I have assets in multiple countries. Do I need more than one Will?
06 May 2021
With assets in multiple countries, the inevitable question becomes – how many Wills must I now have?
With the rise of emigration in recent years together with the expansion of our local economy, it has become more commonplace for South Africans to have assets that are situated outside of the country. And this can become quite tricky.
The reason why a person may have more than one asset varies – from purchasing assets whilst living abroad, to using their South African Reserve Bank allowances for buying a property, to inheriting assets from non-resident family members (remember the movie A Good Year with Russell Crowe? It could happen to you).
But the reason really is irrelevant, because the burning question on everyone’s lips is – do I now need separate Wills if I have assets in multiple jurisdictions?
Well, technically and unless otherwise specified, your South African Will could govern your worldwide assets. But with the complexities of international laws and conflicting jurisdictions (all having their own requirements), having only one Will could not only end up being a time consuming process but painful as well (differing laws in different jurisdictions is a recipe for disaster). To illustrate this, consider the following points –
- Firstly, your South African appointed executor will not have jurisdiction to deal with the assets in the countries in which your foreign assets are located. This means that an agent will need to be appointed in that country by your South African executor. The appointment of this agent can be time-consuming given that an application needs to be made to the Master of The High Court for court certified copies of your Will (which is lodged with the Master of The High Court) and various other affidavits. The original documents are then forwarded to the agent who in turn applies for appointment to act in that country. This process is often referred to as “probate”.
- A crucial factor to consider is what we in South Africa call “freedom of testation” (covered in our article Your Will is Yours to Make) which essentially boils down to “the right of an individual to dispose of his or her property on death as he or she pleases” (enshrined in Section 25 of the Constitution). Certain countries, instead, have what is called “forced heirship” rules. Essentially, forced heirship rules legally prescribe how the assets must be treated on death. The estate of a deceased is separated into an indefeasible portion (the forced estate passing to the deceased’s next-of-kin) and a discretionary portion (or free estate, to be freely disposed of by will). Forced heirship is generally a feature of civil-law legal systems which do not recognise total freedom of testation. This is prevalent among civil law jurisdictions, including Mauritius, Switzerland, Spain, France, Japan and Portugal, as well as countries operating under Shariah law. Each country’s forced heirship rules are unique and it is always advisable to consult with a local expert in that country. As is no doubt evident, forced heirship poses an important conflict between that and South Africans’ rights to freely dispose of their assets as they deem fit.
- Another crucial aspect is jurisdiction. If there are multi-jurisdiction Wills, their jurisdiction clauses must work in conjunction with one another. In other words, if there are conflicting clauses in the Will, it could result in a massive delay and a logistical nightmare. Wills must also be clearly identifiable for the jurisdiction in which they are intended and not revoke one another.
Suffice is to say that with assets in multiple jurisdictions, professional advice is imperative and separate Wills are advisable.
But in reality
Even though it may not be legally required to have a foreign Will, practically speaking it would be advantageous to have one.
Remember, each country has its own set of laws regarding succession and the drafting of Wills. Where some countries will recognise a Will drafted in South Africa, other countries may deem a South African drafted Will to be invalid. With freedom of testation being part and parcel of our right to dispose of our assets, this concept will not work in a country which recognises forced heirship, resulting in one worldwide Will being impractical.
Therefore although it is possible to have one Will which deals with your worldwide assets, you should consider having a separate Will for each country in which you have assets – known as an offshore Will or a concurrent Will.
A separate Will is almost always recommended if immovable property is owned in another country. By drafting separate Wills you can ensure that each Will complies with the laws of the country in which it was drafted.
When setting up a concurrent or offshore Will, it is essential to clarify which assets each Will is dealing with. For example, when setting up your South African Will, you need to make sure that the document specifically states that it deals with all assets held in the Republic of South Africa. Including the following clause in your Will can clarify this point –
“This Will deals with my assets in the Republic of South Africa only.”
Similarly, your foreign Will must be specific in terms of which country’s assets it is dealing with. Importantly, both Wills must be complementary and align with your estate planning goals. It is therefore advisable for your local and foreign estate planners to work in unison.
Revoking of previous Wills
Most Wills include a clause which revokes all previous Wills drafted by the testator and, if not worded correctly, this could have the unintended effect of your South African Will revoking your foreign Will and vice versa. Therefore, when drafting your South African Will, be sure that the revocation clause refers only to previous Wills made in respect of your South African assets, and the same applies to the revocation clause in your foreign Will. It is particularly important to keep this in mind if the Wills are made in different countries with the assistance of different advisors.
By including the following wording –
“This Will revokes all previous Wills made by me in respect of my assets in the Republic of South Africa.”
You will ensure that your South African Will does not revoke any of your other concurrent or offshore Wills.
It is crucial to keep in mind that if you are a permanent resident in South Africa, your worldwide estate is in general liable for estate duty and capital gains tax. According to SARS –
“residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned.”
And this includes capital gains tax and estate duty –
“Estate duty is charged upon the dutiable amount of the worldwide estate of every person who dies on or after 1 April 1955. The estate is however limited in the case of a non-resident (a natural person not ordinarily resident in South Africa) by the exclusion of foreign assets of persons not ordinarily resident in South Africa.”
Therefore, having a separate Will for your foreign assets does not do away with the requirement to report these assets for estate duty purposes. This means that if your property is based in France (a winery left to you by your beloved but estranged uncle), it will still be taken into account when calculating estate duty. Estate duty is applicable to the worldwide dutiable property of the deceased, which according to SARS is worked out as follows –
“An abatement of R3.5 million is allowed against the net value of the estate to determine the dutiable value of the estate. The estate duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.”
Double taxation may arise if the same assets of the deceased are subject to estate duty in South Africa as well as the equivalent thereof in the foreign country. Meaning you may end up paying tax in both countries.
South Africa has entered into estate duty agreements, to avoid double taxation, with the following countries – The United States of America, the United Kingdom, Zimbabwe and the BLS Countries (Botswana, Lesotho, and Swaziland).
However, not all double taxation agreements are the same and you will need to check the details of the agreement that pertains to the foreign country you are invested in or own assets in.
Keep in mind that if you choose to have separate Wills – one Will for your South African assets and another Will for your foreign assets, your deceased estate should be administered, simultaneously (and in accordance with South African law and the laws of the foreign country where your assets are located).
Making concurrent Wills may be a somewhat complicated process, but it will avoid difficulties and unintended consequences regarding the distribution of your estate in different countries (and thereby avoid or reduce costs which would otherwise apply) down the line.
As we have already stated, it is crucial to obtain professional advice when drafting concurrent Wills and preferably have your local legal advisor and foreign legal advisor discuss these issues to ensure compatibility during the estate planning process. If your local advisor operates within other jurisdictions, such as Benaters does, all the better!
Article sourced from Benaters.
See also:(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)