By CHANEL KEMPFF, FIDUCIARY AND TAX SPECIALIST – August 2013 Newsletter
Your foreign assets may be subject to foreign laws with unforeseen consequences for your heirs.
Should you possess foreign assets, they will in most circumstances form part of your South African dutiable estate. This is unfortunately not where it ends: it is also crucial to determine whether the domestic succession laws of the foreign jurisdiction where the assets are located apply in the event of your death.
If they do, apart from potential estate taxes payable in that jurisdiction, foreign succession laws may prescribe that the foreign asset will be governed in terms of that jurisdiction’s formal administration process, which can result in the asset automatically vesting in your heirs. The succession laws of that country may even stipulate that the asset vests in a specific family member, irrespective of the stipulations of your Will. (This is called forced heirship rules.)
So far, so complex … and to complicate matters further, each jurisdiction generally applies its own specific rules, which often results in a conflict of laws if the person is domiciled in or is a national of one country and has assets in another. Your domicile, habitual residence and nationality are all variables that influence whether the foreign laws are applicable or not, as does the nature of the asset in question – and knowing how they interact is therefore of utmost importance. This is also essential if you want to ensure the preservation of these assets for your intended beneficiaries, limit unnecessary delays, costs and taxes, and prevent any nasty administrative surprises. Whether probate has to be obtained and the fact that certain jurisdictions do not recognise an executor is therefore also relevant.
All of the aforementioned require careful consideration when deciding on bequests of foreign assets and in preparing your Will. That is why this is such a complex field, and tends to require the involvement of a specialist who understands the interaction between the legal systems of different jurisdictions.
Chanel Kempff, one of the members of the Fiduciary and Tax (F&T) team at Sanlam Private Investments (SPI), recently completed and passed the Advanced Certificate in International Succession and Probate. This equips us to provide advice on issues surrounding your Will, specifically dealing with your assets in other jurisdictions, the different intestacy rules, joint property in an international context and the treatment of different types of assets under different legal systems, including forced heirship models.
Identifying the potential conflict of law that may arise and providing recommendations on how to mitigate this, is part of the advisory process that can be offered, as is the drafting of foreign Wills in line with these recommendations. The F&T team is able to explain the steps that must be taken in the administration of estates under different legal systems, and can also assist in the administration of deceased estates in various jurisdictions.
For more information or for assistance with your assets in jurisdictions other than South African contact us directly at chanelk@spi.sanlam.com.
This article was taken from Mastermind, the official monthly newsletter of Sanlam Private Investments, a division of Sanlam Ltd. Visit the SPI Website
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