South Africans have always had an appetite for offshore property.
Whether it is a holiday apartment on the Portuguese coast, a buy-to-let in the United Kingdom, a second home in Mauritius, or an investment property in Australia, cross-border property ownership is increasingly common among South Africans who have built wealth over a lifetime of work.
What is far less common is an understanding of what happens to that offshore property when the owner dies. Most South Africans with foreign property have a South African will, a South African executor, and a South African estate plan, and assume that these are sufficient to deal with everything they own, regardless of where in the world it sits.
That assumption is often wrong, and the consequences of getting it wrong are expensive, time-consuming, and deeply stressful for the family members left behind.
This blog explains how South African estate law interacts with offshore property, what ancillary administration means in practice, and what steps property owners should take now to reduce the complexity their estates will face.
Why Offshore Property Complicates Estate Administration
When any person dies within South Africa and leaves any property in South Africa, their deceased estate must be reported to the Master of the High Court with jurisdiction and administered in South Africa under the Administration of Estates Act 66 of 1965.The executor is appointed by the Master of the High Court, Letters of Executorship are issued, and the estate administration process follows the framework South African law prescribes.
The complication arises from a foundational principle of international private law: immovable property (land and buildings) is generally governed by the law of the country in which it is situated. This principle is known as the lex situs rule, and it usually applies regardless of where the owner lived, where their will was drafted, or where their estate is being administered.
What this means practically is that your South African will and your South African executor have no automatic legal authority over immovable property you own in another country, albeit that such assets may form part of your South African estate for the purposes of estate duty, which is a tax levied by SARS against a deceased estate.
Each foreign jurisdiction has its own rules about how property situated within its borders is transferred when the owner dies, and those rules must be followed, separately from and in addition to the South African estate administration process.
What Is Ancillary Administration?
Ancillary administration is the process of administering assets (typically immovable property) in a foreign jurisdiction when the deceased’s primary estate is being wound up elsewhere.
In simple terms: your South African executor winds up your South African estate. A separate process (ancillary administration) is required in each foreign country where you own immovable property, conducted under that country’s legal framework and typically handled by a locally qualified attorney or administrator, even though it is often recommended to appoint a single global project manager for your worldwide estate, to avoid your heirs having to play broken telephone in relation to the various concurrent administrations.
The ancillary administration process varies significantly between jurisdictions. In some countries it is relatively straightforward: a matter of producing the South African Letters of Executorship, having them authenticated, and following a simplified foreign transfer process.
In others, it is a full parallel estate administration, requiring the appointment of a local executor or administrator, the preparation of local tax returns, the payment of foreign inheritance or estate taxes, and compliance with that country’s succession laws.
The cost, complexity, and timeline of ancillary administration depend entirely on the country involved. What is consistent across all jurisdictions is that it adds time, cost, and administrative burden to an already demanding estate administration process.
How South African Law Interacts With Foreign Succession Law
South African private international law generally respects the lex situs principle for immovable property, meaning that the law of the country where the property is located governs how that property is transferred on death, save that SARS may still levy estate duty tax against that foreign asset.
This has several important implications for South African property owners abroad.
Your South African will may not be recognised as valid in the foreign jurisdiction. Different countries have different requirements for a valid will. Some require notarisation, apostille certification, or translation before a foreign will is accepted. Others require that the will comply with local formal requirements, which may differ from the Wills Act 7 of 1953 requirements that govern South African wills.
Foreign forced heirship rules may override your will. Many civil law countries (France, Spain, Portugal, and several others) have forced heirship provisions that give certain family members a guaranteed share of assets situated in that country, regardless of what your will says. If you own property in France and your will leaves everything to your spouse, French law may still require a portion of the French property to pass to your children.
Foreign inheritance taxes may apply. As indicated above, South Africa levies estate duty on the worldwide assets of South African residents. But the country where your property is situated may also levy its own inheritance or estate tax on that property. Double taxation treaties between South Africa and certain countries may provide relief, but not all countries have such treaties with South Africa, and the interaction between South African estate duty and foreign inheritance taxes can be complex.
The foreign transfer process takes time. Delaying your South African and foreign administration, since your South African estate cannot be finalised until the legal and tax consequences of your foreign assets have been resolved. Even in jurisdictions with relatively simple ancillary administration processes, obtaining local legal representation, producing authenticated South African documents, and processing the transfer through a foreign deeds or land registry takes time, often several months, sometimes longer. During this period, the property cannot be sold or transferred, and the estate cannot be fully finalised.
Structures That Reduce Complexity
For South Africans who own property abroad, proactive planning can significantly reduce the complexity and cost that offshore property creates for an estate. The most commonly used approaches are as follows.
A Separate Foreign Will
One of the most practical steps a South African with offshore property can take is to have a separate will drafted in the jurisdiction where the foreign property is situated, a will that deals specifically with that property and complies with the formal requirements of that country’s law. This should not be done to the exclusion of the practitioner who prepared your local will, since it risks a broken telephone and cross-border mix up.
A foreign will dealing with local property is generally easier for a foreign jurisdiction to accept and act upon than a South African will that must be authenticated, translated, and assessed for compliance with local requirements. It also avoids the risk that a blanket revocation clause in a South African will (which typically revokes all previous wills) inadvertently revokes the foreign will. That said, a worldwide will can also be appropriate in certain circumstances.
Where there is more than one will, both wills must be carefully coordinated by attorneys in both jurisdictions to ensure they complement rather than contradict each other, and that neither revokes the other, hence the advice for your family to appoint a single trusted project manager in respect of both wills.
An Offshore Trust or Holding Structure
In some jurisdictions, holding foreign property through a local trust, company, or other holding structure means that the property does not need to go through ancillary administration when the owner dies, the ownership structure continues, and the owner’s interest in the structure is dealt with through the South African estate rather than the foreign property transfer process.
This approach is jurisdiction-specific and carries its own tax and legal implications that must be carefully assessed. It is not appropriate in every situation, and specialist advice from attorneys and tax practitioners in both South Africa and the relevant foreign jurisdiction is essential before any structure is put in place.
Life Insurance to Fund Foreign Costs
Ancillary administration is not cheap. Foreign legal fees, foreign taxes, authentication and translation costs, and the carrying costs of a property that cannot be sold during administration can place significant financial pressure on an estate. Having sufficient liquidity (through life insurance or other liquid assets) to fund these costs without forcing a sale of the property or other estate assets is an important part of planning for offshore property.
The South African Estate Duty Position
South African estate duty is levied on the worldwide assets of South African residents, which includes immovable property situated abroad. The full value of any foreign property you own at the date of death is included in your dutiable estate for South African estate duty purposes, subject to the R3.5 million abatement and any other applicable deductions.
Where foreign inheritance taxes have been paid on the same property, South Africa’s Estate Duty Act 45 of 1955 provides a rebate for foreign taxes paid, but the mechanics of claiming this rebate must be carefully managed by the executor, and it requires documentation of the foreign tax paid.
The interaction between South African estate duty and foreign inheritance taxes is one of the most technically demanding aspects of cross-border estate administration, and one where specialist advice is not optional.
Practical Steps for South Africans With Offshore Property
Tell your South African estate attorney about every foreign asset you own. Many clients disclose their South African assets in detail and mention foreign property almost as an afterthought. Every foreign property needs to be factored into your estate plan from the outset.
Find out what the succession rules are in the country where your property is situated. Forced heirship rules, local will requirements, and inheritance tax obligations vary widely. What works in South Africa may not work, or may actively conflict with local law, in the country where your property is.
Consider a separate will for each jurisdiction where you own immovable property. Coordinate these wills carefully with your South African will to ensure they work together and do not inadvertently revoke each other.
Ensure your executor knows about the foreign property and has access to all relevant documents. Title deeds, mortgage documents, foreign tax registration numbers, and contact details for any foreign advisors should be stored with your estate planning documents and disclosed to your executor.
Review your estate plan whenever your foreign property situation changes. Buying, selling, mortgaging, or restructuring offshore property all have estate planning implications that require a review of your existing will and any offshore structures.
Cross-Border Estates Require Cross-Border Thinking
Offshore property ownership is an achievement worth protecting, but it requires estate planning that goes beyond a standard South African will. The earlier you address the cross-border complexity in your estate plan, the less that complexity will cost your family when the time comes.
Executor Law advises South African clients on wills that account s for foreign assets, coordinating with specialists in relevant jurisdictions to ensure that every asset (wherever in the world it sits) is dealt with efficiently and in accordance with your wishes.
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Frequently Asked Questions
Does my South African will cover my foreign property?
It depends on the jurisdiction. Some countries will accept a foreign will if it meets certain requirements, but it may need to be authenticated, apostilled, and translated before it is recognised. In many cases, a separate local will is more efficient and more reliable.
Will I pay estate duty twice, once in South Africa and once abroad?
Potentially, yes, if the foreign country levies its own inheritance or estate tax. South Africa’s Estate Duty Act provides a rebate for foreign taxes paid on the same assets, which reduces the risk of full double taxation. Whether a double tax treaty applies depends on which country is involved.
Can my South African executor deal with my foreign property?
Your South African executor has authority over your South African estate. For foreign immovable property, a locally appointed administrator or attorney in the relevant jurisdiction is typically required to conduct the ancillary administration process. That said, having a single worldwide project manager or identical executor can be beneficial, especially where there is no duplication of fees..
How long does ancillary administration take?
It varies significantly by jurisdiction, from a few months in straightforward cases to well over a year in jurisdictions with complex succession laws, mandatory waiting periods, or significant inheritance tax obligations.