In conversations with South African clients, I’m often surprised at how many assume that an offshore trust is simply a “copy and paste” version of a local trust — just in another jurisdiction.
It isn’t.
The components may sound similar — but the mechanics and legal positioning are very different.
Let’s unpack the core structural differences between a South African trust and an offshore trust in jurisdictions such as the British Virgin Islands or Mauritius.
The Founder / Settlor
South African Trust
- Often funded meaningfully at inception.
- Founder frequently remains closely connected to the trust structure.
- Greater risk of perceived continued control if not structured carefully.
Offshore Trust (BVI / Mauritius)
- Typically settled with a nominal initial amount.
- Clear legal separation between settlor and trustees is critical.
- Jurisdictions are designed to reinforce asset protection and estate planning objectives — provided control is properly relinquished.
The intention is not cosmetic separation. It is legal and enforceable separation.
The Trustees
South Africa
- Can include family members or trusted advisors.
- Trustees may not always be independent.
- Master of the High Court oversight applies.
Offshore
- Usually a licensed professional trustee in the jurisdiction.
- Regulated by bodies such as the Mauritius Financial Services Commission or the BVI Financial Services Commission.
- Governance standards are institutionalised.
- Fiduciary duties are strictly enforced under jurisdiction-specific trust legislation.
This professionalisation is often one of the biggest structural distinctions.
Governing Law
South African Trust
- Governed by the Trust Property Control Act.
- Subject to South African courts and domestic creditor frameworks.
BVI / Mauritius Trust
- Governed by jurisdiction-specific trust legislation.
- Firewall provisions in some offshore jurisdictions limit forced heirship claims and foreign judgments.
- Predictability for cross-border estate planning.
The governing law determines how disputes, creditor claims and succession challenges are treated
The Asset-Holding Layer
This is where many misunderstand the structure.
Local Trust
- Often holds assets directly (property, investments, shares in local companies).
Offshore Trust
- Frequently holds shares in an underlying offshore company.
- That company then owns the investment portfolio or international assets.
- This creates structural separation between beneficial ownership and operational control.
The layering is deliberate — it enhances governance clarity and risk insulation.
Exchange Control & Tax Reality (For South Africans)
Here’s the crucial point:
An offshore trust does not magically remove South African tax exposure for a South African tax resident.
SARS looks at:
- Tax residency
- Source of funds
- Attribution rules
- Controlled Foreign Company provisions
The structure must be implemented with tax advice from the outset — not after the fact.
The Bigger Picture
A South African trust is typically a domestic estate planning tool.
An offshore trust (whether in the British Virgin Islands or Mauritius) is often a cross-border wealth structuring tool — designed for:
- International families
- Asset diversification
- Jurisdictional risk management
- Multi-generational succession planning
The components may look similar on paper.
But how they interact — legally and practically — is fundamentally different.
If you’re advising families or corporates with offshore exposure, understanding these structural distinctions is not optional — it’s essential.
Happy to unpack specific scenarios if helpful.