Jo-Anne Bailey, Sales Director & Country Manager for Africa, Franklin Templeton Investments
There are a huge variety of offshore investment opportunities that enable you to grow your wealth using a vehicle that suits your income and lifestyle. In the event of your passing, these investments are a legacy that will continue to serve your family. However, in order for you and your family to make the most of your investment, you need to make a few responsible decisions from the outset.
When selecting your offshore investment, you can choose between listed or unlisted equities, fixed income, property or cash investments. It all depends on your risk appetite. For example, listed equities are always a good option because they are very liquid and priced daily, while fixed income investments include bonds issued by the government, corporates or banks as well as money market products (very short-term debt instruments). Before investing, it is therefore important to research and understand the different kinds of offshore investments and what they would mean for you.
One important consideration is the tax implications of your investment. Offshore property investments, for example, may have certain tax conditions in the country you are investing in. For many investments, tax is only applied in the country in which the money and its growth resides (source based tax regime). However, it is important to understand the law of different countries to avoid being taxed twice. Tax on offshore assets becomes a critical consideration in the event of your passing, as your loved ones may wish to bring the money back into the country as part of your local estate. Remove any uncertainty on the matter by getting professional advice on your portfolio. A knowledgeable tax consultant will be able to assist you in making your offshore investment and your overall estate more tax efficient. This does not mean avoiding tax, but rather ensuring that your investments are structured in the most tax efficient way.
The biggest risk to your offshore investment after your demise - is a lack of planning. Unfortunately, when it comes to estate planning, people don’t see their own mortality, which means that their affairs are often not in order or kept up to date. Millions of investments often go unclaimed because the investor has not planned for the worst-case scenario. There is no need for this to happen to you, as future-proofing your offshore investments is very simple.
All you need to do is become diligent about documentation from the moment you invest offshore. Record and save every correspondence and detail about your investment in one place. Document what the investment is and provide clear contact details on who needs to be contacted in the event of your death. Many of us are not good at administration. If you know this isn’t your strong point, simplify things further by hiring someone to do it for you! Commit to the process and remember that it doesn’t have to be expensive or complicated – anybody can do it themselves under the guidance of the Master of the Supreme Court.
When it comes to securing your offshore investment for the future, the best advice would be to imagine what it would be like if it were you consolidating your estate. What information would you want to be in the envelope? What processes would you wish were in place? When planned correctly, an offshore investment is a powerful vehicle to create lasting wealth, even when you pass away. With some simple planning, your loved ones will have an ongoing, sustainable legacy.