How to do estate planning across borders

How to do estate planning across borders

Are you a South African citizen with interests offshore? Perhaps you have a home in Spain? Or a business in Italy? Offshore assets make wills more complicated.

This situation calls for careful estate planning with the right people on-the-ground. This Wills Week, David Thomson, CFP Senior Legal Planner at Sanlam Trust, gives insights into estate planning across geographies.

First up, Thomson says you need to ensure your South African will is valid. There are boxes to tick to ensure it is legal. 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 and sealing’ of Letters of Executorship and a notarial certified copy of the will, but also be required to provide security. Obtaining all this causes delays and may be costly. If you opt for a foreign will dealing only with your offshore assets, on the other hand, 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.

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 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.

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”.

Become Familiar with the Freedom of Testation

This refers to a person’s power to specify their heirs. We mentioned ‘forced heirship’ above. 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 ante nuptial 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.

Article by David Thomson – Sanlam Trust 

 

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