Global Families & Complex Estates:

In an increasingly globalised world, many clients and their families have assets and beneficiaries spread across multiple countries. Traditional estate plans tailored to one jurisdiction often falter when cross-border elements are involved. As legal professionals, we recognize that what works for a purely local estate may not suffice for an internationally diversified estate.

Unique Challenges for International Estates:

Cross-border estate planning introduces complexities around differing legal systems, tax regimes, inheritance laws, and administrative procedures. An estate plan that doesn’t account for these differences can lead to unintended consequences, from conflicting wills to double taxation or protracted legal processes. This section will set the stage for why specialized planning is crucial for “global families” – those with South African ties and international footprints.

Pitfalls of a Single-Jurisdiction Estate Plan

Local Wills vs. Global Assets:

Relying on a single domestic will or standard estate plan for worldwide assets is a common mistake. While a local will can technically cover foreign assets, in practice this “one-size-fits-all” approach is precarious. Different countries impose different formalities and may not recognize a will drafted abroad. For instance, a will valid in South Africa might not meet execution requirements in another country, risking that foreign assets are frozen or distributed contrary to the decedent’s intent.

Jurisdictional Conflicts:

If an estate plan is confined to local law, there’s a risk of conflict of laws when another country’s legal system also claims authority. Which law applies – the law of the deceased’s domicile, nationality, or the law where the asset is located (situs)? Without careful planning, estates can become entangled in legal uncertainty as courts in different countries determine which jurisdiction’s rules govern various assets. This can lead to delays and disputes among heirs or executors in different regions.

Case Example – Forced Heirship vs. Freedom of Testation:

Many civil-law countries enforce forced heirship (legally reserving a portion of the estate for certain heirs), which clashes with South Africa’s principle of freedom of testation. If a client only has a will drafted under South African law (allowing free distribution), it may be partially overridden by foreign forced-heirship rules for assets in countries like France or Italy. In short, a purely local estate plan might fail to carry out the client’s wishes abroad due to these overriding local inheritance laws.

Divergent Inheritance Laws and Requirements

Variation in Succession Laws:

Global families must contend with widely varying inheritance laws. As noted, civil law jurisdictions (e.g., much of Europe, Middle East, Asia) often have forced heirship rules mandating shares for children or spouses, whereas common law countries (like South Africa, UK, US) generally uphold testamentary freedom. This divergence means a single estate plan can’t assume uniform treatment of heirs. Lawyers should identify which assets will be subject to forced heirship or elective share claims and plan accordingly (such as using local law instruments or adjustments in those jurisdictions).

Formal Validity of Wills:

Each country has its own formality requirements for wills (witnessing, notarization, language, etc.). A will that is perfectly valid in one jurisdiction might be deemed invalid in another due to technicalities. For example, some countries require notarized wills or specific formats. Without special planning, a South African will covering a foreign asset could face probate refusals or require time-consuming court procedures to authenticate abroad. Ensuring compliance with each jurisdiction’s will-drafting rules (or having separate wills) is key to avoiding this pitfall.

Probate and Court Procedures:

The process of administering an estate (“probate” in many jurisdictions) also differs. Some countries require a local court grant even if a will exists from overseas. Others, like certain Commonwealth jurisdictions (including South Africa and the UK), allow a foreign grant of probate to be resealed for local use – but only if the foreign country is recognized (e.g., under the Colonial Probates Act in the UK). If a local estate plan doesn’t anticipate these procedural hurdles, executors might have to start fresh probate proceedings abroad, causing significant delays. For legal advisors, planning means anticipating where ancillary probate or resealing will be needed and factoring that into the estate timeline.

Cross-Border Tax and Financial Considerations

Estate Taxes and Double Taxation:

Perhaps the biggest financial pitfall is double estate taxation. Different countries have different estate or inheritance tax systems and thresholds. For example, the UK imposes inheritance tax at 40% on estates above a certain threshold, while South Africa levies estate duty at 20-25% above its own threshold. Without coordination, an estate with assets in both countries could be taxed twice on the same value. Fortunately, South Africa has estate duty treaties with several nations (e.g. the USA and UK) to prevent double taxation. However, if no treaty applies, one must rely on unilateral relief or credits – a process that requires careful navigation of tax laws. Proper cross-border planning will identify all tax jurisdictions involved and use available treaties, credits, or exemptions to minimize the global tax burden.

Differing Tax Regimes:

Some jurisdictions tax the estate of the deceased (estate duty), while others tax the beneficiaries on their inheritance (inheritance tax). Timing and responsibility for these taxes vary. Moreover, certain countries (like the United States) tax even non-residents on situs assets (e.g. U.S. real estate or shares) above low exemptions, which can catch an uninformed family by surprise. A global estate plan crafted by legal experts will include strategies to mitigate such exposure – for instance, using holding companies, insurance, or trusts to own foreign assets so as to lawfully sidestep a punitive estate tax for a non-resident.

Currency and Exchange Control Issues:

When estates span multiple currencies and countries, administration can be complicated by exchange controls and regulations on moving money across borders. South Africa, for example, historically maintains exchange control rules. While heirs abroad are generally permitted to repatriate inheritances, there are procedural steps (e.g. obtaining tax clearance and Reserve Bank approval) that can slow transfers. Failure to account for these requirements might leave beneficiaries unable to promptly access their inheritance. Cross-border planning should integrate a strategy for liquidating or transferring assets in line with local currency regulations – ensuring that your client’s heirs, wherever they are, can actually receive the assets with minimal friction.

Multi-Jurisdictional Estate Planning Strategies

Multiple Wills (Domestic + Offshore):

One effective strategy is preparing separate wills for separate jurisdictions, carefully coordinated to cover all assets without overlap. For instance, a client might have a South African will for South African real estate and business interests, and another will governed by the law of another country for assets situated there. This approach can streamline estate administration by dealing with each country’s legal system on its own terms. Each will is tailored to the local inheritance laws and probate process, reducing the risk of a foreign court rejecting it or causing delays. It’s crucial, however, that the wills be drafted to complement each other (expressly stating they govern only specified assets and do not revoke the other). With meticulous drafting, multiple wills can prevent cross-border conflicts and expedite parallel estate proceedings in different countries.

Trusts and Cross-Border Structures:

Trusts are a powerful tool in international estate planning to bypass many cross-border complications. Assets placed in a trust are not part of a deceased’s estate, which can avoid the need for foreign probate entirely in some cases. For example, a South African family might use an offshore trust to hold overseas investments – upon death, those assets remain in trust and aren’t subject to foreign probate or local estate duty in South Africa. Trusts can also provide continuity (since trusts don’t “die”) and may offer tax advantages or creditor protection across jurisdictions. Other structures like international holding companies or foundations can be considered depending on the countries involved. The key is to use vehicles that are legally recognized in each relevant jurisdiction and confer the intended benefits (tax deferral, control for the settlor’s family, etc.) without violating local laws.

Choosing Governing Law & Domicile:

In some scenarios, individuals can choose which law will govern their estate (or portions of it). The EU Succession Regulation, for instance, allows one to elect the law of their nationality to govern their estate, which can be advantageous for a South African living in the EU (they might choose South African law to avoid forced heirship rules). Even outside the EU, being mindful of one’s domicile (a legal concept affecting which country’s inheritance law and tax applies) is crucial. Strategic planning might involve changing domicile or restructuring asset ownership so that a favourable legal system will apply to the estate. Advisors must guide clients on the implications of domicile and residency and potentially leverage elections or domicile changes as part of the estate plan when appropriate.

Navigating Cross-Border Administration

Executor Appointments in Multiple Jurisdictions:

A frequent pitfall in cross-border estates is the appointment of executors who lack authority across all relevant jurisdictions. For example, if a South African will names a family member in Germany as sole executor, that executor cannot directly administer South African assets without assistance. Similarly, a South African executor has no automatic authority over assets in, say, the UK or US. The solution is to either appoint local executors/representatives in each jurisdiction (through separate wills or ancillary probate processes) or ensure the primary executor can enlist local agents. Being proactive here prevents scenarios where an executor must scramble to get legal authority abroad post-death. We advise coordinating executorship: often naming co-executors (one based in each key country) or leveraging professional fiduciaries where needed to smooth administration.

Probate, Resealing, and Ancillary Proceedings: As mentioned earlier, when a person dies with assets in multiple countries, their estate may need to go through probate in each country. Some countries accept a foreign grant of probate via a simpler resealing process (e.g. England resealing a South African “Letters of Executorship” under the Colonial Probates Act). Others will require a full new application for a local grant. These administrative requirements can significantly affect how quickly beneficiaries receive assets. In planning, it’s important to map out the likely post-death procedure: which courts will be involved, what documents (like translations of the will, death certificate, etc.) will be required, and whether local legal counsel must be engaged in each jurisdiction. By anticipating the administrative maze, we can take steps such as preparing multiple wills (to allow parallel local probates) or using non-probate transfers (like beneficiary designations, joint ownership, or trusts) to avoid tying assets up in court.

Regulatory Compliance (Tax Clearances & Reporting):

Cross-border estates also trigger various compliance steps. In South Africa, the executor must obtain a tax clearance from the South African Revenue Service before distributing assets to heirs, and if heirs are abroad, there may be reporting to the Reserve Bank for currency transfers. Foreign jurisdictions similarly might require reporting an inheritance received from overseas (for instance, U.S. beneficiaries must report foreign inheritances over certain thresholds). A sophisticated estate plan will include a checklist of compliance tasks in each affected jurisdiction. It will also ensure liquidity is available to pay estate taxes or liabilities in multiple countries (for example, setting aside funds or life insurance to pay a U.S. estate tax bill so that foreign assets need not be fire-sold). In sum, cross-border administration can be a tangle of red tape – expert planning tries to minimize this by design.

Importance of Specialized Expertise

Staying Ahead of Legal Changes:

Laws affecting international estates are not static – tax treaties evolve, inheritance laws get reformed, and new compliance rules emerge (for instance, recent transparency rules for trusts in South Africa). Attorneys advising global families must stay up-to-date on both South African legal developments and those in other key jurisdictions. Engaging specialists who focus on cross-border estate planning ensures that your plan is built on current, nuanced understanding of all relevant laws.

Network of International Colleagues:

Another hallmark of effective cross-border planning is collaboration. No single lawyer, no matter how skilled, can single-handedly navigate the laws of every country. That’s why an international approach – working with trusted law experts in other jurisdictions – is essential. We pride ourselves on collaborating with a  network of legal professionals across different countries. This team approach leverages local expertise in each place while maintaining a coherent overall plan for the client.

Proven Experience in Cross-Border Cases:

Our firm has successfully guided families through complex international estate matters.

Conclusion

Holistic Planning for Peace of Mind:

Cross-border estate planning is not business as usual – it’s an advanced discipline requiring knowledge of multiple legal systems and how they interact. Global families who stick to a “local only” estate plan often discover its shortcomings too late, when family members are dealing with legal headaches, unexpected tax bills, or assets tied up in foreign courts. The good news is that with comprehensive planning, these pitfalls can be mitigated or avoided entirely.

Collaboration and Expert Guidance:

Ultimately, advising international clients with South African estates (or vice versa) is a collaborative, expert-driven process. It calls for diligence, cultural awareness, and legal acumen spanning borders. With the right team of cross-border estate planning professionals in place, lawyers can confidently guide their global clients, knowing that every inheritance law, tax obligation, and procedural requirement has been accounted for. Careful planning now means fewer surprises later – allowing families to inherit and enjoy their legacy without international legal entanglements.