Is there a need to have a separate will?
More and more South Africans own assets in foreign countries and clients often ask whether they need to have a separate will for those assets. While many people choose to have a single worldwide will, this is not always the best option. There are several complexities to consider, such as the nature of the assets you hold and the type of jurisdiction.
There are different ways to deal with international assets in a will
The different options for dealing with South African and international assets are:
1. a single will that applies to your worldwide estate, ie including both South
African and international assets;
2. a separate will(s) limited to the jurisdiction where the international asset(s)
is/are situated, and a separate will dealing with South African assets; or
3. one will dealing with worldwide assets outside South Africa (across
jurisdictions), and a separate will dealing with South African assets.
The nature of your assets and the jurisdiction will determine which will is most suitable
The first choice for most clients is to have a worldwide will. However, this is not always practical. The nature of your international assets and the jurisdiction in which they are situated will determine whether you require a separate will.
Immovable property in another country
If you own immovable property in another country, it is almost always essential to have a separate will to deal with the succession of the property. This is because the foreign jurisdiction may only recognize a will executed in that jurisdiction to dispose of the property. We advise you to approach a lawyer in the jurisdiction where the property is situated for advice and assistance with drafting such a will.
Unit trusts or shares in another jurisdiction
If you own unit trusts or shares in another jurisdiction, it is usually recommended that you have a separate will for those assets. If you own these assets in more than one jurisdiction, it is not necessary to have a separate will for each jurisdiction – a practical solution would be to have a will for your assets in South Africa and an international will for your assets in all other jurisdictions (option 3 in the list above). However, it’s important to know that a South African estate and an estate in a foreign jurisdiction cannot always be administered simultaneously. The reason for this is that court-sealed and certified copies of the letters of executorship must often be obtained for the foreign country’s authority to be issued. Having a separate will for those assets will make the facilitation of the administration process much easier.
Assets in a civil law jurisdiction
If you own assets in a civil law jurisdiction, such as Italy, France, Portugal or Germany, you need to beware of forced heirship rules. These rules provide that certain family members inherit a portion of your estate, regardless of what is stipulated in your will. In other words, your South African will may not overrule the effect of forced heirship. It is therefore advisable to have a separate will for those assets.
International bank account
If your only international asset is a bank account, it is usually not necessary to have a separate will. Let’s consider the Isle of Man as an example to illustrate:
Each bank in the Isle of Man has its own threshold to determine whether the bank will release the funds in the account without an Isle of Man court authority or probate (similar to letters of executorship issued by the Master’s office in South Africa). The average threshold is approximately £10 000. If the funds in the account exceed this amount, probate will be required by the financial institution holding the assets (such as a bank, building society, life insurance company, asset manager, or stockbroker) as proof that the correct person or persons have the court’s authority to administer a deceased person’s estate. The document issued by the court is called a Grant of Representation.
There are three main types of grants:
1. Probate – issued to the executor(s) named in the will
2. Letters of Administration with the will annexed – issued to someone other than
an executor when the deceased left a will, for example, an attorney, residuary
beneficiary, or beneficiary or person entrusted in the country of domicile of the
deceased
3. Letters of Administration – issued when the deceased did not leave a will (ie
they died intestate) to one or more (up to a maximum of four) of the person(s)
entitled to the estate in accordance with the law of the place where the
deceased domiciled.
In these circumstances, a worldwide will is appropriate. However, like with unit trusts and shares, having a separate will may help with the administration process.
These considerations should highlight the importance of telling your Wealth Advisor if you have international assets to determine whether you need a separate will. It is equally important to tell your advisor if you already have a foreign will – if you fail to mention this, a later will may accidentally revoke your initial foreign will. The foreign jurisdiction may only recognise a will executed in that jurisdiction to dispose of the property. We advise you to approach a lawyer in the jurisdiction where the property is situated for advice and assistance with drafting such a will.
The detailed wording of your separate will is crucial
It is important to carefully consider the country/jurisdiction in which your assets are registered. For example, the Republic of Ireland, Isle of Man, Jersey and Guernsey are separate jurisdictions from the UK. If you own assets there and want a separate will, make sure that it is worded appropriately and does not refer to your ‘UK assets’.
There are other alternatives to a foreign will, depending on the nature of your assets
If you would prefer to avoid the need for a foreign will and probate altogether then, depending on the nature of the assets and the associated tax consequences, the following may be viable alternatives:
Transferring ownership of your international assets to an international trust during your lifetime, and/or;
Holding your international investible assets through an international endowment.
Contact a Centric Wealth Advisor for further information.
