Investing offshore can lead to unforeseen Estate planning consequences, and one should consider the practicalities of investing offshore, as they relate to the winding up of an Estate in the unfortunate event of death.
With South African markets providing poor low returns in a sustained low-growth environment, there has been a deluge of Investors choosing to move some of their assets offshore.
Investing offshore can lead to unforeseen Estate planning consequences, and one should consider the practicalities of investing offshore, as they relate to the winding up of an Estate in the unfortunate event of death.
Part of this analysis should involve an enquiry as to whether you require a foreign will if you have offshore assets. If you wish to include the offshore assets in your South African will, this should involve careful consideration with the guidance of an experienced professional, to assess whether it is a viable option to refer to your worldwide estate when nominating heirs in your estate.
Whilst considering your options, the following practicalities should be taken into consideration:
The Estate administration authorities in each jurisdiction in which your assets are held, generally require an original will or at least an apostilled or certified will. This may lead to delays with the finalisation of your South African estate
Certain jurisdictions necessitate compliance with different validity requirements that may differ from South African legislative requirements with regards to format, execution and witnesses
South African law of testation may very well differ from that of the offshore jurisdiction, and your South African bequests may not be feasible in an offshore jurisdiction. For example, bequeathing a property in Europe to your wife may not be achievable because of forced heirship laws precluding you from depriving your children of their share in that inheritance. Assuming that the contents of your South African will is applicable to your worldwide assets can lead to practical administration complexities
Be conscientious of bequeathing your Estate to your South African family trust or testamentary trust in your South African will. If this extends to your offshore assets, you may very well cause the offshore assets to have to be liquidated and repatriated back to South Africa to be held by the local trust
Generally, the value and type of the offshore asset would indicate whether it is practical to have a separate will. The general practice is to ensure that there is a separate will if the asset is an immovable property
If you have an offshore will drafted, you must ensure that the South African will and offshore will do not revoke or contradict each other. It is recommended that the drafter in each jurisdiction be made aware of the existence of the will in the other jurisdiction
Consider whether there are any inheritance taxes levied in the offshore jurisdiction so that you can ensure that there is adequate liquidity to pay those taxes
Whilst the above is not intended to be an exhaustive checklist of your considerations, it does highlight the necessity to engage with relevant industry experts on the Estate planning consequences of investing abroad.
