Now that the funds are declared as part of the Exchange Control Amnesty and Amendment of Taxation Laws Act, they should carefully examine exactly how much they are paying in offshore trustee fees.

Tracy Muller of BoE Private Clients, South Africa’s biggest private client fund manager with R20bn under management, says a properly managed and structured offshore trust should not cost South African residents an arm and a leg in fees.

"The need for 'cloak and dagger' meetings, held in obscure venues, are also no longer required, post-amnesty. This was just one of the advantages of the amnesty, as individuals (settlor and/or beneficiaries) may now talk openly with offshore trustees who have a regular presence in South Africa.

"When one looks at the costs in relation to the benefits, there are clear merits in retaining an offshore trust, but there is no need to pay excessive trustee fees."

How much should you pay?

Although there is no quick answer, simply speaking one shouldn't pay more than around 0.5 to 1 percent of the value of the assets held in trust per annum in trustee fees. In addition to trustee fees, there are also investment adviser fees (IA) which annually range from 0.5 to 2 percent, Muller says.

"I always say that if a trust is, as an example, invested in a twelve-month UK fixed deposit, earning, say 4.5 percent p.a., there should still be positive growth after deducting both the trustee fees, IA fees and allowing for tax."

She says some offshore trust companies are even suggesting outsourcing the administration to South Africa in order to reduce costs. But there are many pitfalls associated with this type of arrangement and it should be carefully considered.

Don't compromise the trust

"The validity of the trust should not be compromised in order to save on trustee fees.

"There are also many offshore trust companies who are linked to a specific asset management company and cross-subsidising of the actual trustee fees occur, however the trust assets are often restricted to that specific asset manager which inevitably places these assets at undue risk."

She says many offshore trust companies are not licensed to offer investment advice, so you should look to appoint a professional investment advisor to advise the trustees on the underlying assets of the trust.

Fewer meetings save on costs

"If one is able to find the right match, namely an affordable/cost efficient trustee and a professional investment advisor, one is well on the road to preserving and building one’s offshore wealth.

"The need to meet with offshore trustees regularly is reduced by the proper appointment of an investment adviser, and in so doing, the time charges usually levied by the trustees can be reduced if regular meetings are arranged with the appointed investment advisor, who could be appointed locally, providing the investment adviser has the correct infrastructure in place to advise on offshore assets."

She says investors looking to reduce offshore trustee fees should do the following:

• Look for a reputable offshore trust company (corporate appointment), which has a focus on the South African market. The advantage in dealing with a South African focused company is that the reporting will coincide with the South African tax year end which could result in not only a reduction in trustee fees, but also in a reduction of accountant/tax adviser fees.
• Keep communication with trustees limited but focused.
• Should distribution requests be required, limit the frequency of such requests, for example if monthly distributions are required, request the trustees to consider paying these distributions either quarterly, half yearly or even annually, in order to reduce both the trustee fees as well as the bank charges associated with transfers.
• Ensure that the trustees are in receipt of updated due diligence, namely a certified copy of a valid passport and a certified copy of a recent (not older than three months) utility bill reflecting the beneficiaries full names and physical residential address.
• Look to appoint a professional investment advisor who has the proper infrastructure to manage foreign investments, preferably based locally, for ease of communication.