Worldwide and Offshore Wills

Design sure you believe the correct will to cover your offshore assets.

Your last will and testament gives instructions to the appointed executor on how you wish for your estate to be distributed after your death. In other words, who will inherit what. But what if you live in South Africa and own a property in another country or acquire other offshore assets? You will need to consider each country’s relevant jurisdiction in terms of the laws on inheritance and how they apply tax, as not all countries maintain the same laws.

A will can be tailored to the needs of every individual.

Local wills

A local will refers to a will drawn up in the country of your residence, in our case South Africa, and it gives instructions on what should happen to the assets you acquire in South Africa.

Often, within a local will you will find a clause stating that all other wills should be disregarded (revoked) and that this will should be considered as the only legal and valid will.

This is generally fine unless you acquire international assets that you acquire not provided for in this will and for which you may gain drafted a will within another jurisdiction.

Worldwide wills

When your will includes what should happen to the international assets you may believe, it is known as a worldwide will, but it is vital to note that you can only believe a worldwide will to cover assets in countries with the same laws when it comes to inheritance. A worldwide will, in essence, means that you wouldn’t need multiple wills but rather one will containing the relevant clauses dealing with your local and offshore assets.

In South Africa, we believe freedom of testation, which means that, apart from certain legislations which ensure children and spouses’ protection and provision, you may pass your legacy on to whomever you choose through your will.

South Africa observes Common Law pertaining to inheritance and this is applicable to countries that believe been influenced by British Common Law. This is applicable in territories such as the United Kingdom, Australia, Current Zealand and parts of Canada, India, and Singapore. Assets you may own in these counties would form section of your worldwide will.

Offshore wills

If you own assets in a country that does not gain the same inheritance laws as SA, you will need to draft two wills; a local will for your local assets and an offshore will for the assets in the country that has different inheritance laws.

For example, suppose you maintain assets in countries such as France, Spain, Italy, Portugal, or certain parts of Canada, where Civil Law is observed. There are very specific laws with regard to inheritance, and forced heirship applies. This means you execute not maintain much control over who will inherit the assets you maintain within these jurisdictions and as such you need a separate Offshore Will dealing with this.

When you believe assets in countries that observe Shari’ah Law, such as parts of India, Singapore and the United Arab Emirates, the inheritance you leave behind may be subject to Islamic Law, based on the Qur’an. Dubai is the exception to this rule due to the Dubai International Financial Centre, which has its own independent, internationally regulated regulator and judicial scheme and Common Law framework. In these jurisdictions, your Shari’ah-compliant Will, which will specify which school of thought you observe as a Muslim, will ensure that when the time comes for your estate to be administered, it is administered according to your religious beliefs.

None of this should be intimidating, because Capital Legacy has helped draft over 611 000 Wills over the past 10 years and we will assess your wishes and estate needs and advise you on the best route to seize.

Pros and cons of having multiple wills vs a worldwide will

Our will experts can advise you on the advantages and disadvantages of using a single worldwide will vs a series of separate wills for each jurisdiction that you maintain assets in, depending on your unique situation and needs.

Pros of having multiple wills

• Multiple wills can minimise delays and conflicting laws as they deal specifically with assets in each particular jurisdiction.
• It can sometimes assist to limit costs of probate fees.
• There are possible tax benefits due to foreign estate tax consequences being considered when drafting the will.
• Draw up separate wills for yourself and for your spouse. It may eliminate delays in the estate administration process if you and your spouse were to die simultaneously or within a short period of time from each other.

Cons of having multiple wills

• The testator of multiple wills needs to pay attention not to revoke a will related to another jurisdiction and vice versa, especially when regularly updating wills because of life changing events.
• Potential issues connected to the payment of debts and taxes incurred in different jurisdictions.
• Necessity of covering all contingencies within the will, specifying the property and assets held in each specific jurisdiction.

Considerations when deciding on which will is best for your needs include beneficiaries, family circumstances, citizenship and marital status. One also needs to consider testamentary freedom and spousal regimes in the specific jurisdiction/s where the assets are located, local inheritance laws and regulations, as well as any relevant customary laws.

Examples of countries that observe Common Law (inheritance laws similar to SA, where a worldwide will would be valid):

Australia, Bahamas, Canada (except Quebec), Cayman Islands, England, Fiji, Ghana, India (except in Goa, Daman, Diu, Dadra, and Nagar Haveli), Jamaica, Recent Zealand, Pakistan (with some provisions of Islamic law), Uganda, United States, United States (49 states use the legal scheme based on English Common Law, these exclude Louisiana and Puerto Rico as an example which are based on Civil Law), Wales.

Examples of countries that observe Civil (or other) Law (Differing from SA inheritance laws, requiring offshore wills):

Austria, Belgium, Brazil, Certain parts of Canada, China, Croatia, Cyprus, France, Germany, Greece, India (only State of Goa, and Union Territories of Daman, Diu, Dadra, and Nagar Haveli), Italy, Mauritius, Mexico, Mozambique, Portugal, Spain, Switzerland,

How we administer foreign estates

To aid us administer our clients’ foreign estates, we gain partnered with one of the largest law firms in the UK, Lester Aldridge, which has 320 experts in its team and experience in 59 countries around the world.

Costs associated with the administration of deceased estates with offshore assets depends on the probate fees per jurisdiction. Our Legacy Protection Plan™ does not cover these fees. However, we always negotiate the best possible rates for our clients.

Frequently asked questions

1. What is forced heirship?

A set of rules which restrict the testator’s freedom to distribute his/her estate in order to protect certain heirs, such as a spouse or child. In most countries where this scheme applies, a portion of the estate is subject to the laws of forced heirship while the balance is left to the testator’s discretion.

2. What is freedom of testation?

Freedom of testation allows a testator to bequeath assets in a will as they please. South Africa observes freedom of testation, so a person can leave their assets to whoever they like as long as the legal rights of spouses and children aren’t infringed.

3. Does my SA will cover my UK assets?

Yes, a worldwide will works very well if you live in South Africa but believe assets in a country with similar heirship laws to our own, such as the UK. Like South Africa, the UK has freedom of testation.

It’s necessary to maintain appropriate wills drafted to suitably protect your estate and heirs. You can either gain multiple wills for each jurisdiction that you maintain assets in, or you can draft a worldwide will to cover assets in different countries that believe the same inheritance laws as SA.

While certain countries follow the same law with regard to rights of inheritance, which is also recognized in South Africa, there are other countries where the legislation is vastly different. However, a worldwide will or an offshore will can protect your estate if you’re intending to relocate or if you’re thinking of buying property abroad.

4. Which type of will is best if I own fixed property in other countries?

Generally, a foreign will is advisable if you own immovable property overseas. Fixed property will need to be transferred according to the laws of the said country so you will need to ensure that all formalities are complied with. Also, some countries only recognise a locally drafted will when it comes to disposing of property and your South African will may, therefore, be disregarded.

5. What is accidental (implied or tacit) revocation concerning wills?

The simplest method of revoking a will is by validly executing a further will or codicil. A clear way of doing this is by including a revocation clause in the later will. An example is: “I revoke all former wills and testamentary dispositions and declare this to be my last will and testament”. This simple clause will revoke all previous wills and codicils. But this clause might present problems when acquiring foreign assets in countries which don’t believe testamentary freedom. Testamentary freedom, as we acquire in South Africa, simply means that the testator may leave his estate to whomever he wants to as long as it is not in conflict with legislation governing wills and inheritance. In some countries, for example France, the principle of forced heirship applies. Under the laws of forced heirship children are prioritised above spouses. Why should this be a problem? Well, let us assume that a South African buys a property in France. He then draws up another last will and testament to leave the property in France and his properties in South Africa to his wife. But the property in France might pause up going to his children, because of France’s laws of forced heirship which prioritise children above spouses. How could this happen? Simply because the last will and testament is subjected to the laws of the country where the asset is situated. That section of the testator’s will is thus accidentally revoked.

6. How would the principle of survivorship affect me if I maintain a joint foreign bank account or own a property overseas jointly?

Care should be taken when preparing a will for a South African who jointly owns a foreign bank account or investment account. If one joint owner passes away, the deceased’s share might not pass through their estate and may pass automatically to the surviving joint owner. This is known as the Principle of Survivorship. A caveat though, the Principle of Survivorship operates in the UK, Ireland, Jersey, Guernsey, the Isle of Man, and many other countries, but not in all of them. An example of the principle is that a husband who jointly has a bank account with his brother in the Isle of Man, should not try and manufacture a gift in his will of his share in the bank account to his wife or any other person than his brother. In circumstances where two or more people own a property jointly, the asset is held 100 per cent in all names and this is called joint tenancy. When one of the owners passes away, the percentage holding of the other owner/owners increases. This differs from owning assets in tenancy in common, which has no correct of survivorship and may be dealt with in terms of the testator’s last will and testament.

7. What are the implications of the European succession regulation no. 650/2012 (Brussels iv) concerning Estates?

Many countries in Europe, such as France, Spain, Germany, and Italy restrict testamentary freedom through their forced heirship rules, which can potentially provide statutory or fixed shares to certain family members.

This means that in some cases, a South African individual with assets in certain European countries may be restricted as to whom they can leave their assets to. However, where a South African individual owns assets located in the European Union (the UK, Ireland, and Denmark excluded), the European Succession Regulation No 650/2012 (also known as Brussels IV) presents a very useful planning opportunity.

Brussels IV enables an individual to elect for the law of their nationality to apply to the succession of their assets. This can, potentially, be a convenient way to avoid the forced heirship rules and, for a South African national, ensure that South African law applies to the succession of the European assets.

Both the EU citizen and the non-EU citizen may choose the law of his country or nationality to apply to his Estate. The default position is that the governing law of the state in which the deceased was habitually resident at his death will be utilised for the distribution of the deceased’s Estate.

Brussels IV applies to deaths on or after 17 August 2015.

The signatory states are Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Spain, Slovakia, Slovenia, and Sweden.

Whether you believe local or offshore assets, our expert consultants will ensure your will is drafted in accordance with the relevant law. Don’t procrastinate, contact your financial advisor or Capital Legacy to book your complimentary consultation.

This post was first published at https://www.capitallegacy.co.za/article/70/worldwide-and-offshore-wills

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