It is important to note that having a separate will for offshore assets does not do away with the requirement to report these assets for estate duty purposes. These offshore assets remain subject to estate duty in South Africa and must be reported and taxed at the prevailing rate in South Africa (20% on the value up to R30million and 25% on the value exceeding R30m), subject to certain exemptions, upon death. In certain cases, if inheritance taxes are levied on these assets in the jurisdictions where they are situated, double taxation agreements may soften the blow.
What factors would influence the need for an offshore will? A good starting point is to consider the estate administration formalities that would need to be observed in dealing with the asset, and in order to understand this, we must look at the jurisdiction where the asset is located, the type of asset and its value.
* Immovable property. If you own immovable property in another country, you would be advised to have in place a will that is governed by the laws of that country, to deal with this property. Immovable property is transferred according to the laws of the land where it is situated and it is therefore important to ensure that all the required formalities are observed. We are seeing an increasing trend in the purchase of foreign property by South Africans, and many of our family office clients are buying homes abroad in order to qualify for various residency schemes.
* Bank and investment accounts. Each country has its own administrative requirements which would dictate the necessity for a separate will, or not. For example, in many civil law jurisdictions, a bank or investment manager would require a court-sealed copy of the letters of executorship and will from the country of domicile - in our case, South Africa. In these cases, a separate will would therefore not be accepted and this could cause complications.