Estate Planning and Offshore Wealth Management

An offshore trust remains a viable and advantageous estate planning vehicle for investments. Forced heir-ship rules would generally not apply to offshore assets, the assets in the trust would be protected as with South African trusts, and growth in the value of assets would generally not be subject to estate duty, capital gains tax or executors’ fees on death in South Africa. Offshore trusts may also be utilized to receive foreign inheritances in certain circumstances. In terms of Exchange Control Regulations, South Africa trusts may not invest directly offshore, but may do asset swaps.

A South African Will may deal with the worldwide assets, but a separate foreign Will could provide ease of administration, as long as the revocation clause in each Will does not contradict the other. Estate duty capital gains tax could be applicable in South Africa where spousal rebates do not apply.

Forced heir-ship rules should be considered in drafting of the Will, where applicable. Joint tenancy can be an effective estate planning tool between spouses and will prevent probate from applying on death of the first dying spouse.

When applying foreign investment strategies, the investor should take note of the new taxation rules in South Africa applying to foreign dividends. The new transfer pricing rules, with respect to especially interest free loans, and always the South African Exchange Control Regulations.

Any estate plan should be reviewed at least every two years or immediately if taxation laws or exchange control regulations change in South Africa, or if new case law has an impact on any current estate plan.

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