By Therese Grobler, Head of Wealth Management at Momentum Financial Planning

The 2026 National Budget introduced an important shift for South African investors. The Single Discretionary Allowance (SDA) has been increased to R2 million per adult resident per calendar year, meaning married couples can now transfer R4 million offshore each year without the traditional requirement of a SARS tax clearance certificate and applies to offshore investments, travel, gifts, remittance and donations.

Subject to applicable SARS tax‑compliance requirements and SARB exchange‑control provisions, spouses may transfer up to R 24 million per calendar year, if they use their own Single Discretionary Allowance of R2 million (no SARS clearance required) and the.  Foreign Investment Allowance of R10 million (SARS AIT/TCS and Authorised Dealer verification required).

This leads to the next question: Once your capital is offshore, how should it be held? While many people instinctively look to direct share portfolios or unit trusts, the increased allowance makes this an opportune moment to consider the merits of an offshore trust.

How offshore trusts work

In simple terms, an offshore trust is a legal relationship where you (the settlor) transfer ownership of assets to a trustee (a professional entity in a jurisdiction like Jersey, Guernsey, or Mauritius). The trustee holds and manages these assets for the benefit of your chosen beneficiaries.

Structurally, it acts as a protective wrapper. Because the trust - not you personally - owns the assets, it creates a clear separation between your local estate and your global wealth.

Why the 2026 allowance changes the game

Before February 2026, the administrative hurdle of tax clearances often deterred couples from consistent offshore externalisation. Now, the ability to move R4 million annually abroad without any SARS and SARB approval, allows families to build a significant global legacy over just a few years.

However, moving capital is only the first step. Without a formal structure, offshore assets can become an estate planning nightmare. Upon the death of a holder, direct offshore investments may be subject to foreign probate (legal validation of a will), offshore inheritance taxes (situs tax), and lengthy delays in distributing funds to heirs. An offshore trust can mitigate these hurdles, depending on how the trust is established, ensuring continuity of wealth across generations.

When does an offshore trust make sense?

An offshore trust is not a one-size-fits-all product; it is a long-term strategic vehicle. It generally makes sense for:

• Married couples looking to build a multi-generational legacy.
• Families with beneficiaries living abroad who need seamless access to funds.
• Individuals with significant offshore portfolios who want to protect assets from local or foreign litigation and political volatility.

Conversely, if you are looking for short-term liquidity or have a relatively small offshore allocation, the setup and annual maintenance costs of a trust may outweigh the benefits.

Navigating the risks and ensuring compliance

Offshore trusts are often misunderstood as tools for evasion. In reality, they are widely used as part of compliant, transparent global estate planning, ensuring that a family’s hard-earned legacy isn't eroded by foreign probate or unnecessary administrative delays.

In the modern era of the Common Reporting Standard (CRS), transparency is the baseline. Legitimate offshore planning is about compliance, not concealment.

The primary risks are not legal, but structural. If a trust is not properly managed in its home jurisdiction, or if Section 7C of the South African Income Tax Act (regarding low-interest loans to trusts) is not carefully navigated, investors can face unintended tax consequences. The costs of professional trusteeship require a disciplined approach to ensure the structure remains cost-effective.

Strategy over speed

The 2026 Budget has made offshore transfers easier, but it hasn't made them simpler. The increased allowance provides the fuel, but the trust provides the engine and the steering. The ease of transfer is not a substitute for a sound legal structure. Just because you can move R4 million today does not mean you should do so without a clear roadmap for where that capital will land and how it will be protected for the next thirty years. Remember that moving money is essentially a transaction; protecting it is a strategy.

Speak to a financial adviser

While the new allowances offer unprecedented flexibility, dropping the barriers to entry for sophisticated global planning, the complexities of cross-border taxation and local compliance remain. Before moving funds offshore, it’s important to consult with a qualified financial adviser to ensure your global structure aligns with your long-term family goals.