To ensure the smooth transfer of your wealth to the next generation, comprehensive estate planning is essential, especially if you have offshore assets. Without a clear, regularly reviewed plan, especially when circumstances change, your heirs could face unnecessary complications.
WORDS Stanley Broun, Head of Fiduciary and Tax, Sanlam Private Wealth
Estate planning is a crucial part of ensuring the intergenerational transfer of your wealth. It’s important to remember that every estate plan is unique – there’s no one-size-fits-all solution, and it involves far more than just pushing around some numbers on a spreadsheet.
While many people focus on minimising tax and estate duty, effective estate planning extends well beyond that. Estate duty is certainly an important consideration, especially for those who have accumulated significant wealth, but expert advice is essential to address all elements of the process. This helps avoid unpleasant surprises for beneficiaries when your estate is wound up.
There are many factors to consider, especially if you have both local and offshore investment structures. These include your marital regime, and whether your children have ceased tax residency or intend to do so and settle abroad.
Structuring your assets
Estate planning is also an opportunity to restructure your wealth strategically. For example, how can you best manage UK inheritance tax or US estate tax exposure? Would an offshore trust or a dry trust be a good option for housing offshore assets? Are there ‘offshore wrappers’ that can be incorporated?
While transferring assets into a more appropriate vehicle might trigger immediate capital gains tax, future growth would fall outside your estate for estate duty purposes – an advantage for your beneficiaries in the long term.
The most important starting point is to ask: ‘What are my objectives, and what do I want to achieve?’ Just because a particular product or structure reduces tax doesn’t mean it’s right for your circumstances. Whether planning for local assets, offshore assets, or both, your estate plan should align with your broader goals.
Tax considerations should never be the sole driver of your decisions. If tax laws change, you may be forced to revisit your arrangements. While some events may result in unavoidable taxes, the priority is ensuring your beneficiaries inherit according to your intentions.
Sanlam Private Wealth has all the necessary skills and expertise to assist you in drawing up your estate plan. If you’d like further information, please contact Stanley Broun at stanleyb@privatewealth.sanlam.co.za.
