Having a will drawn up is important to ensure that your assets are distributed according to your wishes in the event of your death. If you have any offshore assets, you are advised to draw up a foreign will even though it’s not a legal requirement.
Kajal Chowthee, fiduciary and tax specialist at Sanlam Private Wealth, says this is advised even if your offshore assets are as simple as money in a foreign bank account, because it will ensure that the administration of the offshore assets can take place much faster and more efficiently.
Willem van der Merwe, global solutions specialist at FNB, says you need to consider your individual, social, environmental and economic circumstances. “While in certain circumstances it makes sense to draft separate wills, it is important to manage the potential risks. For example, if you have a will drafted in Portugal, it should be clear that the will deals with the assets situated in Portugal only,” he says.
Van der Merwe warns that if you do not make this clear, your Portugal will may unintentionally override the directions of the will drafted in South Africa, which is aimed at dealing with the South African assets. Similarly, the SA will should be amended to exclude assets situated in Portugal, or elsewhere if relevant, he adds.
Important points
Before deciding whether you may need to draw up an offshore will in addition to your South African will, Chowthee recommends you consider the following:
If you used your discretionary foreign investment allowance to externalise funds and you invested these funds in foreign jurisdictions in your own name, you may need an offshore will.
Your nominated executor has to obtain a letter of executorship from the Master of the High Court to administer your estate in SA. A similar process must be followed by an executor in any offshore jurisdictions. For example, an executor in the UK would need to obtain a grant of probate authorisation to deal with your foreign estate.
Chowthee says having a separate offshore will can ensure that your foreign estate is administered efficiently and at the same time as your South African estate, which helps to reduce delays in winding up your estate.
Immovable property is typically subject to the succession laws of the country in which it is situated, while movables are governed by the law of the domicile of the deceased individual. Both immovable and movable assets may be subject to a jurisdiction’s inheritance tax laws if such assets qualify as “situs” assets in the jurisdiction, which can result in tax rates of up to 40% applying on such assets.
Legislation in different foreign jurisdictions may vary substantially when it comes to succession, inheritance taxes and validity requirements for the signing of wills. Chowthee recommends that you work with solicitors in the applicable jurisdiction to make sure that your foreign will is drafted in line with legislation in that jurisdiction.
“Some legal terms used in [South African] wills are unknown in certain foreign jurisdictions, which may result in delays and costs to obtain legal interpretations,” says Chowthee. “In the UK, for instance, there may be different legal terms for concepts such as ‘bare dominium’ (ownership without the right of use) and ‘usufruct’ (a legal institution in which someone, who is not the owner, is given the right to use and enjoy the profits and advantages of something belonging to another as long as the property is not damaged or altered in any way, for a certain period of time). So they would have to send your local will containing these terms back for legal clarification before a grant of probate can be issued, resulting in further delays.”
Marius Pentz, Cape regional head for private bank and advisory at FNB, points out that where only movable assets are owned in the foreign jurisdiction, and there is no need to transfer the assets within a specific time period, you could consider a worldwide will covering all assets.
A separate foreign will is strongly recommended if you have immovable assets, such as property, in another country.