select
|

Ownership of assets and the choice of jurisdiction is important

Reduced global economic growth over the last few years has prompted governments worldwide to focus on increased inheritance and wealth taxes to bolster the state coffers, and South Africa is no exception.

“People and capital have become more mobile, and although bilateral agreements and double taxation treaties aim to prevent the double taxation of wealth in various jurisdictions, the payment of inheritance and estate taxes at a higher rate in the jurisdiction where the asset is located, is a reality. Your estate planning therefore needs to take the impact of this into account,” says Godiva Barnard, Fiduciary Adviser at PSG Wealth Rustenburg Arend Road.

Your will might not be recognised offshore

The deceased estate of a person resident in South Africa consists of their worldwide assets and can therefore be liquidated by the nominated executor according to the provisions of the deceased’s last will and testament. “The problem is that it might not be recognised in the jurisdiction where the offshore assets are registered,” says Barnard, as many states in Europe, for example, are civil law jurisdictions where a forced heirship takes precedence over any testamentary provisions.

The following testamentary options should therefore be considered for offshore investments:

• a single will to deal with worldwide assets
• a will pertaining to a specific jurisdiction
• a will dealing with all offshore assets

Getting the wording right


Should an investor decide on more than one will, they should also consider the wording of the various wills carefully. Barnard says it should clearly state the applicable jurisdiction of the will and care should be taken to only revoke previous wills in that particular jurisdiction. “A careless will drafter can cause all other existing wills in other jurisdictions to be revoked, with dire consequences, so estate owners must ensure that they inform a will drafter of any existing wills to avoid any issues.”

Investors who make use of a local investment platform to invest offshore may use their local will to bequeath the offshore investments, as the platform is deemed to be located and administered in South Africa. However, there may be an inheritance tax obligation to the foreign state where the underlying investment is registered.

Some essential tips to follo
w

Ensure that the wording of your South African will is adequate to deal with foreign assets if a single will is preferred. Observe the various legislative and regulatory requirements when signing an offshore will, and take note of the provisions of existing offshore wills when drafting your South African will.

“You must identify the specific offshore jurisdiction as it may be part of, and under the jurisdiction of, another state. It would be wise to obtain legal advice regarding an offshore will when purchasing offshore immovable property from the conveyancer in that offshore jurisdiction,” Barnard adds.

It is also important to ensure that your executor understands the complexities of owning offshore assets and is able to facilitate the winding up of your deceased estate, wherever it is situated.

Different estate and inheritance tax legislation and regulations in various jurisdictions require offshore investors to not only decide on the type of offshore investment that is suitable for their circumstances, but also to consider the legislation of the jurisdictions where those investments are held.

Estate planning where offshore assets are involved can be challenging. “It is important to obtain expert advice in each jurisdiction where capital is invested relating to domicile, residence, reporting obligations, succession, matrimonial regimes and forced heirship, as well as to seek professional advice when drafting your will, taking in to account the various permutations and complexities involved,” Barnard concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 25 May 2018
      Reliable public transport systems moving a mass of commuters to and from work, keep a city’s economy moving. Not only do they have a positive impact on economic growth, successful rail links also influence property values.
    • 25 May 2018
      The live, play and visit environment that Centurion Residential Estate & Country Club offers continues to attract buyers looking for a very specific lifestyle and ambiance.
    • 25 May 2018
      As expected, the Monetary Policy Committee kept the repo rate stable, with analysts and market commentators ahead of yesterday's announcement (24 May 2018) pointing to a more hawkish stance amid a weaker rand, somewhat less stable global environment, and an eye on the inflation outlook – coupled with the increase in VAT and sizeable hike in the price of fue
    • 24 May 2018
      Most real estate professionals agree that 2017 was one the toughest years to date; an eminently challenging 12 months that subdued even the strongest markets - including the country’s economic powerhouse of Sandton.
    • 24 May 2018
      These are uncertain and challenging times for the real estate industry, but the non-profit organisation Rebosa is fighting for their interests and finding pragmatic solutions to industry issues such as the urgent need to fast-track transformation says Richard Gray, Rebosa chairman.
    • 24 May 2018
      The decision to invest in property isn’t one that’s taken lightly, or dealt with flippantly. The same should ring true when deciding on an estate agent partner to handle the letting out of your property.
    • 23 May 2018
      Homeowners who are thinking of selling and “trading up” to a bigger or a better home had better be quick now if they want to get the best deal.
    • 23 May 2018
      The new Loftus Park development in Arcadia is really going to boost the demand for homes and rental accommodation close by and the neighbouring suburb of Sunnyside, says Gerhard Kotzé, MD of estate agency group RealNet Holdings.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK