If you have assets outside of South Africa this is important.
Below is a copy of an article which appeared in the Personal Finance Magazine pg 44, Vol. 86, 1st Quarter 2021. Within the article mention is made of countries where one does not make a will as there are laws of forced inheritance. I found a webiste which explains forced inheritance and I have included the web address and a paragraph from that article with the address at the end of this blog.
HOW DO OFFSHORE ASSETS FIT INTO YOUR ESTATE PLANNING?
While most people understand the importance of having a valid will in place as part of the effective execution of their estate planning wishes after their death, statutory requirements often become a little less clear for people who hold assets in different jurisdictions as part of their estate. The complexity stems from the fact that we live in a world where, for the most part, borders have become little more than grey lines separating countries on a map.
As such, it can be tempting to believe that the freedom of testation that South Africans enjoy, which affords you the right to leave your assets to whomever you please, applies everywhere. However, not all countries have the same rules as South Africa when it comes to dealing with the distribution of assets after death. For this reason, if you hold assets in other jurisdictions, it is essential when drawing up your will that you seek advice about the estate planning regulations of those countries where the assets are held. It’s important to have a clear understanding of the global mobility of heirs and legatees and what is legally required to ensure the smooth transition of assets to your heirs. Given that there is no one-size-fits-all solution, personal advice is the best course of action.
However, there are a few basic principles that underpin all successful multi-jurisdiction estate plans. The first concern is to make sure you have a clear understanding of whether each of the countries in which you hold assets offers the same freedom of testation as South Africa. Not all countries have similar rules to South Africa and some provisions in your will might not be enforceable in such a country.
If you hold assets in a country with forced heirship rules*, these will provide specific guidelines on precisely how your assets must be distributed. In such instances, having a separate will dealing specifically with the assets held in each such country may be the most appropriate approach. This is particularly important if you want to avoid lengthy estate administration delays and even the need for possible legal battles by your heirs.
Where a separate will is not executed in the foreign jurisdiction, and the South African letters of executorship are not deemed acceptable in terms of dealing with a foreign asset, the South African will would need to go through an onerous and often costly validation process before it could be accepted as enforceable in that country. On the other hand, having a separate will in place that aligns with the succession rules of the country concerned would streamline the process and allow the offshore assets and those of the South African estate to be dealt with simultaneously.
That said, simply having separate wills covering assets in various jurisdictions is not a guarantee of a smooth and simple estate administration process. It is imperative that these separate wills are aligned, otherwise the process can become incredibly complex and frustrating. At their most basic level, these wills should never be seen to contradict, supersede or replace one another. One of the most effective ways to avoid this is to look at the revocation clause in each of the wills, as well as any reference made to a specific jurisdiction. It may also be necessary to amend some of the clauses in certain wills to clearly indicate exactly which offshore assets or jurisdictions are dealt with in that specific will. This will ensure that none of the other wills is accidentally replaced or revoked.
It is essential that all the wills are thoroughly assessed to ensure they are not contradictory and align with the rules and regulations of each jurisdiction. When drawing up a will, or wills, for assets held in multiple jurisdictions, being able to check off the following five considerations is a good starting point:
- Have you carefully considered the types of assets? Although it might in certain cases be sufficient to have a single will drafted in the domicile of the testator when only movable assets are involved, it would definitely be advisable to consider a will in each of the jurisdictions when immovable property forms part of the assets.
- Have you gathered all relevant information on the offshore asset types and values? Obtain clear information regarding the type and value of the asset. Some asset classes might have certain limitations or restrictions applicable, which might affect the transfer thereof at your death.
- Have you confirmed who the owner of the asset is? Consider what the possible impact would be on transfer of the asset if there is joint ownership, as well as the impact of your marital regime on its distribution.
- Have you investigated the possible impact of any forced heirship laws in the countries where you hold assets?
- Have you thought about any other potential challenges to the execution of your will/s? For example, execution may be affected by the impact of language barriers and the potential for instructions to be ‘lost in translation’?
Ultimately, a failure to understand the full implications of holding assets in other jurisdictions and ensuring that the laws of those jurisdictions are complied with when drafting one or more wills, could result in significant challenges and delays for those whom you want to beneit from your estate on your death. As such the advantages of seeking help from an adviser well versed in foreign succession laws cannot be too strongly recommended.
Willem van der Merwe is a global solutions specialist, FNB Wealth and Investments.
* Forced Heirship Explained | Holborn Assets Holborn Assets
Forced Heirship Countries and Rules
Forced heirship exists in most civil law jurisdictions and in Muslim countries which follow the Islamic Sharia Law. It applies in most European countries, including Germany, France, Italy or Spain, in Latin America, including Brazil, Argentina and Chile, as well as Russia, China and Japan. Go to the website above for full details.