Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, November 5, 2020

Estate planning for your worldwide assets

Estate planningDue to globalization, more South Africans are traveling and working abroad. Due to the rise in travel, South Africans are "purchasing assets and investing in businesses overseas." "In addition, with local political and economic uncertainty, more South Africans are investing offshore either through foreign-domiciled funds or rand-denominated funds." 

If you have foreign assets, you may need to take extra steps to ensure that the assets are protected and that their succession is correctly planned for. 

Worldwide Will

"Unless otherwise specified, your South African will covers your world-side assets." Therefore, you may need to draft as separate will that deals with your assets that are located elsewhere. "From a practical perspective and depending on the foreign jurisdiction, it may not be possible to have your South African estate and foreign estate wound up simultaneously due to requirements by each jurisdiction for certified and court-sealed documentation."

Foreign Will

Foreign wills are also referred to as offshore wills or concurrent wills. These type of wills deal with assets you own that are located in a foreign jurisdiction. This type of will is typically required when you own "immovable property or shares in an overseas company."

Probate 

You must have your South African-drafted will approved and validated by the foreign legal authority so that your foreign assets can be administered in that jurisdiction. 

Freedom of testation

"Many countries, such as South Africa, the UK and Canada enjoy the freedom of testation which is essentially the right of the testator to bequeath their assets to whoever they wish."

Mandatory succession rights

"Many countries, especially those in civil law jurisdictions and those operating under Shariah law, have mandatory succession rights – otherwise known as ‘forced heirship’. These countries include Mauritius, Switzerland, Spain, France, Japan and Portugal. While mandatory succession rights vary from country to country, these rules essentially restrict a testator’s freedom to distribute their estate as they see fit. "

Foreign Jurisdiction

There are a few things to consider if you own assets in a foreign jurisdiction. You may have to account for language barriers and translation costs which can result in delays and additional expenses. Further, if you own immovable property overseas, that jurisdiction may only recognize a will executed in that jurisdiction. 

Offshore invested assets

"If you are invested directly offshore through foreign-domiciled funds, your investments are held in the foreign country’s currency such as dollars, euros or pounds and, generally speaking, you may require a foreign will to deal with these assets. On the other hand, if you are invested offshore through a rand-denominated fund such as a feeder fund, your funds are held in South African currency and a foreign will is not required."

Tax Residency

If you are a permanent resident in South Africa, the South African tax system will control your worldwide estate. Therefore, capital gains tax and estate duty will apply to your estate. 

Accidental Revocation

"If you have a South African will and a foreign will, be sure to avoid inadvertently revoking a will. All wills should include what is referred to as a revocation clause which effectively revokes all previous wills that you have drafted."

Double taxation agreements

Consider whether South Africa has a double taxation agreement with the country where you have other assets. This is important, because if you do not take this step, you may end up paying taxes in both countries. 

See Eric Jordaan, Estate planning for your worldwide assets, MoneyWeb (South Africa), November 3, 2020. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2020/11/estate-planning-for-your-worldwide-assets.html

Estate Administration, Estate Planning - Generally, Estate Tax, Travel, Wills | Permalink

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