It has been estimated that there are many thousands of young South Africans living and working abroad. This means that many, especially older South Africans, should plan their Wills around the fact that one or more of their future heirs will be outside SA at the time they die, and that the transmission of inheritances to heirs abroad is not necessarily a straightforward matter.

Movable assets

South Africa’s Exchange Control laws govern and restrict the right for the local as-sets of South Africans to be transferred overseas, and that applies even after one dies. Before any inheritance due to a South African living abroad can be re-mitted to their place of residence, the executor of the estate must obtain the permission of the South African Reserve Bank. The same applies to the beneficiary named on a life assurance policy – the assurance company concerned will have to obtain Reserve Bank approval before transmitting proceeds abroad.

A South African who has not formally emigrated will, for the purposes of exchange control, be regarded as an SA resident temporarily living abroad even if they left SA many years before and never intend returning.

Where there’s a Will there’s a way

Broadly, in terms of South African ex-change controls, if a South African living abroad has received an inheritance from an SA estate, he or she will fall into one of three categories:

South African Resident temporarily abroad (most people fall into this category) The options are then to: (a) Transfer funds using the heir’s foreign investment allowance, which will require getting a SARS tax compliance certificate (formerly called a tax clearance) or (b) Placing his or her formal emigration on record with the South African Reserve Bank – this is done via a local bank’s foreign ex-change department or an emigration company. Emigration does not affect one’s SA citizenship or the right to retain a South African passport.

South African who has already formally emigrated in terms of exchange control laws. Emigrants falling into this category can have their funds transferred abroad, provided they can provide proof of emigration in the form of a South African Reserve Bank reference number which they would have received when they originally emigrated.

Non-resident – a person who was never a South African resident. This is a relatively straight forward process of providing evidence of non-residence status after which the inherited funds can be freely transferred overseas.

If an executor is unable to transmit an inheritance to an heir due to a legal disability, such as exchange control restrictions, the law makes provision for the inheritance to be paid into the Guardian’s Fund administered by the office of the Master of the High Court, for the duration of the legal disability.

Here or there?

If you have left an inheritance to a family member who is living abroad, it would be prudent to ascertain from them their residency status as far as Exchange Control is concerned, so as to ensure a relatively hassle free transmission of their inheritance come the time.