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The conundrum of a lifetime: Do I need one Will, or two? Part 3

This final article in our three-part series will explore the importance of estate planning, the complexities of having children, joint offshore bank and professional support required for the ultimate benefits of your loved ones.

In our first article, we dealt with the importance of understanding that different countries have different legal rules applicable to estates, inheritance and family law, the benefits of having one worldwide Will and the fact that there is no one-size-fits-all approach to decide whether a worldwide Will is appropriate for your unique circumstances.

In the second article of our three-part series, we unpacked some considerations around having multiple Wills governing various assets in different countries and the importance of going through a thorough estate planning exercise with your financial planner and fiduciary advisor regularly when you have multiple Wills in various jurisdictions.

The importance of proper estate planning

Your local South African estate planning should align with your foreign estate planning. A thorough cross-jurisdictional estate planning exercise will guide whether one Will, or multiple Wills, are more appropriate for your circumstances. For persons permanently resident in SA, South African estate duty and capital gains tax are payable in light of the worldwide assets forming part of your estate. Remember, a separate Will for foreign assets does not negate the legal obligation on your executor to report your offshore assets to SARS for estate duty purposes. Estate duty applies to your total worldwide estate, regardless of how many Wills you have.

There is some reprieve from taxes on death, though exemptions apply to assets left to your spouse and registered charities. While every South African’s first R3,5 million of their estate is also tax-exempt, estate duty is currently applied at 20% of the total value of the dutiable estate up to R30 million, and 25% of the value of the estate above R30 million.

A further tax concession for your offshore assets is given if a double taxation treaty exists between SA and an offshore jurisdiction in which you own assets at the date of your death. Inheritance tax across jurisdictions may be reduced depending on the tax already paid in SA.

Complexities of having children

An important consideration for parents is what would happen to your children when you pass away. Different countries have different rules that apply to the care of children and the age of adulthood. Local trusts for children can be helpful estate planning tools in South Africa, but this does not necessarily hold true worldwide. Offshore trusts may seem attractive but will involve their own costs, administrative, legal and cross-border requirements. Complexities also arise when parents wish to appoint guardians abroad for their children, and specialist advice should be sought in these instances.

Joint offshore bank accounts

The need for a separate Will can sometimes be circumvented by opening a joint bank account with your spouse as a co-account holder in some offshore jurisdictions. On the first spouse’s death, the surviving spouse becomes the only surviving account owner. As a result, the challenges and delays of dealing with joint offshore assets in an estate are reduced.

Unfortunately, offshore bank accounts held jointly with your children remain problematic in an estate since these accounts do not qualify for any spousal concessions. We recommend obtaining specialist advice to ensure that you do not inadvertently trigger donations tax or contravene exchange control regulations and that your Will properly caters for all joint assets.

Proceed with professional support for the ultimate benefit of your loved ones

Losing someone you love is never easy. However, through proper planning and sound holistic fiduciary and financial advice, your family’s transition in this time can be eased.

Suppose you already have more than one Will in more than one country. In that case, it is vital to check that your Wills do not conflict with, revoke or override one another, that your Wills align with your tax and estate planning, that your (and your beneficiaries’) nationality, domicile and place of residence have been taken into account and that differences in language, culture, and legal principles are catered for.

Although not all fiduciary practitioners specialise in international estate planning, many members of the Fiduciary Institute of Southern Africa do have these skills. The team at Chartered Legacy and Trust are FISA accredited and have the insight to care for your fiduciary needs so that you can continue to grow your wealth and care for your family.