Key estate planning factors when moving abroad temporarily or permanently

However, there are quite serious financial issues that must be considered when deciding to emigrate to avoid an extremely nasty surprise at a later stage.

First, there is the question of residency. It is crucial to note that residency for tax purposes and residency for exchange control purposes are two different matters.

Changing tax residency is based on a few factors which give evidence to whether you are “ordinarily resident” in South Africa or not.

Furthermore, a double tax agreement with the other country may also play a role in determining tax residency.

Emigration for exchange control or formal emigration, on the other hand, is effected by applying to the financial surveillance department of the SA Reserve Bank. For this you need proof you have the right to live in the country you intend to go to, and you must show your intent to no longer be a permanent resident of SA.

The two may coincide, but not necessarily, which is where difficulties and confusion often arise.

Furthermore, we quite often find that when children move offshore, they never emigrate formally from a financial surveillance perspective.

This means that should you leave your estate to your children, the executor of your estate would not be able to transfer their inheritance directly offshore.

Instead, your children would need to return to the country and use other mechanisms to facilitate the transfer of assets.

Trusts are a key issue to be aware of as part of your financial planning when moving abroad.

Keep in mind that the jurisdiction that you are moving to may treat trusts and the benefits received from them in a completely different manner from South African law.

Likewise, when it comes to your will, it is important to bear in mind that while your will may be valid in South Africa, it may not be practical or efficient to administer and execute in another jurisdiction.

In common law countries, such as the UK, where there are similarities to certain South African legal concepts, South African wills and assets in that jurisdiction, belonging to South Africans, tend to be easier to administer and probate, especially by specialists with the relevant experience and knowledge.

However, civil law countries are very different, as they may have rules involving forced succession, or other restrictions on inheritances and what may be addressed and dealt with in your will.

It is therefore vital to obtain professional, jurisdiction-specific advice on all aspects of your financial and estate planning should you choose to emigrate.

Theunis Ehlers is a director at Citadel Fiduciary

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