Global estate planning: What you need to know

Managing wealth across borders has never been more complex – or more necessary. As South Africans accumulate offshore assets, from property in London to investments in New York or Mauritius, the question of how those holdings are treated upon death becomes critical. 

A well-structured estate plan is not just about minimising tax; it is about ensuring your heirs inherit smoothly, without legal disputes or unexpected liabilities. 

This guide unpacks the key considerations for global estate planning, from marital regimes and offshore trusts to the tax implications of where your beneficiaries live.

Why is proper and timeous estate planning so important?

Estate planning is a crucial part of ensuring the smooth intergenerational transfer of your wealth. It’s important to remember that each person’s estate plan is unique – there’s no one-size-fits-all solution, and it involves far more than just pushing around some numbers on an Excel spreadsheet.

We often find that individuals become fixated on wanting to save on tax and estate duty, but estate planning is much more than that. Estate duty is, of course, key, especially if you’ve accumulated wealth over your lifetime. However, it’s paramount to obtain expert advice to ensure that all the elements of proper estate planning are taken into consideration to ensure that there are no nasty surprises for your beneficiaries when your estate gets wound up. 

There are many factors to consider – especially if you have both local and offshore investment structures – including your marital regime, and whether your children have ceased their tax residency or intend to do so and settle abroad.

What are the main elements you look at when drawing up an estate plan?

• All the details of your assets and liabilities, both local and offshore
• Information about life policies, pension and provident funds
• Business interests and company shares
• Loan accounts
• Where the beneficiaries are resident
• Antenuptial contract

Your marital status and the marital regime – in community of property, out of community of property, with or without accrual – will influence the division of assets at death and are therefore also important factors to be considered in estate planning. 

Having the whole picture enables us to draw up a proper estate plan and determine if there are ways to better structure your financial affairs – both in South Africa and offshore – to reduce your overall tax burden and contribute to the ease of wealth transfer to the beneficiaries of your estate, especially if they live abroad.

How can estate planning help you to structure your assets more efficiently?

Proper estate planning can offer an excellent opportunity to restructure your wealth. For example, what planning opportunities are there to better manage inheritance tax issues in the UK or US estate taxes? Would an offshore trust or a dry trust (an empty trust structure that holds no assets until they are transferred into it) be a good option to house your offshore assets? Are there “offshore wrappers”, a type of product that packages your offshore investments in a legal and tax-friendly way, which can be incorporated into your estate planning? 

While there may be an immediate capital gains tax impact should you decide to transfer your assets into a more suitable vehicle, the future growth of your assets will be outside your estate for estate duty purposes, which will definitely be more advantageous for your beneficiaries at your date of death.

The most important question to ask when thinking about estate planning is, “What are my objectives, and what do I want to achieve?” Just because one product or vehicle may prevent someone from having to pay estate duty and taxes doesn’t mean it will be suitable for your particular purposes. Your estate plan, whether it’s for your local or your offshore assets, or both, must be in line with your overall objectives. 

You should never allow tax to be the driving force in your decision-making, because if the tax laws change, you may have to change your vehicle or structure again. While certain events may well result in you having to pay some taxes, your plan should at least be aligned with your objectives, so that when you pass away, your beneficiaries will inherit the way you intended them to.

Stanley Broun is head of fiduciary and tax at Sanlam Private Wealth. With more than 15 years’ experience, he advises high- and ultra-high-net-worth clients on global estate planning, tax law, corporate restructuring and the administration of estates in South Africa and abroad. He leads a team focused on delivering tailored, client-centric solutions in a fast-changing legal and tax landscape.

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