By Neville Bredenkamp van der Spuy, Attorney, Executor Law (J Bredenkamp Incorporated)
Cross-border estates are becoming increasingly common among South African families, and one of the most persistent misconceptions Neville encounters is that a South African will limited to local assets also limits South African tax exposure, when in fact it does not.
Succession and Taxation Are Two Different Questions
In every cross-border estate, we must separate succession from taxation, and a South African will may be deliberately limited to South African assets. This is common, as many people with assets in different countries choose to have separate wills for each jurisdiction.
A Local Will Does Not Limit South African Estate Duty
However, what many people in such positions do not realise is that the local limitation occasioned by having a South African will in respect of your South African assets affects only the executor’s authority to administer the South African estate under the Administration of Estates Act 66 of 1965, and it does not limit the reach of South African estate duty.
If the deceased was ordinarily resident in South Africa, SARS assesses estate duty on the worldwide dutiable estate in terms of the Estate Duty Act 45 of 1955, and it makes no difference that the South African will deals only with local assets.
The South African executor must still obtain information about foreign assets, liabilities, and any foreign death taxes to complete the estate duty return, even where those assets are administered by foreign executors under foreign wills.
The Practical Lesson: Identify Foreign Assets Early
The practical lesson is that even if you have a local will for your South African assets only, the South African executor should identify all foreign assets too, establish whether there are foreign wills or foreign executors, and involve the tax adviser immediately.
The tax review should consider whether any estate duty treaty or domestic relief from double taxation is available, and it should also identify what information is needed from the foreign administration.
A South African will limited to local assets, therefore, does not remove the need for international coordination when tax is involved.
Should You Have One Will, or Several?
Cross-border families with South African assets therefore need coordinated legal, tax, and estate administration services, and a local will does not change that reality. A heavily punted view in the market is that clients with assets in different countries should have multiple wills, with pundits claiming that separate wills can simplify probate in the countries where the assets are held, while also dividing the administration of the estate and avoiding double costs. But that is not always correct.
The Hidden Cost of Multiple Wills
A result of various wills is, in fact, complexity for your family, as families may then have to deal with several executors, several advisers, and several reporting lines at the very time they need clarity, and the result can be a broken telephone.
The Case for a Single Worldwide Will
Where the law of the relevant countries allows it, a single worldwide will may be the better option, provided it meets the formal validity requirements of the Wills Act 7 of 1953 and any foreign jurisdiction in which assets are held, particularly where an experienced international estates practice can coordinate the administration without duplicate or disproportionate executor’s fees.
A single worldwide will gives the family one principal adviser, one project manager, and one point of accountability, replacing fragmentation with coordination.
One Trusted Office, One Point of Accountability
If the local executor has the experience and international network to manage the cross-border process, and, critically, is prepared to do so without charging a second full administration fee simply because assets are situated overseas, the advantages of a single worldwide will become compelling, and families benefit from one trusted office leading the process from beginning to end.
There Is No Universal Answer
Admittedly, there is no universal answer, as some estates are better served by multiple wills, while others are better served by one worldwide will. The correct approach is to assess each estate on its own facts, considering the client’s residency, the location of the assets, the succession laws of each country, the tax consequences, and, critically, the practical realities of administration, then choosing the structure that best serves the client rather than following convention.
One Point of Contact Is the Greatest Certainty You Can Leave Behind
International estate administration should be simple in its purpose: reduce complexity, avoid unnecessary tax, coordinate the process across borders, and give families one trusted source of guidance during one of the hardest times of their lives.
Think twice about having a single worldwide will, thereby ensuring one trusted point of contact for your family in respect of it, as the alternative could be an avalanche of independent, broken telephone calls for your family after you are no longer around.
Speak to Neville and the Executor Law team today →
About the Author
Neville Bredenkamp van der Spuy BA, BA(Hons), LLB, LLM is an attorney practising exclusively in wills, deceased estate administration, and property at J Bredenkamp Incorporated, trading as Executor Law.
He advises individuals, families, and financial professionals, and specialises in the practical administration of deceased estates, including estates with international and offshore assets.
He regularly assists with cross-border succession matters and the administration of complex local and international estates which require discerning, discreet, and boutique attention instead of institutional rigidity.
Frequently Asked Questions
Does a South African will limited to local assets reduce my South African estate duty?
No, if you were ordinarily resident in South Africa, SARS assesses estate duty on your worldwide dutiable estate in terms of the Estate Duty Act 45 of 1955, regardless of whether your South African will deals only with local assets.
Can my South African executor deal with my foreign assets directly?
Not automatically, as a South African Letter of Executorship gives the executor authority over South African assets under the Administration of Estates Act 66 of 1965, while foreign assets, foreign wills, and foreign executors typically require separate coordination, and the South African executor must still gather enough information from that foreign administration to complete the local estate duty return.
Is it better to have one worldwide will or separate wills for each jurisdiction?
There is no universal answer, as it depends on the client’s residency, the location of the assets, the succession laws of each relevant country, the tax consequences, and the practical realities of administration, and each estate should be assessed on its own facts rather than by following convention.
What happens if my foreign and local executors do not coordinate with each other?
Families can end up dealing with several executors, several advisers, and several reporting lines at exactly the time they need clarity, and this fragmentation is often described as a broken telephone, making it one of the strongest arguments in favour of a single worldwide will with one point of accountability, where the relevant jurisdictions allow it.