How to estate plan across geographies

By Janice Roberts

David Thomson CFP®, Senior Legal Adviser, Sanlam Trust

When planning your estate across geographies, you need to firstly ensure that your South African will is valid. That’s the word from David Thomson, CFP® Senior Legal Adviser at Sanlam Trust.

Next, consider whether you need a separate will for your overseas assets. For assets such as unit trusts and life insurance, you probably don’t. For property, shares in overseas companies (not dual listed) and businesses, it’s highly recommended.

There are additional logistics if you don’t have a foreign will. For example, on your death your original will must be delivered to the Master of the High Court in South Africa, who shall retain it. The local executor will need to have his or her authority to act notarially certified and authenticated by the appropriate government authority (and translated where required) before it will be recognised overseas. If the person seeking to wind up the estate resides abroad, he or she will not only have to apply to the local Master for the ‘signing & sealing’ of Letters of Executorship and a notarially certified copy of the will, but also be required to provide security. Obtaining all this causes delays and may be costly. Whereas if you opt for a foreign will dealing only with your offshore assets, your overseas solicitor could access it immediately and proceed in that jurisdiction without delay.

Thomson also does not recommend only having a foreign will. There are complicated procedures involved in the resealing of the overseas ‘Grant of Probate’ that will take time.

Thomson shares some of the factors to consider when setting up an offshore will:

1. Make sure your foreign will is legally valid in that country. Firstly, there’s the difference between a foreign will, which is a will you’ve drawn up overseas, and a will you’ve drawn up and had signed in South Africa, which is subject to South African law. If you reside permanently in SA, but have assets overseas, it’s probably a good idea to execute a foreign will in the jurisdiction your assets are in, particularly if you have an asset in a country where the law is different to South Africa and they speak a different language.

If you draw up a foreign will, you must ensure it’s legally valid for the country where you have assets. Some countries have unusual laws and regulations you’re unfamiliar with, so it is best to engage with an expert on-the-ground such as a solicitor or attorney. They can draft the will in the language of that country, in accordance with its laws. There may be laws such as ‘forced heirship’ (in some countries you are forced to bequeath a certain percentage of your estate to relatives) that you need to comply with.

The European Succession Regulation (known as Brussels IV) allows you to choose whether you wish South African law or the law of the European country to apply. However, Brussels IV does not apply to assets in the UK; Ireland or Denmark.

2. Be meticulous with your wording. If you write a will in South Africa that says, “This revokes all previous wills”, it is possible that your foreign will(s) will also be revoked. Be very careful with the wording in your wills. For example, your general South African will could say, “This will shall only apply to my South African assets, it cancels and revokes previous wills relating to my South African assets, but it does not cancel or revoke my will for my UK assets.”

3. Become familiar with the freedom of testation. This refers to a person’s power to specify their heirs. Most countries have freedom of testation up to a point, but there are restrictions – for example in South Africa, you need to provide sufficiently for your spouse and dependent children. The same applies in the UK. Other points to consider:

  • Whether you’re married in or out of community of property and with or without accrual. If you get married in South Africa, without an antenuptial agreement stating otherwise, you are married in community of property and half of your estate is automatically owned by your spouse so you cannot leave that half to anybody.
  • Sharia Law – if you’re Muslim and living in South Africa, for example, you may only bequeath up to a third of your estate to anyone outside of your family.

4. Understand the costs. If you’re a permanent resident in SA, your worldwide estate is subject to the SA Revenue Service (SARS)  – which means capital gains tax and and estate (death) duty. So, even if your property is in Australia, for example, you must still account for estate duty in SA. It’s very difficult to get an asset out of your estate if you’re a permanent resident in South Africa, unless you acquired that property overseas before you immigrated to SA. You could have donated it or transferred it to an offshore trust, but that is a different scenario and would have attracted donations and capital gains tax at the time. It’s very important to be aware of double taxation agreements. You could end up paying tax in two countries unless you get the proper advice.

If South Africa has a double taxation agreement with the country in which you have your assets, you should not, generally speaking, pay any more tax than you would have paid in South Africa. You can check the SARS website to see the list of countries South Africa has an agreement with – but note that these agreements are NOT all the same.

5. Find the right people. If you’re in the country where your foreign assets are located, ask neighbours for recommendations regarding a local solicitor or attorney to contact. Alternatively, many legal firms in SA are part of global networks so may have partners abroad to assist you. For example, Sanlam Trust has an excellent solicitor partner in the UK you can engage with. He visits SA on a regular basis as well. Your financial planner should also have knowledge of all your wills and where they are located.

6. Consider  Nudum  Praeceptum. This is the term for a clause in your will that’s simply not enforceable. For example, if you say, ‘I leave my house to my husband on condition he doesn’t marry again in the next ten years…’ that’s not enforceable, because you haven’t named an alternative beneficiary if he does marry again. So, the house will go to him and that’s the end of the matter. Again, it comes down to meticulous wording.

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