Joint Account


Many South African tax and exchange control residents hold offshore bank and/or investment accounts in a joint capacity. In certain circumstances, joint accounts provide for ease of administration; however, it is important to understand the applicable laws and specific contractual terms of such an arrangement, as the practical implementation may vary depending on the country and/or financial institution where the account is held.

No joint ownership in SA

Joint ownership of a bank and/or investment account is generally not recognised in South Africa. One of the reasons for this is that there is no legislation specifying what will happen to the cash and/or investments held in the account if one of the joint account holders passes away or becomes insolvent. Such an event can lead to conflicting demands between the surviving joint account holder(s) and the executor of a deceased estate/ a creditor of an insolvent estate.

Types of offshore joint accounts 

To complicate matters further, there are two different types of joint accounts in an offshore context:

Joint account

‘Joint account’ means that the account holders jointly own the entire bank and/or investment account. Should one of the account holders pass away, the deceased account holder will fall away, and the surviving account holder(s) will continue to hold the entire account. This mechanism is commonly referred to as the ‘principle of survivorship’. Amongst other jurisdictions, the ‘principle of survivorship’ is invoked in the United Kingdom, Mauritius, Switzerland and the Channel Islands.The joint bank and/or investment account provides what are called probate benefits. Probate is the offshore version of the administration of a deceased estate in South Africa. A grant of probate is therefore the offshore equivalent of a Letter of Executorship in South Africa (i.e., authority is provided to the executor to deal with certain assets). This is important because certain foreign jurisdictions will not allow certain types of assets, which are within their jurisdiction, to be dealt with by an executor without a grant of probate being issued by their courts.

The joint bank and/or investment account will not be frozen and no in-country probate requirement will have to be met upon the passing of a joint account holder. In other words, the cash and/or investments held in a joint account will not form part of the deceased administration process. In essence, the ownership of the entire account will ‘transfer’ automatically to the surviving account holder(s). We do caution that the terms and conditions associated with these offshore joint accounts are very important as they will govern the process that must be followed upon the death of an account holder.

It’s important to note that a joint account can be between more than two individuals who collectively own 100% of the account. It is also possible for some account holders to have signatory rights on these accounts and for others to purely benefit upon the death of the first dying account holder.

In certain circumstances, this type of account may be beneficial for South African clients with global cash and investments as it creates liquidity for the surviving account holder(s).

Ownership in common

‘Owners in common’ means that each person holds a separate undivided share of the joint bank and/or investment account. It’s important to note that each joint account holder would need to deal with his/her undivided share in his/her own last will and testament. In these circumstances, the entire account will be frozen on the passing of any of the joint account holders.


What about real estate?

Similarly, there are two concepts applicable to real estate: joint tenants and tenants in common.

Owning offshore real estate as joint tenants means that the principle of survivorship will apply. See the above explanation of the principle of survivorship. However, in essence, the surviving tenant(s) will automatically retain full ownership of the real estate. No in-country probate will be required upon the passing of the first dying tenant.

Tenants in common usually come into play when the parties have different interests, and therefore want their share to be transferred on death in accordance with their personal last will and testament.

Tenants in common (similar to ownership in common accounts) means that each tenant holds a separate undivided share. Each tenant could hold different percentages of ownership in the real estate. Tenants in common usually come into play when the parties have different interests, and therefore want their share to be transferred on death in accordance with their personal last will and testament. For example, let’s say Sam and Paul are business partners and each owns equal shares in UK real estate (50%/50%) as tenants in common. On Sam’s death, he wants his share of the real estate to go to his two children as per his will.

In circumstances of tenants in common, Sam’s 50% share will be transferred to each of his children in equal share. So, the real estate is then owned 25% by child 1, 25% by child 2 and 50% by Paul.


How do exchange control regulations impact the practical workings of a joint account?

Before 23 February 2022, a South African exchange control resident was not allowed to place his/her foreign assets at the disposal of another South African exchange control resident without prior written approval from the SA Reserve Bank (SARB). 

Post-23 February 2022, the SARB amended the regulations, such that a South African exchange control resident, with authorised foreign assets to donate, is now allowed to lend and/or dispose of such assets to another South African exchange control resident without the specific prior written approval of SARB. This is subject to local tax disclosure and compliance by both parties.

Owning offshore cash, investments and/or real estate in a joint capacity has therefore become a very handy tool from an estate planning perspective that could mitigate unnecessary probate procedures and create liquidity (in certain circumstances) for the surviving joint owner.


The bottom line

It’s important to understand the administrative process and tax implications of joint accounts before such an agreement is concluded. Investec offers international banking and investment solutions to our clients and we therefore can explore these options with clients.

Joint ownership of cash, investments and/or real estate tends to be most useful and efficient between spouses.

The consideration of joint ownership certainly deserves a place in your global estate plan. It's best to speak to your banker, wealth manager or in-country adviser about the most suitable approach for your specific circumstances.


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