With the relaxation of South Africa's foreign exchange controls and more investors seeking to diversify risk, many are creating offshore estates. People often don’t think about what the offshore probate formalities might be, what the death duties position might be, and what other effects the death of the investor will bring about.
This is according to David Knott, a fiduciary expert at Private Client Trust, a division of Private Client Holdings, who says that, in many instances, a South African will would be acceptable and recognised in a foreign jurisdiction, provided that it complies with the South African formalities.
“The local executor, once appointed, would need to appoint an agent in the foreign jurisdiction to deal with the foreign estate and effect a distribution to the heirs. A single worldwide will is workable in many instances where there are no forced heirship rules in place,” says Knott. “There are no such rules in the common offshore havens such as Jersey, Guernsey or Isle of Man.”
Due advice and caution must be taken where forced heirship rules apply, for example in Scotland or in many European countries. In France, the freedom to dispose of assets is restricted if the deceased is survived by either descendants or ascendants. Descendants are preferred over ascendants and, interestingly, a spouse is not regarded as a forced heir. If the deceased is survived by one child, that child must receive at least one-half of the estate. Where two children survive, they must share equally two-thirds of the estate, and if three or more children survive, they must share equally three-quarters of the estate."
However, according to Knott, whether or not there are forced heirs, obtaining the necessary local documents in a manner acceptable to the foreign probate office could take up some time - for example, translations may be required - and, for this reason, many would rather execute a separate will in the foreign jurisdiction.