while most Trusts and similar legal arrangements are set up for legitimate and noble causes, research by the International Financial Organizations such as the Financial Action Task Force (FATF) indicate that these corporate vehicles can and are being used, intentionally or unintentionally for money laundering and terrorist financing activities. “An environment such as ours in Botswana, where trust arrangements are not subjected to accountability and transparency requirements, can facilitate undesirable results; including even denial of rights accruing to legitimate beneficiaries under trust instruments made in good faith,” he said.

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