Offshore Assets and Your Will

Offshore Assets and Your Will

It is becoming more and more attractive for South Africans to invest in and/or purchase assets in foreign countries where the economy may offer better growth and perhaps less risk. However, it is imperative for these individuals to consider the fate of these assets upon their passing. They should be wary of potentially unwanted consequences of the applicable jurisdiction’s laws. This applies to the impending estate taxes, the succession laws and the law pertaining to Wills.

Your valid South African Will may not be recognised in the domestic jurisdiction where these assets are located. If this is the case, the local succession laws may then apply, meaning that your assets may flow to a specific family member, irrespective of your wishes as per your South African Will.

If is therefore advisable to seek advice regarding the foreign jurisdiction’s applicable laws. Depending on the specific jurisdiction and, the type of offshore asset, if may be advisable to have a second Will to deal with the specific foreign asset upon your passing. Should the latter be the most appropriate option, it is important to note that each jurisdiction has specific formal requirements for Wills.

This second Will should be prepared by a professional and an expert in the foreign country’s laws. It is of utmost importance to take due care when drafting this second Will to ensure that the second Will does not cause a revocation of your first Will. Revocation may cause your South African Will, which governs the greatest part of your estate, to be null and void. 

Some individuals find it more appropriate to have a Global Will. Having one Global Will may promote simplicity and clarity and reduce the risk of the accidental annulment. It may also be easier for the family to deal with one executor instead of dealing with another in a foreign country.

However this may also have its downfalls, and is not always the most appropriate option, depending on the type of asset and the applicable Jurisdiction. Further to this, if a South African has a Will prepared that deals with foreign assets, the drafter of this Will may not have extensive knowledge of the foreign country’s laws. 

A Global Will would also become risky when there are many jurisdictions applicable. The argument can me made that an Offshore Will, prepared by an expert in the foreign Country’s laws, minimises the risk of non-compliance with certain formalities.  

Language may also be an issue when dealing with one Global Will that needs to be interpreted by multiple administrations. The costs of sworn translation services may be an unwanted expense in your estate. 

Some civil Jurisdictions, such as some European Countries, have forced heirship rules. This regime may cause assets to automatically flow to certain family members upon the owner’s passing, irrespective of the testator’s wishes as recorded in his Will. The potential buyers should therefore consider the local succession laws before purchasing such assets.

In the case of European Countries, the European Succession Regulation (Brussels IV) should be consulted during estate planning. The owner of certain assets may be able to choose that the law of their nationality should apply to the succession of the assets upon their passing.

Therefore always seek professional advice during estate planning. Take care and make sure that external expert assistance is acquired when dealing with the laws of foreign jurisdictions. 

 

Michelle Soutter

Practising Attorney