Ruan built his career the slow way. Twenty years in a professional services partnership, reinvesting most of what he earned back into the practice, living well but not extravagantly. When the partnership restructured and he exited with a substantial cash payout, he had more capital to work with than he’d ever planned for — and less certainty about what to do with it than he expected.
He came to us eight months after the transaction, still sitting on most of the R17 million. His instinct was to move it all offshore. His previous adviser had suggested a conservative balanced fund. Neither felt quite right, but he couldn’t articulate why.
The reason, as it turned out, was that neither option was a plan. They were products. This case study is about what an actual plan looked like — and what it required to build one.
Client Profile
| Detail | |
|---|---|
| Name | Ruan |
| Age | 47 |
| Background | Former partner, professional services firm; now consulting independently |
| Marital status | Married, two children (ages 13 and 16) |
| Annual flat fee | R60,000 p.a. |
Balance Sheet at Engagement
| Asset | Value | Notes |
|---|---|---|
| Business exit proceeds | R17 million | In savings and money market accounts |
| Retirement annuity | R4.5 million | Default balanced fund; not reviewed since inception |
| Discretionary investments | R1.5 million | Three separate platforms; overlapping fund holdings |
| Residential property | R4 million | R800k bond outstanding |
| Total (excl. property equity) | ~R23 million |
The Situation
Ruan’s financial position was strong. The problem was that it had grown faster than the thinking around it. His RA had been opened in his early 30s and never reviewed — the default 60/40 balanced fund it started in was still there fifteen years later. His three discretionary accounts held overlapping funds across platforms he’d opened at different points in his career, without any coordination between them. And his estate planning reflected the life he’d had at 38, not the substantially more complex one he had now.
The R17 million exit proceeds made everything more pressing. That capital needed to go somewhere deliberate — but the decision about where required understanding the full picture first: what the existing assets were doing, what Ruan actually needed the money to achieve, and what the tax and estate implications of each option were.
He had a goal he’d been vague about but had clearly thought through: financial independence by 60. Eight years away. Achievable on paper, but only with a structured deployment of the exit capital and disciplined use of his ongoing consulting income.
Building a Capital Framework
Before recommending anything, we mapped his full balance sheet and categorised every pool of capital by purpose and timeline: money needed within five years, money working for medium-term goals, long-term retirement capital in a tax-efficient structure, and offshore capital targeting long-term rand-hedge growth.
This categorisation drove every subsequent decision. The near-term pool didn’t need to take equity risk. The offshore allocation didn’t need to be rushed. The RA didn’t need to be touched at all — it needed to be restructured in place. Knowing the purpose of each pool before touching any of them meant the deployment was orderly, not reactive.
Overhauling the Retirement Annuity
Ruan’s R4.5 million RA was the most straightforward fix with the most immediate tax impact. The default balanced mandate it had been sitting in for fifteen years was replaced with a higher-equity, CPI+5% growth mandate — appropriate for someone with a 13-year horizon to his target retirement date. The previous allocation had been too conservative for his age and timeline.
More importantly, we modelled his Section 11(k) deduction capacity against his projected consulting income and identified that he had been significantly undercontributing relative to his allowance. The deduction ceiling is 27.5% of the higher of remuneration and taxable income, capped at R430,000 per year. Ruan had room for meaningful additional annual contributions from his consulting income — contributions that would reduce his current tax bill immediately and compound inside the RA over the remaining eight years. On his marginal rate, the annual tax saving on maximum contributions was substantial. The long-term compounding effect was more so.
For more on how retirement annuity contributions and deductions work, that’s worth reading in detail.
Deploying the Exit Proceeds
The R17 million was split across three pools with distinct purposes.
R3 million remained in a liquid near-term pool — part in a money market fund, part in a short-duration bond strategy. This covers the outstanding bond (targeted for full settlement within four years), university education costs for both children, and emergency reserves. It doesn’t need to take meaningful investment risk, and it doesn’t.
R5 million was allocated to a local discretionary portfolio, replacing and consolidating the three fragmented legacy accounts. The mandate is CPI+4%, diversified across a deliberate mix of active managers and asset classes, with meaningful global exposure through rand-denominated international funds. This is Ruan’s primary medium-term wealth-building vehicle — the capital that will compound alongside his RA and offshore allocation to reach the independence target by 60.
The remaining R9 million was converted to USD for offshore deployment, phased over two tranches. Phasing rather than transferring everything at once reduced currency timing risk and gave us the opportunity to assess exchange rate conditions before committing the full allocation. The offshore investing component of Ruan’s plan is discussed in the next section.
Offshore: Structure Over Speed
Ruan’s instinct to go significantly offshore wasn’t wrong. South African investors with a meaningful rand exposure and a long time horizon should have global diversification — the case for that doesn’t depend on views about the rand, it’s simply a risk management position.
Where his instinct was incomplete was the structure. Moving USD capital offshore without thinking about the vehicle first creates the same problems that Andrew and Sarah had: potential situs tax exposure on direct US holdings, higher CGT on future withdrawals, and estate complications.
We set up the offshore allocation through an international investment wrapper from the outset. This resolved the situs risk before it could develop, set the effective CGT rate on future withdrawals at 12% rather than 18%, and kept the estate position clean. The portfolio targets USD CPI+5% with a 80/20 equity/alternatives split — appropriate for a 47-year-old with a long horizon but not an unlimited one.
Estate Planning After a Capital Event
A R17 million business exit changes an estate materially. Ruan’s will still named his wife as sole heir with no trust provision for the children, and there were no beneficiary nominations in place. Neither of those positions made sense for someone whose estate had grown significantly in a short period.
We coordinated with his attorney to update both wills — including a testamentary trust provision for the children — and ensured beneficiary nominations were completed and properly documented. We also reviewed the need for a buy-sell agreement on his new consulting company, which he had set up as a Pty Ltd. The estate planning work ran alongside the investment restructuring, not after it.
Modelling the Independence Target
“Financially independent by 60” had been a stated ambition but had never been modelled against real numbers. We built a projection: what the portfolio needed to look like at 60 to sustain R100,000 per month in today’s money, accounting for inflation, realistic portfolio drawdown rates, and a 30-year retirement horizon.
The current trajectory reaches it — but only if annual RA contributions are maintained at or near the maximum deduction, the consulting income is consistently reinvested rather than absorbed by lifestyle creep, and the investment mandates deliver within a normal range of outcomes. None of those assumptions are aggressive. We track all three explicitly at the annual review.
| Area | Before | After |
|---|---|---|
| RA mandate | Default balanced; never reviewed | CPI+5% growth mandate; maximum contributions modelled |
| Discretionary investments | 3 fragmented platforms; overlapping holdings | Consolidated; goals-based; CPI+4% |
| Exit proceeds | Sitting in money market | Split across near-term, local growth, and offshore pools |
| Offshore structure | None | USD portfolio via wrapper; situs-clean; lower CGT rate |
| Estate planning | Outdated will; no RA nominations | Updated will with testamentary trust; nominations in place |
| Independence target | Vague aspiration | Modelled, tracked, on course |
Frequently Asked Questions
What should you do with a large cash payout from a business sale?
The first step is categorisation, not deployment. Identify how much you need in the next five years, how much is long-term capital, and what the tax implications of each option are. Rushing to invest before understanding the full picture — tax treatment of the proceeds, existing balance sheet structure, estate implications — is where most expensive mistakes happen.
How much can a self-employed professional contribute to a retirement annuity?
Up to 27.5% of the higher of remuneration or taxable income, subject to a maximum of R430,000 per year. Contributions above this threshold are not deductible in the current year but carry forward to future years. For a consultant or business owner at a high marginal rate, maximising RA contributions is one of the most efficient tax planning tools available.
What is the benefit of phasing offshore investment tranches?
Currency timing is notoriously difficult to get right. Splitting a large offshore allocation into two or more tranches reduces the risk of converting all your rands at an unfavourable exchange rate. It also gives you time to assess market conditions and refine the offshore portfolio mandate before committing the full allocation. The cost is some additional administrative effort; the benefit is reduced regret risk.
Does a business exit affect your estate planning?
Significantly. A capital event that materially increases your net estate changes the tax position on death, the adequacy of any existing trust provisions for minor children, and potentially the need for specific liquidity in the estate. Wills and beneficiary nominations should be reviewed whenever the balance sheet changes substantially — not just at milestones like marriage or divorce.
Three Years In
Ruan is three years into an thirteen-year runway toward his independence target. The three fragmented discretionary accounts no longer exist. The RA is benchmarked, growing, and fully utilising the available tax deduction. The offshore portfolio is properly structured from day one. The estate is in order.
The fee is R60,000 per year — against an AUM equivalent on his R23 million balance sheet of around R115,000 at 0.5%. More importantly, the fee doesn’t change if the portfolio grows, which means the advice is consistently focused on outcomes rather than asset accumulation.
A business exit is one of those financial moments that either gets structured properly or creates problems that compound over time. For more on financial planning for professionals and entrepreneurs, or on how the RA deduction works in practice, both are worth reading before the next decision point.
If you’ve recently had a business exit, a liquidity event, or a material change in your financial position, and you haven’t had a proper structural review, we’re happy to work through the picture with you — capital allocation, tax, offshore, estate — before the window to get it right closes.
This article is for informational purposes only and does not constitute financial advice. Henceforward (Pty) Limited is an authorised representative of Graviton Wealth Management (FSP 8772). Tax figures referenced are indicative — verify current rates and thresholds at sars.gov.za before making any decisions. Exchange control allowances are subject to SARB policy. Consult a qualified financial or tax advisor for advice specific to your circumstances.