Margaret had been involved in the family’s finances for decades. She’d sat in on meetings, asked questions, pushed back when things didn’t make sense. She was financially literate and not easily intimidated.
But there’s a difference between being informed and being responsible. When Johan died unexpectedly at 68, Margaret became the one who had to make the decisions — about the living annuities, the offshore trust, the family holding company stake, the estate. And she discovered, quickly, that much of what she thought she understood had actually lived in Johan’s head.
Statements went to his email. Relationships sat in his contact book. The offshore trust deed referred to an entity that no longer existed in the same form. She described herself, in our first meeting, as “not lost — just without a map.”
This case study is about how we built that map, and what we found along the way.
Client Profile
| Detail | |
|---|---|
| Name | Margaret |
| Age | 65 |
| Life stage | Recently widowed; recently retired |
| Children | Karien (42, Johannesburg) and Thomas (38, London) |
| Total balance sheet | ~R75 million |
| Annual flat fee | R150,000 p.a. |
Balance Sheet at Engagement
| Asset | Value | Notes |
|---|---|---|
| Living annuities (2) | R28 million | Across two separate platforms |
| Local discretionary portfolio | R18 million | Three managers; accumulated over 20+ years; some legacy positions |
| Offshore trust (USD) | ~USD 1.5m (~R27m) | Established 12 years ago; outdated deed; largely in a mix of funds since Johan’s death |
| Family holding company (stake) | R4 million (est.) | Illiquid; dividend income ~R180k p.a. |
| Cash and money market | R2.5 million | Pending estate finalisation |
| Residential property | R8 million | No bond; long-term plans under consideration |
The Situation
Johan had managed their financial affairs with a level of personal involvement that worked well while he was alive and created significant problems when he wasn’t. Not because he’d done anything wrong — the assets were substantial and largely well-managed — but because the knowledge of how everything worked, who held what, and what the plan was had never been properly documented or transferred.
Margaret knew the broad picture. She didn’t know the detail. And the detail mattered: one of the two living annuities was drawing at 7.5%, an unsustainable rate for a 65-year-old with potentially 30 more years ahead of her. The offshore trust deed was outdated and the trustee arrangement hadn’t been reviewed since the trust was set up. The discretionary portfolio included some long-held legacy positions from Johan’s personal stock selection that hadn’t been reviewed against any benchmark or mandate.
There was also a family dimension that needed careful handling. Karien and Thomas were both co-beneficiaries of the offshore trust, and both had questions — about what they could expect, how the trust worked, and what Margaret intended. Thomas, living in the UK, had his own tax position to consider in relation to the trust — a dimension that hadn’t been addressed at all.
Mapping the Estate
The first two months of the engagement were almost entirely diagnostic. We produced a complete balance sheet — every account, every platform, every fee, every mandate — and presented it to Margaret in a format she could actually use and refer back to. For the first time, everything was in one place.
This exercise revealed the 7.5% drawdown rate on the first living annuity, which was the most urgent issue. At that rate, on a CPI+4% portfolio, the capital would be materially depleted before Margaret reached 90. It also identified the offshore trust as needing legal attention before any investment decisions could be made within it, and flagged several duplicate manager exposures across the discretionary platforms that were adding cost without adding diversification.
Living Annuity Restructuring
The two living annuities required different interventions. The first — the one drawing at 7.5% — was restructured at the next available reset date. The drawdown was reduced to 5%, and the underlying portfolio was overhauled from a legacy balanced fund to a CPI+4% mandate with a deliberate manager mix including both established names and boutique managers. The lower drawdown rate significantly improves the long-term sustainability of this pool of capital.
The second annuity was already drawing at 4%, which was appropriate. The underlying portfolio was retained but refined — the asset allocation was adjusted to align with our house view, and the manager lineup was updated to reflect our current assessment of the available options.
Together, the two annuities now generate a sustainable income stream that, combined with the holding company dividend and income from the discretionary portfolio, comfortably covers Margaret’s lifestyle needs. For a detailed explanation of how living annuity drawdown rates affect long-term capital, that’s worth reading.
Consolidating the Local Portfolio
The R18 million local discretionary portfolio had accumulated over more than two decades. It spanned three managers and included a number of individual equity positions Johan had selected personally over the years — some of which had done well, some of which had been held long past the point where they made sense.
We conducted a full position-by-position review. Some legacy holdings were retained where the investment case remained sound. Others were exited and the capital redeployed into a consolidated, benchmarked portfolio with a clear CPI+3% mandate and meaningful offshore diversification through rand-denominated global funds. The three platforms became one. The cost of running the portfolio dropped, the overlap disappeared, and there was now a single mandate to measure performance against.
The Offshore Trust
The offshore trust was structurally sound when it was set up, but twelve years is a long time in both family circumstances and trust law. The deed referred to entities that had since changed form, the beneficiary designations hadn’t been reviewed since Johan’s death, and the portfolio within the trust had been sitting largely in a mix of funds — neither performing all that well nor invested with any purpose.
We worked with the corporate trustee firm in the Channel Islands — the independent professional trustees responsible for administering the structure — to review and update the trust deed. The revisions aligned the deed with the family’s current circumstances, updated the beneficiary designations to reflect Margaret’s wishes, and resolved several references to arrangements that no longer existed in the same form. That process took approximately three months and required close coordination between us, the trustees, and specialist offshore trust attorneys.
A useful by-product of the review was the opportunity to renegotiate the trustee fee structure. The trust assets had always been invested in relatively straightforward unitised funds — simple to administer and value. The trustees had been charging on a time-based model, which is common but tends to be expensive relative to the actual work involved when the underlying portfolio isn’t complex. Because we were restructuring the portfolio into a clear, well-defined mandate — and because that mandate kept the investment structure clean and straightforward to report on — we made the case for moving to a fixed annual fee. The trustees agreed. The result was a reduction in annual trustee fees of approximately 50%, with no change in the quality of the governance.
The trust portfolio itself was repositioned from its disparate fund holdings into a USD-denominated accumulation structure targeting USD CPI+4%. The mandate is long-term and deliberate: withdrawals are limited to defined events — education costs for grandchildren, specific income supplementation needs — rather than drawn casually. The trust now has a clear purpose, a clear investment mandate, and a governance cost that reflects what it actually requires to run.
The trust also raised a cross-border tax issue that hadn’t been considered. Thomas’s UK tax position meant he had potential reporting obligations in relation to the trust that he hadn’t been aware of. We connected him with a cross-border tax specialist in London to ensure he understood the position and had appropriate advice. Flagging that wasn’t our job in the narrow sense — but it was the right thing to do.
The Family Conversation
Margaret wanted both children to understand the overall picture — not because she owed them an accounting, but because she wanted to reduce the anxiety that comes from uncertainty about what a parent’s estate looks like. She’d seen enough family situations where that uncertainty created conflict after the fact.
We facilitated two briefings: one with Karien in Cape Town, one with Thomas over video. Both covered the same ground — overall balance sheet structure, the offshore trust and how it worked, what the medium-term plan was, and what they could expect. Thomas’s cross-border situation was handled separately, as described above.
The briefings reduced anxiety on both sides and created a shared understanding of the plan. Margaret felt less alone with the responsibility. The children felt informed rather than excluded. That’s not a financial outcome, but it matters.
Income and Longevity Modelling
The income picture was healthy. Living annuity drawdowns, holding company dividends, and interest from the discretionary portfolio covered Margaret’s lifestyle needs with room to spare. The modelling confirmed this. It also identified a small optimisation: she was drawing slightly more than she needed from the first living annuity and not reinvesting the surplus — which meant the discretionary portfolio was growing more slowly than it could.
We made a modest adjustment: a small reduction in the living annuity drawdown on the restructured account, and a standing instruction to invest surplus monthly income into a separately designated discretionary account intended for estate distribution. A small change in direction over a 20-year horizon produces a meaningfully different outcome.
The longevity modelling also covered the cost of care in later years — a scenario many clients prefer not to think about but which is better addressed on paper in advance than in practice under pressure. The current portfolio structure handles it comfortably under most scenarios.
Frequently Asked Questions
What should a surviving spouse do first after their partner dies?
The most important immediate step is to get a complete picture of what you own before making any financial decisions. Accounts, platforms, policies, trusts, beneficiary nominations — all of it. Many surviving spouses are surprised to discover gaps or outdated arrangements when they start looking. A financial adviser can help structure this process systematically rather than reactively.
Can a living annuity drawdown rate be changed?
Yes. The FSCA allows drawdown rates between 2.5% and 17.5% per year, and you can change your rate once per year at the policy anniversary date. If you inherit a living annuity or take over management of one, reviewing the drawdown rate early is important — a rate that made sense for a 68-year-old may be unsustainable over a 30-year retirement.
What is an offshore trust and when does it make sense?
An offshore trust is a legal structure that holds assets for the benefit of named beneficiaries, administered by trustees in a foreign jurisdiction. It can protect assets from South African estate duty, provide situs tax benefits, and facilitate multi-generational asset transfer. It makes sense when the capital is substantial enough to justify the setup and ongoing governance costs — typically USD 2 million or more.
What happens to an offshore trust when the settlor dies?
The trust continues to exist and is administered by the trustees for the benefit of the beneficiaries. Depending on the trust deed, the settlor's death may trigger specific provisions — asset distribution, change in trustee composition, or conversion of income to capital. If the trust deed is outdated, those provisions may no longer reflect the family's actual circumstances. Reviewing the deed after a death is essential.
How does Henceforward handle family dynamics in complex estate situations?
We see the family as part of the client context, not separate from it. Where there are multiple beneficiaries or cross-border considerations, we facilitate structured briefings that ensure everyone understands the plan — reducing the anxiety that comes from uncertainty, and the conflict that comes from surprises later.
What Changed
Margaret started the engagement without a map. She had the assets; she just didn’t have a complete, organised picture of what they were, what they were doing, or what the risks were. That’s more common than it sounds — and it’s more manageable than it feels in the immediate aftermath of a loss.
The 7.5% drawdown that was the biggest long-term risk in her portfolio has been resolved. The offshore trust is updated, properly governed, and invested with purpose. The local portfolio is consolidated, benchmarked, and no longer carrying legacy positions that had outlived their rationale. Thomas’s UK tax position is being managed. The family has a shared understanding of the plan.
Our fee is R150,000 per year, which reflects the genuine complexity of the engagement — two living annuities, a local discretionary portfolio, an active offshore trust across two jurisdictions, a family company stake, family coordination, and biannual comprehensive reviews. On a R75 million balance sheet, that’s 0.2% of assets; the equivalent AUM fee at 0.5% would be R375,000 annually.
If you’re a surviving spouse navigating a complex estate, or you’re helping a parent in that position, the most useful first step is usually to understand the full picture before deciding anything. For more on estate planning in South Africa, that’s a good starting point.
If you’re managing a complex estate — or helping someone who is — and don’t yet have a clear picture of everything that’s in it, we’re happy to help with the mapping process. That’s often where the most important work happens.
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. Situs tax thresholds and rules are subject to change and vary by jurisdiction. Exchange control allowances are subject to SARB policy. Consult a qualified tax or legal advisor for advice specific to your circumstances.