Death, while something we strive to avoid, is an inevitable part of life. Dealing with the complexities of a deceased estate is challenging in itself. However, if you are a beneficiary of an inheritance from a South African estate, navigating the legal and exchange control regulatory requirements adds another layer of complexity. Understanding the steps involved and the options available is crucial in ensuring a smooth process for transferring inherited funds. Let’s explore what you need to do in this situation.
Remittance of monetary gifts and inheritance proceeds from South Africa
Monetary gifts, as well as the cash proceeds of inheritances and distributions from resident estates owed to non-resident private individuals, entities, or trusts, can be remitted abroad, contingent upon viewing the Liquidation and Distribution Account bearing the Master of the High Court reference number.
In instances where the total assets of the resident estate amount to less than R250,000, the inheritance may be remitted abroad provided the Last Will and Testament and Letter of Executorship or Authority are supplied to the bank facilitating the transfer.
Exporting physical inherited assets
Non-residents can export other inherited assets, such as jewellery and personal effects, under the prescribed SARS Customs Declaration, provided that the Last Will and Testament or the Liquidation and Distribution Account is provided to confirm the bequest.
Capital distributions from South African testamentary trusts
Capital distributions from local testamentary trusts to non-residents are permissible for remittance abroad, subject to the trustee’s resolution and the Last Will and Testament provided as evidence of the inheritance.
Approval for renounced beneficiary rights
Distributions resulting from renounced beneficiary rights require the Financial Surveillance Department of the South African Reserve Bank (FinSurv) approval. To assess an inheritance’s transferability and regulatory requirements, one must first establish the individual’s residency status.
South African residency status classifications and transfer options:
The residency status of an individual will fall into one of three categories:
1. South African resident temporarily abroad
Definition: An individual working or living abroad and has not formalised their emigration with FinSurv (before 2021) or has not ceased tax residency with the South African Revenue Service.
Transfer Options: Up to R1 million may be transferred abroad as part of an individual’s single discretionary allowance. No Tax Compliance Status PIN needs to be obtained from the South African Revenue Service.
The transfer of funds over R1 million will form part of an individual’s foreign capital allowance of R10 million. The South African Revenue Service must provide an Application of International Transfer Tax Compliance Status PIN. Prior approval from FinSurv must also be obtained for transfers over R10 million.
2. Financially emigrated via FinSurv or ceased tax residency with SARS
Definition: Individuals who have formalised their emigration via FinSurv or have ceased tax residency with the South African Revenue Service.
Transfer Options: The inheritance is transferable to the individual abroad provided proof or confirmation of non-resident status is provided – either a letter from the bank confirming your emigration via FinSurv or the Non-Resident letter issued by the South African Revenue Service confirming you have ceased your tax residency.
3. Non-Resident
Definition: An individual who never resided in South Africa.
Transfer Options: The inheritance is transferable to the individual abroad, provided proof or confirmation of non-resident status is provided.
Navigating legal and regulatory complexities
Navigating the complexities of inheriting from a South African estate, especially as a non-resident, can be daunting. However, understanding the legal and exchange control regulatory requirements is crucial for a smooth and compliant transfer of inherited funds.
FinGlobal: cross-border specialists for South African expats
Handling the paperwork to get your estate distribution paid out to you as a non-resident beneficiary can be time-consuming and stressful. At FinGlobal, we’ve made it our business to remove the headache and eliminate the administrative burden for you. We’ll handle everything for you every step of the way. Once you’ve signed the paperwork, all you need to do is sit back, track our progress online, and wait for your money. It is that simple! We can also help you with several other cross-border services, such as tax emigration, tax clearance, international money transfers, and more.
To learn more about FinGlobal’s services, please leave your contact details below and we’ll contact you to discuss your specific requirements.