Have investments offshore? Do you really need a foreign will?
In law a South African will is valid overseas, and can be recognised in a foreign jurisdiction, but there are problems around this
South Africans are increasingly investing offshore and the question that is frequently asked is: "Do I need a foreign will if I have assets overseas?"
Foreign vs local wills
It must be stressed that in law a South African will is valid overseas, and can be recognised in a foreign jurisdiction, but there are problems around this:
• The master of the high court in SA requires an original will. So do the authorities overseas.
That means the original will first has to be sent to the master, and then only afterwards can it be sent overseas, which obviously delays the winding-up process there. While you can sign more than one original will, very few people do this.
• Other countries have different laws of testation to SA. European countries, for example, follow Napoleonic law, which has forced heirship rules. This means assets have to pass to the deceased's spouse and children in certain fixed percentages. The authorities there will not follow a South African will bequeathing assets contrary to this. While forced heirship can be avoided, it needs a carefully drafted will, by an expert in that particular jurisdiction.
• Different countries also have different rules around the validity of wills. For example, in a decided court case in SA, the issue centred on a will executed in Austria, which has different rules to SA around the requirement of witnesses to the will. The will was valid in Austria but not in SA. Was the will valid? It is clearly dangerous to execute a will in SA that might be valid in terms of South African law, but might not be valid in terms of foreign law. To avoid this conflict of laws issue, it is safer to have a foreign will in that foreign jurisdiction. This is definitely the case when the assets overseas involve immovable property.
However, practicalities also need to be considered. If the asset overseas is small, for example a simple bank account or small mutual fund investment, it is probably not worth the cost and trouble of drafting a special foreign will.
However, a foreign will would still be safer than drafting two of the same original wills in order to send one to the foreign authorities on death.
In addition, it is worth noting that if the foreign mutual fund is held in an offshore endowment policy issued by a South African insurer, a beneficiary can be nominated to receive the proceeds on the death of the person assured.
This removes the need for this investment to be mentioned or included in any will and makes the distribution and winding-up of the offshore estate much simpler and quicker.
So, if you have any immovable property offshore you should have a foreign will, drafted by an expert in that foreign jurisdiction, to avoid any problems with conflicts of law across different jurisdictions.
If you have movable assets offshore, you can consider doing a foreign will, but if it is just a small offshore investment rather include it in your local will.
An offshore endowment will make your life even simpler here. Most important, if you have a second will offshore, you must make it clear that your South African will applies only to your local assets, and your foreign will only to your foreign assets, so the two do not potentially contradict each other and lead to ambiguity.
If your local South African will applies to offshore assets as well, make this clear in the will.
Finally, always be sure to consult an expert when arranging the drafting of your wills and estate planning if it involves offshore assets.
Whichever route you follow with the wills, make sure it is checked by an expert in the jurisdiction in which you have those foreign assets.
• Joffe is head of legal services at Discovery Life.