Estate planning: How to manage worldwide assets so you don’t turn in your grave

Like many in the South African diaspora, I have a messy collection of life insurance, investments and assets spread across several countries – some in SA, the UK and elsewhere in Europe. Inheritance-related laws vary considerably around the world. I have three wills to deal with my affairs, which has required engaging the services of lawyers in three separate countries. South African estate planning expert Christo Meyer underscores the stress and administrative nightmare for beneficiaries and family members if an individual dies without putting a few plans in place ahead of that dreaded D-day. In addition to thinking about where your own assets are, you also need to factor in the global moves of your beneficiaries, he suggests. And, then, ideally you should have this big picture all tied up in one master plan. Sounds like I’ve got a bit more work to do on my international estate planning. – Jackie Cameron

By Christo Meyer*

Needing to know what you don’t know is one of the biggest obstacles relating to international estate planning.

There isn’t a book or a manual that you can grab off the shelf telling you the what, where and when as each parties circumstances are different and thus different rules and strategies apply, and most individuals/families do not have the experience or reference to understand the complexities of an international estate planning strategy.

Understanding international law is no longer only a concern for multinational companies. Together with readily available second residency schemes and the ease at which people can live, invest and/or do business outside of their home countries, has increased the importance of understanding how different laws affect their lives.

An often overlooked aspect of international law that requires more attention is estate/inheritance laws, these laws and regulations govern what happens to assets in the event of the death of the owner.

As a human being, we do not like to talk or even thick about loss or death, therefore, death, unlike taxes, is not one of the first things that comes to the mind of entrepreneurs, business owners or investors who are busy growing their assets.

Since countries apply different death tax (succession and inheritance tax) rules for individuals depending on nationality, domicile, residence, and place of death, as well as the location where a property is situated, it is imperative to understand the different rules and regulations that apply to your assets and estate.

For the reasons mentioned above, it is crucial that properties in multiple jurisdictions are not considered in isolation from each other, because different laws can have jurisdiction over the same asset, or beneficiaries/heirs of the asset might have liability for reporting and/or paying duties/taxes in multiple countries.

Even if there is a last will and testament, a property might be subject to the conflicting intestate succession rules of multiple countries, resulting in double death duties.

Due to these various sets of and possible conflict of rules in different jurisdictions, failing to plan for such events and/or conflicts can result in very costly consequences and even total loss of one’s assets. It will also cause immense trouble, financially and emotionally for family members, who must deal with different types of legal systems (common law vs civil law), and often must travel to a foreign country to try prove and claim their rightful share.

All of these unwanted financial and emotional consequences can be avoided by having an international estate plan in place.

There are generally three sources of international estate planning focus points:

  1. foreign-located deceased;
  2. foreign-located beneficiaries; and
  3. foreign-located assets.

In today’s world, it is common to have family members and/or family assets scattered across the globe, it is imperative that they understand their global exposure and create a plan that maximises the benefit of this global exposure while reducing costs, confusion, and stress.

At UCHI we start with an estate and succession planning risk analysis. This is in short a process where the planner is deemed to have passed away the day before, that will show the planner what would have happened in terms of the administration/probate and distribution of his/her estate, should he/she have passed away.

It can be explained as follows:

The planner hands each advisor (legal, financial, banking, family, auditing) a piece of wood and a carving knife during his/her lifetime. These advisors then start carving a puzzle piece based on the instruction of the client. However, these advisors are almost never introduced to each other. Then at the death of the client all these puzzle pieces are put together to build the puzzle, most of the time for the first time. Inevitably this is a recipe for failure as the puzzle piece will not fit to make up the “picture” the client intended, not to mention double death taxes or situs taxes.

  • Christo Meyer is with UCHI. He says: “we collect all these puzzle pieces and build that puzzle whilst the client is alive and have the opportunity to see what will happen, this process allows the planner to understand the consequences of any current estate planning strategy to identify shortcomings, with the opportunity to implement corrective measures and adjust his/her estate planning strategy.”