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Offshore Assets and Your Will and Testament

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Offshore Assets and Your Will and Testament

Guiding Principles for The Interpretation of Last Wills & Testaments

In South Africa, we enjoy the freedom of testation.

This means you may pass your estate to whomever you choose through your Will.

Only specific legislations, which ensure the protection and provision for women and spouses, may apply to your Will.

Offshore Assets and Your Will and Testament

A Local Will, an Offshore Will, a Worldwide Will.

More people are considering diversifying their assets and investments across borders.

Knowing the importance of having a Will and Testament and effectively executing your local and international estate can prove very helpful.

Does Your South African Will and Testament Cover Your Offshore Assets?

One must consider the type and location of the Asset in the name of the Testator.

Generally, for offshore immovable assets, a single Will may be sufficient.

A separate Will and Testament is highly recommended when dealing with immovable property owned in another country.

In certain countries, the freedom of testation is not acknowledged. These countries have their own succession laws that supersede the Testator’s intention; this is commonly known as forced heirship.

Forced heirship is a set of regulations that limit the Testator’s freedom to distribute their estate to specific heirs.

In countries where forced heirship applies, typically, only a part of the estate is subject to this system’s laws and the remainder of the estate may be left to the discretion of the Testator.

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A Local Will and a Worldwide Will

A Local Will is often drawn up in the country where you permanently reside and it provides instructions on what needs to happen to your assets within South Africa.

Your local Will often has a clause stating that all other Wills should be revoked or invalidated and that this Will should be accepted as the only legal and valid Will.

This clause is often required in a Will; however, it can be problematic if you have international assets that are not part of this Will.

If you decide to have separate Wills, your South African Will should contain clauses specifying that:

“This Will deals with my assets in South Africa only.”

and that

“This Will revokes all previous Wills made by me in respect of my assets located in South Africa only”.

Each offshore Will should also declare that each Will does not revoke another offshore Will.

An Offshore Will is a separate Will that you draft to direct how your assets should be distributed in a particular country. It must be compliant with the laws and jurisdictions of that specific country.

A Worldwide Will is a will that directs what needs to happen to any international assets that you may have.

When drafting a Worldwide Will, one can only cover assets in countries with the same succession laws.

A worldwide Will contains the relevant clauses dealing with your offshore assets, which means you would not need multiple Wills.

Dealing With Your Foreign Assets In A Will

The Master issues a letter of executorship, which mainly authorises the executor to administer the estate.

However, when dealing with offshore assets, more than a letter of executorship may be required to give the executor the same authority.

As such, the authority necessary should be obtained from the relevant officials of that country.

Some countries that do not recognise a South African letter of executorship will require local probate.

This is a process in which a Will is authenticated or validated through a court process.

In certain countries, the authority given to the executor through the Master’s letter of executorship is recognised and sufficient to administer offshore assets.

It becomes imperative to ensure that your Will correctly deals with your offshore assets and that you comply with the succession laws of where your offshore assets are located.

A Foreign Will for Foreign Assets

Preparing an offshore Will for your offshore assets is also highly recommended.

Ensure you have checked for any special requirements in that country for testamentary writing to constitute a valid Will.

Human hand over wooden background and offshore text concept

When considering preparing a separate Will for your offshore assets, contemplate the following:

The Type Of Asset – For offshore assets that are classified as movable. The general directive is that a single Will would be sufficient.

This Will must be drafted in the jurisdiction where the Testator is domiciled.

The laws of the country in which a particular Asset is located should be considered.

Potential Challenges To The Execution Of Your Will/s – The estate’s heirs must prove the Asset’s ownership by the Testator.

It is also imperative to understand if freedom of testation applies to that country.

If it does not, you may include a clause in your offshore Will that you rely on private international law or international regulations to apply South African law regarding the distribution of your offshore assets.

Tax Liability

Section 3(2) of the Estate Duty Act stipulates that if you are permanently resident in South Africa, you are liable for estate duty and Capital Gains Tax on your assets worldwide.

Despite having Offshore Wills, you are still required to report any foreign assets for estate duty purposes. One must also be aware of double taxation.

Final Thoughts On Offshore Assets And Your Will And Testament

In conclusion, it may not always be a requirement to have a second Will to distribute your estate outside of the Republic of South Africa.

However, even where it is not legally required for you to have a foreign Will, it may be advantageous to have one in certain instances.

It is essential to consult with a professional (bank, financial institution, etc.) or an attorney who is versed in estates when you are considering drafting a new Will.

One needs to be knowledgeable about the various legislation pieces to give the necessary advice.


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