Since the relaxation of exchange control, and as the Rand continues its downward slide, many South Africans are investing offshore with important consequences for their estate planning. If you have invested offshore, consider whether you need a foreign will to deal with your foreign assets on your death.
Judy Snyman, Trust & Fiduciary Specialist at AlphaWealth, which offers investment and wealth planning for high net-worth clients explains: “The main reason for creating a foreign will is to avoid delays in winding up your estate. If a South African resident only has a South African will, the executor of his estate may have to apply for foreign court orders to recognise his right to deal with the foreign property. This could result in foreign language problems and additional administration costs. Having a foreign executor appointed by a foreign will means that your local estate can be finalised, without delays caused by obtaining recognition in a foreign jurisdiction.”
A foreign will dealing with offshore assets will address specific requirements of the relevant jurisdictions and legal systems and simplify the administration of the offshore estate.
Six tips for your foreign will
- It is important to specify in the local will that it deals only with local assets, and in the foreign will that it deals only with the relevant foreign assets.
- Having separate wills for local and foreign assets will not affect a South African resident’s liability for estate duty. If resident in South Africa, estate duty is payable in South Africa on all assets, wherever situated. There may also be estate duty payable in the jurisdiction where the assets are situated and in such a case, the estate will receive a credit which can be set off against duties payable in South Africa.
- If the assets consist of foreign investments administered by a South African institution, there is no need to prepare a separate foreign will.
- There are jurisdictions, like Switzerland, where it is not necessary to have a foreign will in place for assets held in that jurisdiction. This is because a South African executor will be recognised by financial institutions without the need for expensive court applications.
- In certain jurisdictions two or more people may hold accounts jointly. The effect of this is that on the death of one of them, the account simply continues in the name of the survivors and a foreign will is not needed to deal with assets held in such an account.
- It is always advisable to have a will where there is foreign property. This is because different countries have different laws that deal with the transfer of property and these wills have to be drawn up by a specialist attorney in that country.
AlphaWealth offers bespoke investment and wealth planning services for high-net-worth individuals, families, selected institutions and charitable trusts.