Estate planning considerations for South African residents with international heirs
By Tom Brukman, Director of Chartered Wealth Solutions Western Cape
As is the reality for many South Africans, many of our clients have children or heirs living abroad. This dynamic adds an additional layer of complexity to estate planning and often raises the important question of how to ensure a smooth transfer of assets while protecting your wealth. Navigating the intricacies of estate planning becomes even more crucial when your loved ones reside in another country. In this article, we will explore practical considerations specifically tailored to South African residents with children or heirs living abroad, offering insights and strategies to help you manage this unique estate planning landscape.
Managing investments: A clear understanding
Estate planning entails having a clear understanding of how your investments, both local and offshore, will be managed and distributed by the executor of your estate. However, being well-informed and proactive becomes even more critical when your heirs reside in another country. It is essential to have a comprehensive grasp of how your investments will be handled and ensure that your intended beneficiaries receive their rightful share.
Assets outside the estate winding up process
Certain assets may not automatically be included in the estate winding-up process, but this does not exempt them from estate duty tax obligations. As a South African resident with heirs living abroad, it is crucial to explore how such assets will be distributed and consider the available options, such as individual ownership or placing assets in local and offshore trusts. Understanding each option’s implications will help you make informed choices that align with your specific circumstances and protect your assets.
Varying timelines for inheritance
The timeline for heirs to inherit assets can vary significantly, especially when international factors come into play. Factors such as including assets in the estate winding-up process and the involvement of entities like the Master’s office, Deeds office, and SARS (South African Revenue Service) can introduce complexities and potential delays. People with heirs abroad need to grasp their own timeline expectations and effectively communicate them to their heirs. By managing expectations and providing your heirs with a clear understanding of potential inefficiencies, you can help them navigate the complexities of the inheritance process and minimize any challenges that may arise.
Inheriting assets in their pre-death form
One advantage for heirs living abroad is the ability to inherit assets in the form they were in before your passing. This means that heirs residing in another country can hold South African-based assets (such as property or a share portfolio) and offshore-based assets without needing immediate redemption. However, it is advisable to check with your heirs regarding any country-specific exceptions or regulations that may apply. Ensuring that your heirs are aware of their rights and limitations can prevent complications and facilitate a smoother transition of assets across borders.
Estate planning for South African residents with children or heirs living abroad requires careful consideration and attention to detail. By understanding how to effectively manage investments, navigate assets outside the estate winding-up process, anticipate varying timelines for inheritance, and consider the impact of different jurisdictions, you can ensure a seamless transfer of wealth and protect your legacy.
Please contact your Financial Planning Specialist if you have any questions or require further assistance in addressing these considerations.