Mr Kermit Mocha has approached you for advice concerning estate tax planning. Mr Mocha is 60 years old and has considerable wealth. He has a wife Amanda aged 45 years and three children aged 17 13 and 10 years.

Most of Mr Mocha's wealth is in property and equity investments in Botswana. He estimates that his property investments have a market value of P35million and his equity investments are worth P15million.

Mr.Mocha has been suffering from ill health and he wishes to set up a plan which will both provide security for his family as well as minimize tax liabilities.

He has been told about a number of possibilities but is not sure which option to take so would like your advice on each of the following options

1. Donate all assets to his wife

2. Donate a usufract in his assets to his wife and retain the bare domination. The bare domination will then be left to his three children in his will.

3. Form a trust in which his wife and children are beneficiaries and Donate his assets directly to the trust.

REQUIRED

Advise Mr Mocha on the capital transfer tax, transfer duty, capital gains and other income tax aspects of each of his three options. Include reference to the tax positions of his wife and children where relevant and identify the most beneficial option (s). (15marks)