Estate planning for your offshore investments
If you have offshore assets you need to ensure that they are included in your estate planning so that you do not leave your heirs with a legal and tax nightmare.
Nisha Ramnath of BoE Private Clients says there are key points to consider when planning your estate.
Is a separate will required?
It is possible for a South African executor to appoint a foreign agent to deal with assets in a foreign jurisdiction if one will is executed which deals with worldwide assets.
Most foreign jurisdictions would require a sealed copy of the original will and appointment, which is issued by the Master of the High Court. This generally takes a few weeks to obtain.
Some foreign countries have restricted succession rules such as fixed property. In such cases it may be useful to have a separate will dealing with those foreign assets.
The South African executor would be responsible for the payment of estate duty on the deceased South African resident’s estate, which includes worldwide assets. It is expedient for the South African and foreign executor to work together to ensure that there is no double taxation.
A professional adviser would be able to weigh up these factors and advise the client of the best way forward.
Revoking a will
A new will usually revokes all other wills—and could inadvertently revoke an offshore will.
The revocation clause should specify if the revocation is intended to revoke all previous wills (including wills that deal with foreign assets) or whether the revocation is limited to a will dealing only with South African assets.
Keep it honest
It is important to disclose fully all the assets to your nominated executor as this will aid informed and thorough estate planning.
However, a word of warning: if you do have assets offshore that have been expatriated in contravention of exchange control regulations, you should keep in mind that the South African adviser may be duty-bound to report such instances in terms of the Financial Intelligence Centre Act 38 of 2001.
If a potential inheritance could subject a foreign heir to increased tax obligations, proper planning could involve setting up a structure such as an offshore trust to receive the heir’s inheritance.
If your assets sit outside a trust, ensure that your estate has enough liquid assets to settle any taxes.
Given the added complexities of foreign assets in estate planning, make sure you select a suitable adviser.
A professional executor with a longstanding reputation, such as an accredited member of the Fiduciary Institute of South Africa, is preferable.
A professional with links or access to worldwide legal networks, such as Eurolegal or DLA Piper,
would be a preferred choice.
Certain countries have restricted succession rules with regard to assets such as fixed property.
Foreign shares could also pose administrative difficulties, as some foreign transfer secretaries insist on the use of signature guarantees to eliminate fraud.
Access to such networks provides the South African executor with reputable contacts to act as foreign agents.