BUSINESS NEWS - Tens of thousands of South Africans have established geographically diversified estates. This tendency seems to increase every year.
Testators, together with their fiduciary advisors, should not underestimate the complexities of this tendency on estate and succession -planning.
South African residents are essentially free to bequeath their assets to whoever they please (subject to certain exclusions of course), but a number of countries, including some European jurisdictions have forced succession rules. The consequences of these forced succession rules are that assets will pass to individuals whom the deceased might not have intended to benefit. With different countries recognising different concepts and connecting factors of succession, succession planning may become complex and challenging. It is therefore extremely important for the testator to be aware of his/ her options when it comes to the succession of multi- jurisdictional assets.
The EU Succession Regulation is adopted by 25 of the EU states and applies to all deaths on or after 17 August 2015. This regulation is focused on simplifying the legalities and consequences of multi-jurisdictional wills and succession matters. The default position captured in this regulation is that the law of the state in which the deceased was habitually resident at his/ her death will be utilised for the distribution of the deceased’s estate. But, luckily, the regulation further provides for the possibility that both the EU citizen as well as the non- EU citizen may choose the law of his country of nationality to apply to his estate by expressing such desire in his/ her will. A South African testator may therefore state in his/ her will that South African law is to apply to his/ her assets situated in any EU state, even though such testator is habitually resident in another state. This will prevent any interpretive uncertainty and exclude unintended results by means of forced heirship / forced succession rules adopted in certain countries.
The South African testator with assets in an EU jurisdiction should therefore carefully consider, with the help and support of his/ her estate planner whether it would be the better decision to rely on the default position of the EU Succession regulation, ie the habitual residency test or whether it would be in the best interest of the testator to state in his/ her will that the law of his/ her nationality will apply to those assets.
It is of the outmost importance that the South African testator who has a multi -jurisdictional estate should consider all relevant information when making his/ her decision. The testator together with his/ her fiduciary advisor should carefully consider the implications of each jurisdiction on the estate of the testator by considering whether it is necessary to draft a separate will for each jurisdiction where assets are located instead of having one will containing all bequests. It might be in the best interest of the South African testator to consider involving fiduciary advisors within each separate jurisdiction in the estate planning of that testator.
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