Since the most recent relaxation in exchange controls many South Africans have been using their discretionary foreign investment allowances of R10 million per year to invest offshore. It’s often believed that a local will is sufficient to cater for worldwide assets, but this isn’t always the case. There are a number of reasons why a separate offshore will is essential.
These seven considerations may determine the viability of a separate will dealing with offshore assets:
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 common law jurisdictions, such as the UK or the US, immovable property will be subject to the local succession laws, while movables may be governed by the law of domicile. Despite the different treatment for succession law purposes, both immoveable and moveable assets may be subject to that jurisdiction’s inheritance tax laws, which can result in rates of up to 40% applying on assets that are classified as situs assets in that jurisdiction.
Legislation in different foreign jurisdictions may differ substantially regarding succession, inheritance taxes and validity requirements for the signing of wills.
Having a separate offshore will can ensure that your foreign estate is administered efficiently and simultaneously with your South African estate. It therefore helps to reduce any delays in the winding up of your estate, since it won’t be subject to the administration process at the office of the Master of the High Court in South Africa.
Having an offshore will can alleviate the need for your local executor to apply for a foreign court order to recognise his authority to deal with your foreign estate.
There will generally be no need for your executor to obtain sealed copies of your will and Letters of Executorship from the Master of the High Court in South Africa, which may cause unnecessary delays, as will be the case where there is only one will dealing with your worldwide assets.
South African law is largely based on Roman Dutch law principles, with some English law influence. Some legal terms used in our wills are not known in certain foreign jurisdictions, which may result in delays and costs to obtain legal interpretations. It may also be necessary to have your worldwide will translated and sealed before sending it to the foreign executor or agent.
Having a separate offshore will therefore has these advantages:
The legal terms of the jurisdiction in which the assets are situated are used in the will.
The will allows an offshore solicitor to be appointed to obtain a grant of probate overseas where necessary.
There are 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 taken into account when drafting the will.
Probate requirements are considered in the succession planning process.
The Fiduciary and Tax team at Sanlam Private Wealth can assist you with advice on the probate requirements and inheritance taxes on foreign assets, as well as with drafting of wills dealing with your foreign assets. Contact Ken Newport at 011 778 6659 or email@example.com.
we can assist you with
The formation and registration of trusts, and the provision of independent trusteeships – both local and oﬀshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
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All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
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