By: Rone Silke, a consultant at Sovereign Trust
Having a valid, legally compliant will has never been more important. Your clients’ wills ensure that their assets, and other considerations, are distributed and handled according to their wishes when the time comes.
However, if they have offshore property or business interests that form part of their estate, a will drafted in South Africa may not comply with the requirements of other jurisdictions. If you have assets in other countries, it’s in your best interest to work with a professional who specialises in offshore estate planning, and to draft separate wills to protect those assets in terms of the applicable laws in the countries in which they reside.
Given that laws differ from country to country, it makes sense to have a distinct will for each jurisdiction, thus ensuring that the specific legal requirements and provisions for asset distribution are met. A good estate planner will advise on legalities – formalities like witnessing and signing requirements, age restrictions, and any content specifications – that are different from those applicable in South Africa.
Likewise, they can advise on country-specific language and translation technicalities. If a will is written in a language other than the official language of the country in question, it may be necessary to have it translated.
There are also considerations like jurisdiction-specific tax. Laws governing inheritance, succession, and taxation may vary from South African tax legalities. Specific tax considerations may apply to offshore assets and may be governed by the tax laws of the foreign jurisdiction where the assets are located, in addition to South African tax laws.
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Inheritance, capital gains, and other taxes could impact your beneficiaries when your estate is being would up. Understanding the tax structures in your investment destinations, both before investing and while drawing up your will, is a crucial aspect of maximising your return on your investments.
Depending on the nature and size of the offshore investments, it may be advisable to engage in tax planning and structuring. By putting tax-efficient investment structures, like trusts, companies, and investment funds in place, you will be better able to minimise the impact of taxes on investments and assets, as well as on the client’s legacy. Implementing such tax planning strategies requires expert advice from tax professionals who are knowledgeable in both South African and international tax laws.
Working with a tax professional will also help in benefitting from double tax agreements (DTAs), which aim to provide relief from the potential double taxation of income and assets between countries. DTAs ensure that income and assets are not taxed twice – once in the country where they are earned or located and again in the country where the taxpayer is a resident.
Drawing up and executing wills to protect offshore interests is one aspect of protecting a client’s legacy. Making sure that their wills are updated is just as important. Advisors must keep their clients’ wills in mind, especially when changes to assets, beneficiaries and family composition happen. Keeping wills current helps ensure that they always reflect the client’s intentions and comply with any changes in the relevant laws.
Wills are more important than ever before as they enable clients to have control over their assets, protect their loved ones, and ensure that their wishes are honoured. And, in our increasingly complex and evolving society, utilising industry experts is essential – especially when offshore factors come into play.