As descendants from the UK to Germany, and Italy to Spain and Portugal, South Africans are a truly mixed bag, and many of these people are returning to their roots and even further afield, such as America, Canada and Australia.
But what does living abroad mean for your Estate Plan and do you need to amend your Will should something happen to you?
Not all countries share the same laws when it comes to inheritance and how they deal with or apply tax. So, when you are about to purchase assets, like property, it’s important that you understand what the implications will be when you pass away, and your assets need to be distributed to your heirs or beneficiaries. Unless you have a valid Will, there may be much confusion around what exactly it is you own, where you own it and to whom it should go to.
But does your South African Will cover what happens to your international assets? Not necessarily.
Local, offshore and worldwide Wills
Wills are divided into three different categories when dealing with international assets, namely: – local, worldwide and offshore Wills. A local Will refers to a Will that has been drawn up in the country of your residence, in our case South Africa, and it gives instruction on what should happen to the assets you have in South Africa. Often, within a local Will you will find a clause that says all other Wills that have been drafted should be disregarded (revoked) and that this Will should be considered as the only legal and valid Will. This is generally fine unless you have international assets that you have not provided for in this Will and for which you may have drafted a Will within another jurisdiction.
When it comes to international assets, it is very important that your Will is either drafted to include these assets, which means it then becomes a worldwide Will or that it does not cancel Wills you may have in other countries. When your Will includes what should happen to the international assets you may have, it is known as a worldwide Will, but it is important to note that you can only have a worldwide Will to cover assets that are in countries that have the same laws when it comes to inheritance. If the countries do not have the same inheritance laws, you will need to draft a local Will, for your local assets in South Africa, as well as an offshore Will for the assets that are in a country that has different inheritance laws.
Different jurisdictions may require you to have more than one Will
In South Africa, we have freedom of testation, which means that, apart from a few legislations which ensure the protection and provision of children and spouses, you may pass your legacy on to whomever you choose, through your Will. South Africa observes Common Law when it comes to inheritance and so do a few other countries that have been influenced by British Common Law. This is applicable in territories such as the United Kingdom, Australia and New Zealand and parts of Canada, India and Singapore. Which means that the assets you may own there, would form part of your worldwide Will.
However, if you have 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 regards to inheritance, and forced heirship applies. This means you do not have much control over who will inherit the assets you have within these jurisdictions. Interestingly, in Germany, for example, unlike many other countries which have stricter forced heirship rules, a person can write a German Will that excludes their natural heirs.
When you have assets in countries that observe Shari’ah law, such as parts of India, Singapore and the United Arab Emirates, except for Dubai, which has Dubai International Financial Centre (DIFC), which has its own independent, internationally regulated regulator and judicial system and common law framework, the inheritance you leave may be subject to Islamic Law which is based on the Quran. 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, that it is administered according to your religious beliefs.
Effective Estate Planning across multiple countries can be complicated and fraught with pitfalls that you may not know to look out for. We always recommend talking to an expert to ensure you’re not blind-sided and ensure that you leave a legacy and not a mess.
Contact Capital Legacy to assist you with all your needs with regards to Wills and Estates: www.capitallegacy.co.za.