International MarketsJuly 27, 2023
Optimum – Orion Quarterly ReviewJuly 28, 2023
As part of its integrated client service, Appleton selects specialists to provide expert professional services in a host of areas. One key area is that of taxation, so this month we feature some guidelines published by the South Institute of Taxation regarding the treatment of offshore assets. Points to ponder When drawing up a Will, or wills, for assets held in multiple jurisdictions, it is a good starting point to be
able to check off the following five considerations:
The types of assets should be considered
Where the offshore assets only consist of movable assets, the general rule is that a single (worldwide) Will can be drafted. For this purpose, the Will should be drafted in the jurisdiction where the testator is domiciled. However, depending on the above-mentioned factors, a separate Will may also be required in the jurisdiction where the assets are located.
Gathering all relevant information on the offshore asset types and values
These aspects may determine whether or not a separate Will is required within the jurisdiction where assets are located, even if they are movable. An example would be where the only asset is a bank account to a value under a specified amount, for example £10 000. The foreign bank, and subsequent foreign rules, might allow the release of the funds on presentation of the South African formal documents. This should be confirmed with an expert within the specific jurisdiction.
Confirmation of ownership of an asset
Consider how your marital regime, as an example, impacts your ownership of an asset. This impact should be weighed upon any transfers made to any other heirs in terms of your will. Also take into account whether there are any limitations on the ownership you enjoy on the property, which might negate any of the wishes in your Will.
Are there any forced heirship laws in the countries where you hold assets?
It is important to understand whether freedom of testation applies in the specific jurisdiction. If not, can you include a clause in your offshore Will where you can perhaps rely on private international law or international regulations to apply South African law when executing your offshore Will?
Are there any other potential challenges to the execution of your Will(s)?
The impact of language barriers and the potential for instructions to be ‘lost in translation’ is something that should be considered. If you rely on one worldwide Will to address your worldwide estate and if you hold assets in, for example, Germany, this will result in the worldwide will having to be translated to German. This will result in extra costs, delays and possibly other barriers: a poor translation might cause unintended consequences after your death.
Ultimately, it is important to understand the full implications of assets in other jurisdictions and to ensure that the laws of those jurisdictions are complied with when setting up one or more Wills. Failure to do so could result in significant challenges, delays and possible unintended consequences for those whom you want to take ownership of your assets in those countries after you have passed away.