Offshore investments and probate

What happens to offshore investments upon the death of a contract owner? Momentum Wealth International offers various succession planning options that can ensure that the investment continues in accordance with the original owner’s wishes in a tax-efficient manner while also avoiding the cumbersome probate process.

If the succession planning options available have not been used, and the contract owner passed away, the investment would form part of the deceased’s estate and may require probate. We have enhanced the death claims process for South African clients to streamline the process.

With immediate effect, for South African estates, Momentum Wealth International (MWI) no longer requires a Grant of Probate if the executor’s request is to pay the proceeds to a bank account in the name of the estate.

Succession planning options

For many years, we have offered a range of succession planning options for advisers to structure their client’s investments to suit their specific needs, should the client pass away.

These options include joint and survivorship provisions, successor contract owner(s) and/or beneficiaries for proceeds, depending on which solution the client is invested in, as shown in the diagram below.

Different combinations of these product features and order of events could lead to different outcomes, as shown below.

The optimal use of these succession planning options ensures that the investment does not form part of the deceased’s estate. Therefore, it is not up to the estate to advise what to do with these assets in the event of a death claim. If it is up to the estate to advise, it could lead to the initiation of the probate process.

Probate

Probate refers to the general legal and administration process that occurs when a person passes away, which involves the validation of the rightful heirs to an asset on a deceased estate. This is very important, and in some jurisdictions, you may require a Grant of Probate (a form of a Grant of Representation) to initiate the probate process.

A Grant of Probate represents official recognition by a court that a Will is legally valid and that the person(s) appointed as executor(s) are authorised to administer the estate. This can be an expensive and potentially time-consuming document to acquire.

Enhancements to the death claims process where probate has not been avoided

The provision of the Grant of Probate upon the death of an owner reduces the risk of fraudulent activities by ensuring that the executor is properly authorised to wind up the estate and that a financial institution, such as MWI, can accept instructions from the executor. For smaller estates, financial institutions often do not require a Grant of Probate.

To make doing business with us easier, we enhanced the process following a death claim for a South African client where the succession planning options mentioned above are not in place and the investment forms part of the deceased’s estate.

With immediate effect, for South African estates, we will no longer require a Grant of Probate if the executor’s request is to pay the proceeds to a bank account in the name of the estate.

In these instances, we will follow the same death claims process as we use in South Africa for the Momentum Wealth platform. This process has already been adapted to mitigate the risk of fraud by introducing various measures, including who deals with these claims, and how documentation is verified.

In summary, if the investment contract’s succession planning options are not applied, the executor of the estate will have to take the following into consideration:

• If the proceeds are paid to a bank account in the name of the South African estate, the normal death claims process will apply (and a Grant of Probate will not be required).

• If the proceeds are to be paid directly to the beneficiaries of the South African client’s Will, and the investment value is less than USD25 000, the normal death claims process will apply (and a Grant of Probate will not be required).

• If the proceeds are to be paid directly to the beneficiaries of the South African client’s Will, and the investment value is more than USD25 000, a Grant of Probate is required.

At Momentum Wealth, we strive to make doing business with us as efficient and as easy as possible. We are committed to enhancing the experience financial advisers have when interacting with us and are pleased to introduce these latest developments in making it easier to do business with us.

Speak to your Momentum consultant to find out more about how Momentum Wealth International can help you with your clients’ offshore investing needs on their journey to success or visit momentum.co.gg.

The International Investment Option is an investment service offered by Momentum Wealth International Limited, registered in Guernsey No. 30830 and licensed by the Guernsey Financial Services Commission to conduct investment business. Registered address La Plaiderie House, La Plaiderie, St Peter Port, Guernsey, Channel Islands, GY1 1WF. Telephone +44 (0) 1481 735 480. Momentum Wealth International Limited is an authorised financial services provider (FSP 13495) in terms of the Financial Advisory and Intermediary Services Act No 37 of 2002 in South Africa.

The International Endowment Option is a life insurance product, underwritten by Momentum Metropolitan Life Limited Guernsey Branch, a foreign branch of Momentum Metropolitan Life Limited, a licensed life insurer under the Insurance Act, and is licensed by the Guernsey Financial Services Commission under the Insurance Business (Bailiwick of Guernsey) Law 2002 to carry on long term insurance business. Postal address La Plaiderie House, La Plaiderie, St Peter Port, Guernsey, Channel Islands, GY1 4HE. Telephone +44 (0) 1481 735 480.

Momentum Investments is part of Momentum Metropolitan Life Limited (1904/002186/06) (South Africa), an authorised financial services provider (FSP 6406) and registered credit provider. Momentum Wealth International Limited and Momentum Metropolitan Life Limited Guernsey Branch are part of Momentum Group Limited (2000/031756/06) (South Africa).