INVESTING OFFSHORE: DO YOU
NEED A FOREIGN WILL?

Read more below or listen to Kajal’s views in a short video clip.

If you have assets located in an offshore jurisdiction, even if it’s just money in a foreign bank account, it’s advisable to have both a local and a foreign will. Although it’s not a legal requirement to have an offshore will, it will ensure that the administration of the offshore assets can take place much faster and more efficiently. If you don’t have one, it can become very time-consuming and complicated to wind up your estate.

CONSIDER THIS

Before deciding whether you may need to draw up an offshore will in addition to your South African will, consider the following:

• If you’ve used your discretionary foreign investment allowance to externalise funds and you’ve invested these funds in foreign jurisdictions in your own name, you may need an offshore will.
• In order for your nominated executor to administer your estate in South Africa, he or she has to obtain a Letter of Executorship from the Master of the High Court. If you also have direct offshore assets, especially in the UK and the US, your executor has to go through a similar process in those jurisdictions. In the UK, for example, a Grant of Probate has to be obtained authorising the executor to deal with your foreign estate.
• Having a separate offshore will can ensure that your foreign estate is administered efficiently and at the same time as your South African estate. It therefore helps to reduce delays in winding up your estate.
• Immovable property is typically subject to the succession laws of the country in which it is situated, while movables are governed by the law of the domicile of the deceased individual. Despite the different treatment for succession law purposes, both immoveable and moveable assets may be subject to a jurisdiction’s inheritance tax laws if such assets qualify as ‘situs’ assets in the jurisdiction, which can result in rates of up to 40% applying on such assets.
• Legislation in different foreign jurisdictions may vary substantially with regard to succession, inheritance taxes and validity requirements for the signing of wills. When we at Sanlam Private Wealth draft an offshore will, we work with solicitors in the jurisdiction in question to make sure it’s drafted in line with legislation in that jurisdiction and that there is no confusion when it comes to interpretation.
• South African law is based largely on Roman Dutch law principles, with some English law influence. Some legal terms used in our wills are unknown in certain foreign jurisdictions, which may result in delays and costs to obtain legal interpretations. In the UK, for instance, there may be different legal terms for concepts such as ‘bare dominium’ and ‘usufruct’ – so they’ll have to send your local will containing these terms back for legal clarification before a Grant of Probate can be issued, resulting in further delays.

Another factor to consider is the language in which your will is written – it complicates matters if it is not in English. Your executor will first have to have it professionally translated into English to ensure that the core of what has been set out in the will is accurately reflected in the English version. Then the will must be submitted to the Master of the High Court, and only once the executor has received the sealed will from the Master can he or she start the process of obtaining a Grant of Probate in the UK, for instance. All these elements can delay the administration of the estate and result in additional costs.

OFFSHORE WILL: ADVANTAGES

Having a separate offshore will therefore has the following advantages:

• The legal terms of the jurisdiction in which the assets are situated are used in the will.
• The will may expedite the process of obtaining a Grant of Probate overseas where necessary.
• There are typically no delays resulting from the required compliance with processes in the Master’s Office in South Africa.
• Succession laws and validity requirements in other jurisdictions are considered when drafting the will.
• Foreign estate tax consequences will be considered in drafting the will and in the succession planning process.

When drafting separate local and offshore wills, it’s crucial that your offshore will doesn’t unintentionally revoke your other will(s). It’s best to obtain expert advice – our Fiduciary and Tax team at Sanlam Private Wealth can assist you in this regard, as well as with the probate requirements and inheritance taxes on foreign assets. Contact Kajal Chowthee on +27 (0)31 560 3666 or kajalc@privatewealth.sanlam.co.za.