Advisers must be accurate when giving clients advice on foreign investments

October 1st, 2017
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Oliver Phipps of Lester Aldridge Solicitors in the United Kingdom, was a guest speaker at the 7th annual Fiduciary Institute of Southern Africa (FISA) conference in August.

By Kgomotso Ramotsho

Oliver Phipps of Lester Aldridge Solicitors in the United Kingdom, said there was no right or wrong answer as to whether a second Will is needed. Mr Phipps was discussing multi-jurisdictional estate planning and administration at the 7th annual Fiduciary Institute of Southern Africa (FISA) conference at the Sandton Convention Centre in August. He said that people have become internationally diverse with the ability to work or study in foreign countries, and pointed out that individuals holding assets in a foreign country, needed to consider if a separate Will is required for those assets.

Mr Phipps noted that legal practitioners who have clients with international property had to consider if having offshore assets was appropriate and to look at the fact that if a client dies, how best the legal practitioner is going to administer the client’s estate. He said having more than one Will depended on the value of the assets and jurisdiction in which the assets are located. Mr Phipps added that the rules that apply in some European countries allowed an individual to elect for the law of their nationality to apply to the succession of assets in order to avoid the forced heirship rules. He said that it was recommended that a professional with the knowledge of the rules in a specific country, where a client has assets, be consulted for advice.

Managing director of the Accuro Fiduciary in Mauritius, Gordon Stuart, discussed multi-jurisdictional estate planning. Mr Stuart said it can become complicated when looking at multiple jurisdictions and the holding of different assets in different investments across the world. He pointed out that clients look for advisers and planners who can guide and assist them in structuring and arranging both their local and international affairs. He added that this places advisers under pressure, because they have to make sure that the advice they are giving clients is accurate.

Managing director of the Accuro Fiduciary in Mauritius, Gordon Stuart, discussed multi-jurisdictional estate planning. Mr Stuart said complications may occur when one has different assets across the world.

Mr Stuart noted that many South Africans are in a bid to hedge against geopolitical risks, as well as uncertain currency, which means they are investing a large percentage of their wealth offshore. Mr Stuart noted that clients have to decide whether they are going to invest assets in their own name, such as, bank accounts, immovable property and listed shares. He said with the particular choice of clients investing in their own name, there are choices that a client has to make.

Mr Stuart noted that when clients invest assets offshore in their own name, the assets will form a part of their deceased estate and a client has to look at the consequences that comes with that. He said a Will would be the best way for a client to ensure that the Will deals with the estate when they are deceased, that succession and continuity of their assets is what the client wanted.

Mathys du Preez of Sanlam, Namibia, spoke about cross-border estate planning in Southern Africa, at the FISA conference.

Mathys du Preez of Sanlam, Namibia discussed cross-border estate planning in Southern Africa. Mr du Preez said that as much as there are similarities in formalities for Will drafting, estate planning tools and the administration of deceased estates in Namibia and South Africa (SA), there are also small differences that clients must be aware of. He noted an important difference relating to Wills is that the courts in Namibia cannot condone non-compliance with the formalities for a Will, which means that if the formalities were not complied with, the Will is invalid. He added that it was also notable that Namibia does not levy estate duty, donations tax or capital gains tax.

Mr du Preez referred to legislation in Namibia that gives the state a preferential right to acquire agricultural land whenever the owner of such land intends to alienate the land and cautioned that this also applies when the owner of the land dies. He added that another difference between SA and Namibia, when a deceased estate is administered, is that the Master of the High Court in Namibia requires that the executor of the estate must be Namibian or have a Namibian agent. He said Namibia has a source-based income tax system and trusts are taxed according to the tax tables that apply to individual taxpayers.

Professor Piet Naudé of the University of Stellenbosch Business School spoke about ethical behaviour in an unethical environment.

Professor Piet Naudé of the University of Stellenbosch Business School spoke about ethical behaviour in an unethical environment. He said that ethics is crucial in the financial industry as there is a fundamental power imbalance between a client and his or her agent, where the client has to trust the agent. He noted phases in which there is a move away from ethical leadership and cautioned that this often starts unintentionally but, if allowed to continue, will eventually become unconscious behaviour. Prof Naudé added that this would result in blaming and shaming for what is right and what is considered bad and the abnormal, therefore, becomes normal.

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2017 (Oct) DR 11.

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