A typical South African private wealth client who has sought substantial diversification and growth opportunities has multiple global assets.
However, the ownership of global investments may present complex estate planning challenges. Thorough consideration of the transfer of those assets and a strategy detailing how your wealth is not only transferred generationally but preserved generationally are essential. Without them, you may face cumbersome administrative processes and unplanned taxes that can delay and cause unanticipated costs for an estate being wound up in multiple jurisdictions.
A well-curated estate plan should always consider onshore and offshore assets, any local or offshore trusts, life policies or investment wrappers, and retirement products. Meticulous estate planning may involve structuring in your will – or multiple wills if required – the setting up of local or offshore trusts or obtaining products that are intended to transfer assets to heirs in a manner that bypasses the estate. This way you can ensure that your estate is transitioned in a careful, well-considered manner.
Offshore – or global – assets include international properties and investments, foreign bank accounts, and shares in multinational companies. Each of these assets may have a different capital gains and estate tax effect, depending on the asset type and the jurisdiction that the asset is in. Each asset may also be subject to a different administrative process, such as probate outside of South Africa. There may be overlapping taxes chargeable in South Africa and the offshore jurisdiction or mismatches in the administration process of winding up an estate as well as misaligned legislation in your country of residence and the jurisdiction of the offshore asset.
How a professional tax expert can help
Given the complex multijurisdictional nature of a carefully curated estate, it is essential to work with professional experts who have knowledge and experience in cross-border taxes to help you navigate the nuances of different tax systems and ensure compliance across jurisdictions. Strategic use of tax planning tools, such as double taxation treaties and proper asset structuring, can help minimise the overall tax impact on your estate.
Professionals will also support your estate planning goals by structuring your estate in a manner that is designed to plan for the taxes payable in each jurisdiction and ensure that your wishes come to fruition. Many a client has bequests in Wills that are misplaced, or there are bequests that cannot be granted as there is insufficient liquidity to pass those assets along to the intended beneficiaries, or the bequests cannot be fulfilled due to misunderstandings about the legalities and complex administration processes involved.
The global economic and regulatory landscape necessitates constantly reviewing your estate plan to ensures that it remains effective considering new tax regulations, international treaties, and changes in your personal circumstances. Experts ensure that they are up to date with changes in tax laws both domestically and internationally and are geared up to review and update your estate plan regularly to align with these as the laws. This is essential as these laws evolve constantly and an outdated estate plan may not accommodate recent changes and updates to the legislation.
For individuals with global assets, the stakes are high. Without careful estate planning, you risk encountering unplanned taxes and facing complex administrative challenges that could undermine the wealth you’ve built over your lifetime. Proactive and comprehensive estate planning is essential to protect your legacy, ensuring that your beneficiaries receive the full benefit of your hard-earned assets without unexpected setbacks.
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