We live in a world where borders have become grey lines separating continents with the mere click of a button. Considering the implications of distributing your assets at your death, not only from a local point of view, but also from an offshore point of view, can be considered a complex planning scenario.
“Generally, when addressing off-shore assets, the first question that needs to be answered is whether a local and an offshore Will(s) should be executed or whether one Will is sufficient which will deal with worldwide assets. There is, however, not a ‘one size fits all’ type of answer to the question. Every person’s individual circumstance will have to be considered to determine the best (personalised) option. Considering the fact that different jurisdictions have different succession rules, the consequences of your wishes and how they interact with a specific jurisdiction’s laws, should be duly noted,” says, Remay Olivier, Product Manager, FNB Fiduciary.
While in certain circumstances, it makes sense to draft separate Wills, it does carry certain risks e.g., should your client have a Will drafted in another country say, Portugal, and the existing South African Will does not reflect that it is in respect of the South African estate only; the directions of the South African Will could, unintentionally, override the directions of the Will drafted in Portugal. The separate offshore Will could also revoke the South African Will if not correctly structured which could have various unintended consequences.
While considering whether or not to finalise a separate Will for your offshore assets, the following are good guidelines when weighing up the options:
· Rule of Thumb: where only movable assets are owned in the foreign jurisdiction, a Will can be drafted based on the domicile of the testator (i.e., the foreign assets can be covered in one worldwide Will). In the event of immovable assets, draft a Will in the jurisdiction where the assets are located.
· Obtain clear information regarding the type of asset and what the value is. Some assets might have certain limitations which are stipulated in terms of the Title Deed or as part of the product rules of the specific investment. Ensure that, where an asset is administered by a specific institution, i.e., a Bank or an Investment company, that the specific bank or investment company confirms their requirements at estate administration stage.
· Consider if forced heirship applies in the offshore jurisdiction(s)? Forced heirship has the effect of assets devolving to beneficiaries via a certain set of stipulated rules. If this is not taken into account during the planning process, the practicalities of administration and transfer of your assets might be impacted, forcing your executor to sell assets in order to effect a practical transfer of your assets to the intended beneficiaries.
· Consider Countries who don’t have English as a first language: This has the effect that a Will drawn up in SA, might need to be translated into the relevant language. This leads to unnecessary delays, costs and might create possible confusion if not translated correctly.
· Some jurisdictions have certain thresholds whereby there is no need for a Will, i.e., a bank account where the funds are lower than £5000 (for instance) can be transferred directly to the nominated beneficiary without the need for Probate requirements to be adhered to.
Eric Enslin, CEO of FNB Private Banking and Advisory adds that, “A notable number of our private banking clients are diversified in their global investments which helps contribute to growing and protecting their wealth. In relation to offshore wills, we’ve seen several unfortunate scenarios, where clients who held investment assets in various offshore jurisdictions pass away without appropriate estate planning and offshore wills. These instances add substantial time delays and countless complexities, often at substantial costs to the executors and families tasked with resolving the estate.”
“Our role as an integrated financial services provider is not only limited to our client’s transactional needs but it extends to helping them and their families manage their assets with the right kind of integrated advice and solutions that talk to a broader financial and estate planning journey that’s structured to help with our client’s onshore and international financial needs,” Enslin adds.
It’s important to ensure that the implications of separate Wills are understood, when entering into further Wills in future. When a review of a succession plan is attended to, future Will drafters should be notified of all finalised Wills to safeguard accidental revocation of any of the current Wills. In addition, its vital to ensure that all Wills ‘speak’ in alignment with each other and that no duplication of assets are mentioned in any of the Wills which may result in possible disputes between beneficiaries.
“Lastly, if you have assets that are in a foreign jurisdiction, you should consider having an offshore will and estate plan,” concluded Olivier.
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