The TT and trusts: legacies in The Isle of Man

The Isle of Man is famous for many things, but nothing defines it quite like the TT: a motorbike race so fast, so technical, and so unforgiving that even veteran riders describe it as a test of absolute precision. With more than 200 corners being navigated at speeds exceeding 320km/h, the TT has earned its reputation as the most dangerous motorcycle race in the world.

Yet just beyond the roar of the engines, the island presents an entirely different side; one defined by security, structure, and stability rather than risk. And it is this quieter, more predictable side that is catching the attention of globally minded South Africans looking to grow and preserve their wealth for generations to come.

A stable structure in a volatile world

An Isle of Man discretionary trust is built on a robust foundation. It begins with a settlor who has the intent to create a trust, a clearly identifiable trust asset and a corporate trustee that assumes legal ownership on behalf of beneficiaries. “This structure is designed to endure,” says Coreen van der Merwe, Director at Sovereign Trust (SA), a company specialising in setting up offshore companies and trusts around the world. “It offers continuity and protection even when personal circumstances change.”

Beneficiaries do not own the assets; they only have the hope of benefiting. This distinction, combined with the island’s well-established trust laws, makes the structure attractive for high-net-worth individuals seeking long-term planning solutions.

Layered on top of that is the Isle of Man’s tax environment: 0% income tax, no capital gains tax, no inheritance tax, and no withholding tax on distributions. Compared to the tax environment of the United Arab Emirates, this might not be too different, however, many South Africans plan on moving back to South Africa at some point and this is when these benefits become really valuable.

Why more South Africans are looking to ‘man up’

Key advantages of setting up a trust in the Isle of Man include the preservation of wealth for future generations without the fragmentation that often occurs after death, as well as seamless succession planning that avoids the delays and costs associated with multi-jurisdictional probate and international executor fees. Trust structures also provide robust asset protection from potential creditors, business risks, or relationship breakdowns, while ring-fencing assets such as farms, holiday homes and business interests that cannot be easily subdivided. In addition, they support minor or vulnerable beneficiaries through tailored provisions and create a clear separation between personal and business assets, offering both clarity and long-term protection. Timing is particularly important and ideally the trust should be set up before the settlor/founder of the trust has returned to South Africa and/or has become SA tax resident again. When a person gets the timing right, assets transferred to the trust will be ringfenced from South African taxes even when distributions are received from the trust in the future.

An additional, and often overlooked, benefit is the local expertise available on the island. “Many Isle of Man trust administrators, lawyers and accountants are themselves South African,” notes Van der Merwe. “This dual perspective is truly invaluable. They understand both the regulatory requirements and the cultural nuances that shape South African wealth planning.”

Setting up a trust: what South Africans living in the UAE must know

Establishing a trust offshore is not a quick, one-step exercise. It requires careful planning and professional guidance, particularly because South Africans must navigate South African Reserve Bank and Revenue Service requirements in addition to The Isle of Man’s legal framework.

The process includes:

• Consulting a cross-border specialist who understands dual tax residency, controlled foreign company rules, and exchange control.
• Choosing the most appropriate trust structure, usually a discretionary trust.
• Reviewing and signing the trust deed, which outlines trustee powers, beneficiaries and the trust’s purpose.
• Transferring an initial asset, which formally activates the trust. Without this transfer, the trust does not exist in law.
• Transfer assets to the trust before you become South African tax resident.

Once established, the trust can hold global investments, property, portfolios, and other international assets, in strong currencies like GBP, USD, and EUR.

For South Africans with global wealth ambitions, the Isle of Man offers a jurisdiction with decades of stability and a legal system built for long-term security, Van der Merwe emphasises that success in offshore structuring depends on expertise, not experimentation.

“Just as the TT demands absolute precision and risk mitigation, so does cross-border wealth planning. An offshore trust should give you peace of mind, not uncertainty and working with professionals who understand South African realities as well as offshore rules is the only way to achieve that.”

For more details, contact Coreen van der Merwe below.