Inheritance Transfers from South Africa: A Guide to Navigating the Process

Winding up a South African estate is increasingly burdensome, with numerous delays. Adding to this challenge, many beneficiaries now reside abroad, creating an often unforeseen complication at the final stage of the process.

When offshore beneficiaries must receive inheritances from local estates, complexities arise under the South African Reserve Bank’s (SARB’s) Exchange Control Regulations. Commercial banks typically lack the specialist teams needed to navigate these rules effectively. This is where practitioners, executors, and agents benefit from partnering with experts in cross-border transfers.

At Currency Partners we offer practical solutions and expert market insight to make cross-border transfers more efficient for our clients. Thanks to the scale of our bulk currency orders, we’re able to secure more competitive exchange rates for beneficiaries resulting in meaningful savings. There is no cost to you as the practitioner when referring a client or estate to us.

We typically follow four key steps to ensure a smooth and effective process:

Step 1: Determine the Beneficiary’s Exchange Control Status

Exchange Control Residency is based not on citizenship or current location, but on place of birth and tax residency. A client can be tax resident in multiple jurisdictions.

Beneficiaries are classified as:

• South African Residents: Born in South Africa and holding a barcoded SA ID. They are subject to the R1 million Discretionary Allowance and R10 million Foreign Investment Allowance.
• Bona Fide Non-Residents: Foreign-born, holding only a foreign passport. While not subject to allowances, funds due to them are automatically encumbered and require estate documentation (Source of Funds documents) to release.
• Emigrants: South African-born individuals who completed formal Tax Migration (formerly Financial Emigration). Their Rands are also encumbered and need to be unencumbered before offshore payment. For amounts above R1 million, a SARS-issued Non-Resident AIT (Approval for International Transfer) may be required.

Step 2: Open the Appropriate Rand Account

• For South African Residents Abroad: We open Resident Rand settlement accounts in their name locally. The executor or agent can pay directly into these accounts, fulfilling their fiduciary duty (see Administration of Estates Act 66 of 1965, sections 35–42; Estate Duty Act 45 of 1955; and Ex parte Estate Davies 1947 (3) SA 376 (N)).
• For Bona Fide Non-Residents: We open an Estate Late Rand settlement account. Funds paid into this account by the executor satisfy the executor’s fiduciary obligations.
• For Emigrants: We open an Emigrant Rand settlement account in the beneficiary’s name. The executor pays into this account, and we handle the unencumbering process and Exchange Control approval before offshore remittance. Funds paid into this account by the executor satisfy the executor’s fiduciary obligations.

Step 3: Obtain Exchange Control Approval

Once the beneficiary’s account is open and funded, Currency Partners facilitates the externalisation of funds to the beneficiary’s overseas account.

Foreign accounts must be in the full legal name of the beneficiary, unlike local transfers where account numbers typically suffice. While awaiting approvals or exchange rate bookings, funds in our accounts earn interest at money market rates, benefitting the client. Tip: Include “including interest” in the Liquidation & Distribution account.

• Residents remitting under R1 million: No Excon approval is needed.
• Residents remitting over R1 million: We assist in obtaining an AIT from SARS at no cost, provided the total is below R11 million for the calendar year we are assisting to remit the funds.
• For Non-Residents: We unencumber funds based on estate documents and may open individual accounts. SARB applications are submitted as needed.
• For Emigrants: We unencumber funds using estate documentation and may assist with Non-Resident AIT where required.

Special Case – SA-born Beneficiaries Without SA ID

Many beneficiaries left South Africa as minors, never obtained a local ID or tax number, and lack birth certificates. Despite holding foreign passports, if their place of birth is listed as South Africa, they remain Residents under the Regulations.

For such cases, we offer a Special Dispensation Declaration, in collaboration with our primary bank. If the client has no other SA assets, hasn’t completed tax migration, and the inheritance is under R10 million, we help prepare a signed declaration to SARB requesting Non-Resident status for this transaction. Approval is often granted within days.

Step 4: Convert and Transfer Offshore

After approvals, we book exchange rates with the client or their authorised representative. Our rates are typically 0.5% to 3% better than commercial banks, ensuring beneficiaries receive more in foreign currency.

Foreign account details are submitted through a secure portal and verified via WhatsApp. Before payment, we confirm account details telephonically to ensure security. Funds are then paid directly to the offshore account.

Currency Partners’ end-to-end service ensures that practitioners and executors can confidently manage the complexities of international inheritance distributions while beneficiaries enjoy reduced costs and regulatory compliance.

For more information or assistance please email enquiries@currencypartners.co.za or call (+27) 21 203 0081 to get in touch with our expert team.