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WHY IS IT IMPORTANT TO DEAL WITH COLLATION IN YOUR WILL?

WHY IS IT IMPORTANT TO DEAL WITH COLLATION IN YOUR WILL?

The South Africa common law presumption of collation (collatio bonorum) is alive and well.

This presumption is rooted in the belief that a testator intended that there should be equality in the distribution of his estate among his descendants (“children”). Collation is the process by which the inheritance of certain descendants (heirs) of the deceased is adjusted to consider any substantial benefits received from the testator during his lifetime.

Collation is achieved by adding to the inheritance the amount due by each heir. The new total shall then be divided between all the heirs. An heir cannot, if he refuses to collate, enforce legal remedies to claim his share of the inheritance.

Collation further takes place by operation of law and therefore applies automatically to your will, or if you have failed to execute a will it applies to your intestate heirs.

If you, therefore, intend to release any of your descendants (heirs) from this obligation to collate it should be clearly expressed in your will, by adding the following paragraph: –

“I direct that my children need not collate any of the gifts or sums of money they received from me during my lifetime and I remit collation so far as they are concerned.”

Or if you specifically intend for one of your descendants (heirs) to collate it should be clearly expressed in your will, by adding the following paragraph: –

“I record that during my lifetime I advanced to my son, Piet Louw sums totalling in all R300 000 (three hundred thousand rand) to enable him to qualify as an attorney and I direct that he collates that sum with my estate before he is paid his inheritance in terms of this will.

An heir who is obliged to collate has the choice of restoring the property he has received or permitting a deduction equal to the value he received at the time of the gift.

Considering the above it is imperative to have your true intentions reflected in your will and to enlist the services of an estate specialist to assist you with your estate planning and the drafting of your will.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

UPDATING OR DRAFTING YOUR WILL

UPDATING OR DRAFTING YOUR WILL

This year is coming to an end at a rapid speed. There is still so much to be done before the December holidays and the last thing you want to think about now is your personal affairs, especially your will.

However, the reality is that according to the Road Traffic Management Corporation’s (RTMC) report from 1 December 2015 to 11 January 2016, 1434 fatal accidents occurred on South African roads and 1 828 persons died during this period.

It is extremely important to keep your will up to date, especially in changing circumstances, such as the purchase of a property or the birth of a child.

David and Vera has a 20 year old daughter, Anne, who lives with them while completing her studies. Their will, among other things, indicates that should they pass away at the same time, their estate will go to Anne.  They are of the opinion that she will at least have a home to live in.

What they did not keep in mind, however, is that their life insurance will only be enough to settle the existing mortgage bond registered over the property. Unfortunately, they also have a lot of other debt and the reality is that should Anne not be able to pay the cash shortfall into the estate, the house would have to be sold to settle the estate’s debt.

Should David and Vera not pass away at the same time and the surviving spouse inherits the deceased spouse’s estate, the survivor will be faced with the same problem as Anne if they cannot pay the cash shortfall in the estate.

When you see an attorney for estate planning, it is important to disclose all information about your assets, liabilities and finances. Costs like the executor’s fee, possible estate duty, master fees and other expenses like your funeral expenses should also be kept in mind. Additionally, ensure that provision is made to meet your dependents’ daily needs.

The following is a broad guideline of the *capital that will be required:

Your debt +
Your funeral expenses +
Your monthly expenses for two years +
Provision for possible estate duty, executors fees, transfer fees, income tax return, capital gains tax on second property
Cash needed in estate

*Capital in your estate can consist of physical cash in a bank account or investment, insurance policies, pension fund disbursements or estate assets that can be sold.

It is therefore advisable to take the following with you for consideration during your consultation:

LIST OF INFORMATION NEEDED
ASSETS :
Immovable Property
Motor Vehicles (paid up)
Furniture
Jewellery, Coin Collection, Valuable paintings with valuations
Details of Bank Accounts
Details of Cash Investments
Details of Funeral Policies
Details of Life Insurance Policies
Details of Retirement Annuities / Pension Fund
Details of endowment policies
Details of Shares of Business Interests
LIABILITIES :
Details of Bonds over Immovable Property
Details of Debt on Motor Vehicles
Details of Loan Accounts and Credit Cards
Details of Personal Loans and Study Debt
Details of maintenance to divorced spouse / minor children
Details of all other debt and responsibilities ex clothing accounts

It’s never easy to lose a loved one, therefore you need to ensure that the administration of your estate is as care free as possible for your family.

From 11th to 15th September, it is the annual National Wills Week, where participating attorneys set up a free basic will for clients. Contact MHI today for an appointment.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

GROUNDS TO CHALLENGE A WILL

GROUNDS TO CHALLENGE A WILL

My dad married again and his children with his other wife inherited, but not us. On what grounds can we challenge his will?

In order to make a valid will, the testator must have the necessary testamentary capacity. A will is presumed to be valid until its invalidity has been established and the onus is on the person alleging the invalidity, to prove the allegation.

No person in terms of the South African law has the right to inherit. However the freedom of a testator to dispose his estate as he wishes is not absolute, since the law can restrain testators in their exercise of their testamentary freedom.

Grounds to challenge a will:

Failure to comply with the formalities:

Section 2 of the Wills Act 7 of 1953 (“the Act”) determines the formalities for a valid will. However in terms of section 2(3) of the Act, if a court is satisfied that a document or an amendment, drafted or executed by a person who has since died, was intended to be that person’s will or an amendment thereto, the court shall order the Master of the High Court to accept that document as his will, despite it not complying with the prescribed formalities.

Therefore courts have a general discretion to condone non-compliance with the prescribed formalities. In most case law courts use a strict application/approach of section 2(3) of the Act and always considers the surrounding circumstances to determine whether the testator intended the document to be his will.

Forgery:

A will can be challenged on the ground that it was forged. In other words the will looks genuine and complies with all the formalities, but the testator’s signature is forged. In this instance evidence such as statements made by the testator, the testator’s instructions and statements of testamentary intention are admissible. In Molefi v Nhlapo and Others the court allowed evidence of a handwriting expert and his evidence helped to determine that the will was a forgery.

Another instance when a will can be challenged on the ground of forgery, would be when a person is disqualified to inherit or benefit from the will. Examples include:

  1. A person depriving his siblings of their share according to the estate;
  2. A person contributed or caused the death of the testator and;
  3. A person and his spouse, who is a witness to a will, signs on behalf of the testator or who writes out the will in his handwriting. However section 4A(2) of the Act states that where a court is satisfied that the person or his spouse did not defraud or unduly influence the testator in the making of his will, they would be able to receive a benefit in terms of the will.

Testamentary capacity:

Section 4 of the Act states that any person who is sixteen years and older, and has the mental capacity to understand what he is doing, can execute a will. The problematic requirement is whether the testator had sufficient mental capacity to understand and appreciate his testamentary act. In Thirion v Die Meester the court held that the consumption of alcohol is not a sufficient ground to invalidate the will. In Essop v Mustapha and Essop NNO and Others the court held that the decisive moment for establishing the competence of a testator is the time when the will was made and not when instructions were given to draft a will.

Undue influence:

Every testator has testamentary freedom and discretion to divide his estate as he wishes. In the case where a testator’s testamentary freedom and discretion was infringed or impaired, his will is declared invalid. Courts have to take into consideration certain principle circumstances, like the testator’s mental capacity; the testator’s ability to resist influence; the relationship between the testator and the person responsible for the alleged influence and; the period between the drafting of the will and the death of the testator. Conduct similar to duress or fraud is also required. Therefore the key element to contest a will on the ground of undue influence is displacement of volition. However if after the execution of a will a period of time has lapsed, during which the testator could have changed his will and he did not, it may be concluded that his will was not made against his wishes.

If in doubt whether you can contest a wil, contact your legal advisor for clarification.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

DIFFERENT TYPES OF WILLS

DIFFERENT TYPES OF WILLS

A3_AWhere parties are married to each other in community of property, the legal effect of such a marriage is that all the assets and liabilities owned by each party prior to the marriage, or acquired by them during the course of the marriage, will form part of a communal or joint estate of the two spouses.  This means that all assets acquired during the course of the marriage, will be owned by them in equal, undivided shares.  In most instances spouses married in community of property to each other execute a joint Will, which is a single Will (a single legal document) prepared and signed by both the spouses in terms of which all their assets and property are bequeathed according to their wishes.

The fact that only one Will is executed does not necessarily mean that the Testator and the Testatrix are jointly deciding on how their assets should be divided upon their deaths, eventhough the parties are married to each other in community of property.  The law recognizes each Testator’s right to dispose of his/her assets as each party deems fit.  As such, each party will decide how his/her estate is to be divided upon their deaths separate from each other, although their wishes are contained in one single Will.

If parties are married out of community of property and also decide to execute a joint Will, the drafter of the Will needs to ensure that the Will reflects whether it is two separate Wills contained in one document, or whether the massing of the separate estates of the parties (as referred to below), will take place.  Said joint Will also needs to prescribe what will happen if the husband and wife should die simultaneously, or within a short period of time (ie. 30 days) from each other.

Each party retains the right to amend the joint Will without the consent of the other Testator.  Each party also has the right to draft a new Will at any given point in time, without having the obligation of informing the other Testator thereof.  Should the joint Will be the last Will of the deceased, said Will will be valid in respect of that deceased irrespective of the fact that the surviving spouse executed another Will subsequent to the signature of the joint Will.

Although a joint Will is a common phenomenon amongst married couples, caution must be taken when drafting same as the parties’ assets, liabilities and their separate needs for the division of their assets upon death needs to be taken into account when one considers whether a joint Will is the answer to the parties’ needs.   Lastmentioned is critical, especially in light of the fact that a joint Will might result in negative financial and tax implications for one or both of the parties.

Parties can also execute one Will in terms of which it is decided that the massing of their separate estates, or the massing of the joint estate needs to take place.  Massing of estates takes place when the estate of two persons is massed into one estate upon the death of the first of them, for the purpose of dealing with a communal asset of both the parties.  Even if massing took place, the surviving spouse has the right to either accept or to refuse the joint Will and the massing of the estate assets upon the death of the first of the Testators.  This leaves the door open for the surviving spouse to walk away from the joint Will if he/she refuses to accept the terms of the joint Will upon death of the first Testator.  Even the acceptance or refusal of a Will in which a massed estate is created, can have a variety of tax implications and as such, caution is advised when the execution of such a Will is being considered.

Nothing however prevents married couples to each execute a Will in their own names in terms of which their exact wishes as to the division of their respective estates are stipulated.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

WHAT HAPPENS IF I DIE WITHOUT A WILL?

WHAT HAPPENS IF I DIE WITHOUT A WILL?

A3Attorneys often emphasise the fact that you should have a will drawn up and revise it regularly in order to facilitate the administration of your possessions after your death. Many people still neglect to do this. The problem is that, should a person die without leaving a valid will, in other words intestate, his/her estate will be administered and distributed according to the stipulations of the Intestate Succession Act, 1987.

Below is a basic example of the effect an intestate death will have on the distribution of an estate. Should the composition of the beneficiaries of the deceased be more complex, the administering of the estate in terms of the Intestate Succession Act will also become more complicated.

Let us assume that person A dies and the value of his estate is R1.8 million. He is survived by his wife (B) and two children, of which one is of age and the other is a minor.

Scenario 1:

A and B are married out of community of property.

B inherits R125 000 or a child’s portion, whichever is the largest.

A child’s portion is calculated by dividing the total value of the estate by the spouse and number of children, in other words R1.8 million/3 = R600 000.

The spouse and children therefore inherit R600 000 each.

Scenario 2:

A and B are married in community of property.

B inherits 50% of the estate due to the marriage in community of property.

B also inherits R125 000 or a child’s portion, whichever is the largest, with regard to the other half of the estate.

A child’s portion is calculated by dividing half of the total value of the estate by the spouse and number of children, in other words R900 000/3 = R300 000.

The spouse inherits R1.2 million and the children R300 000 each.

How does a minor receive their inheritance?

The inheritance of the minor will be paid to the Master’s Guardian’s Fund, as there is no will which determines that a minor’s inheritance should be placed in e.g. a testamentary trust, where the funds will be administrated on behalf of the minor until he/she becomes of age or reaches any other specified age.

The fact that the inheritance of a minor will be paid to the Master’s Guardian’s Fund may place the spouse in a dilemma such that he/she has to devise plans to finance the amount payable to the Master’s Guardian’s Fund to the benefit of the minor. Alternatively, she could register a mortgage against an immovable property in favour of the Master’s Guardian’s Fund.

When there’s no will

In the case of a death without a valid will there will be no person or institution appointed to support the surviving spouse in the administering of the estate. This should not usually present a huge obstacle, but the spouse should consider carefully which person or institution he/she appoints to assist them in this task. He/she should also negotiate the executor’s fee with the relevant person or institution before the administering of the estate commences.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

HOW TO REGISTER AN INTER-VIVOS TRUST

HOW TO REGISTER AN INTER-VIVOS TRUST

A2_MarIn South Africa there are mainly two types of trusts that are registered. An inter-vivos trust can be created between living persons, and a testamentary trust is created in the will of a deceased.An inter-vivos trust is registered at the office of the Master of the High Court in whose area of jurisdiction the main assets of the trust are or will be held.

The first step is to draw up a valid trust deed. A trust deed is a contract between the founder of the trust and the trustees, for the benefit of a third party or parties, known as the beneficiaries. In terms of the trust deed, the founder agrees to transfer certain assets to the trustees of the trust for the benefit of the beneficiaries. The trust deed must stipulate who the first trustees of the trust are going to be. In many instances the Master will insist on at least one independent trustee to be appointed. This means that the independent trustee will receive no benefit from the trust assets apart from the specified and reasonable trustee remuneration. The beneficiaries must be specified in the trust deed, as well as their entitlement to either the capital of the trust, the income of the trust assets, or both.

A trust deed is a valid contract and therefore subject to all applicable laws. Furthermore, there are significant tax, financial and other consequences of being involved in a trust, whether as trustee, founder or beneficiaries.  Therefore it is imperative to seek professional advice when drawing up this deed.

The duly signed and witnessed trust deed must be submitted to the Master of the High Court, together with the completed and signed Acceptance of Trusteeship for all trustees and certified copies of their identity documents. This Acceptance of Trusteeship states the basic information of the trustees that the Master requires, as well as certain declarations made by the trustee. If the Master requires the trustees to furnish security, proof of the bond of security by those trustees must be provided to the Master when the trust is registered. Form JM21 sets out certain requirements and information that must be supplied to the Master together with the other documents set out in this paragraph. This information include details on the professions or business occupation of the trustees to be registered, any previous experience that these trustees might have in the administration of trusts, the name and branch of the bank where a bank account will be opened for the trust, and so forth.  An original undertaking by an auditor or accounting officer must accompany form JM21. Lastly, proof of the payment of the prescribed fee of R100 must be submitted.

On receipt of the above documents in accordance with all the requirements, the Master will issue a Letter of Authority to the trustees. The trustees may then act on behalf of the trust.

Any amendments to the original trust deed must be placed on record with the Master of the High Court where the original trust deed is on record.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your attorney for specific and detailed advice. Errors and omissions excepted (E&OE)

WAAROM MOET EK ‘N TESTAMENT OPSTEL?

WAAROM MOET EK ‘N TESTAMENT OPSTEL?

A3bSoos die bekende gesegde deur Benjamin Franklin lui, “in hierdie wêreld kan niks met sekerheid gesê word nie, behalwe die dood en belasting.”

Niemand wil daaraan dink dat ons op een of ander stadium ‘n geliefde aan die dood sal afstaan nie, veral nie as ons nog jonk en gesond is nie.  Ongelukkig is dit ‘n realiteit wat ons op een of ander stadium in die gesig sal moet staar.  Wanneer dit wel gebeur is die laaste ding waaroor jou geliefdes bekommerd moet wees, die bereddering van jou boedel.

Kom ons kyk na Anton se omstandighede.  Hy is ‘n fikse en gesonde 32 jarige man, getroud met twee minderjarige kinders.  Hy besit ‘n huis met ‘n uitstaande verband, die meubels in die woning, ‘n motorvoertuig en ‘n spaarrekening.  Hy is onder die indruk dat hy nie nodig het om ‘n testament op te stel nie, hy is nog jonk en gaan nie ‘n reuse boedel nalaat nie, boonop sal sy vrou mos sy bates erf wanneer hy sterf…nie waar nie?

Sou Anton sterf sonder om ‘n geldige testament na te laat, sal sy boedel in terme van die Wet op Intestate Erfopvolging 81 van 1987 verdeel word.  Wat dit vir Anton se gesin beteken (soos in die scenario hierbo), sal sy vrou in terme van die Intestate Erfreg R250 000 of ‘n kindsdeel, watter bedrag ook al die grootste is, van sy boedel erf en sy kinders elk ‘n kindsdeel.  ‘n Kindsdeel word bereken deur die waarde van die boedel te verdeel deur die aantal kinders en nagelate gades.  Veronderstel die waarde van Anton se boedel beloop R1 200 000 sal ‘n kindsdeel R1 200 000 ÷ 3 (sy twee kinders en sy vrou) = R400 000 wees.  Sy vrou en elk van sy twee kinders sal dus R400 000 erf.   Die kindsdeel is dan groter as die minimum van R 250 000 voorgeskryf deur die wet. Maar sou die waarde van Anton se boedel R300 000 beloop, sal sy vrou R250 000 erf en sy twee kinders R25 000.00 elk.

Ten spyte van die feit dat hierdie omstandighede glad nie Anton se wense weerspieël nie, bestaan die moontlikheid dat die Eksekuteur van sy boedel die gesinswoning sal moet verkoop om die uitstaande verband af te los.  (Let asseblief dat dit nie altyd die geval is nie, maar wel ‘n moontlikheid afhangende van die omstandighede.)

Dit is uiters belangrik om ‘n deskundige te raadpleeg vir hulp en bystand met die opstel van ‘n testament.  Soos wat jou lewensomstandighede verander, moet jou testament ook gereeld opgedateer word om aan jou veranderende behoeftes of wense uitvoering te gee.

Eerstens stel ‘n testament jou in staat om jou wense duidelik uit te spreek.  Anton sal dus kon bepaal dat sy vrou sy hele boedel moet erf, wat haar in staat kon stel om moontlik met die kontant in sy spaarrekening ‘n gedeelte van die verband oor hulle woning af te los.  Dit kan dus letterlik die verskil beteken of sy hulle gesinswoning kan behou of nie.  Dit is belangrik om seker te maak dat geen onduidelikheid oor jou wense bestaan nie.  Jy sal nie meer hier wees om jou ware bedoeling uit te spreek nie.

Anton mag dalk oor ‘n paar jaar anders voel en sy kinders wil insluit by sy testament.  Hy kan dan ‘n Testamentêre Trust in sy Testament stig ten bate van sy minderjarige kinders.  Die Testament kan onder andere aandui wie as Trustees van die Testamentêre Trust aangestel moet word om die trustbates namens sy minderjarige kinders te behartig, asook die ouderdom waarop die erfporsie aan hulle uitbetaal moet word.

Verder sal ‘n deskundige hom adviseer oor die kostes verbonde aan die bereddering van ‘n boedel en die belangrikheid om voorsiening te maak dat voldoende kontant in die boedel betaal sal word om enige skuld af te los, asook kostes wat deur die loop van die boedelproses betaalbaar is.  Sodoende sal ‘n nagelate gade nie gedwing word om bates te verkoop om skuld te vereffen nie.

Anton sal ook in staat wees om ‘n Eksekuteur aan te wys in sy Testament wie sal toesien tot die administrasie van sy boedel.  Aangesien die boedelproses ‘n gespesialiseerde taak is, is dit wenslik om ‘n deskundige aan te stel.  ‘n Nagelate gade kan egter ook aangewys word as Eksekuteur van ‘n boedel, wie dan weer ‘n deskundige kan raadpleeg vir bystand.

Die afsterwe van ‘n geliefde is ‘n pynlike ervaring, dit is dus belangrik om alles in jou vermoë te doen om die bereddering van jou boedel so sorgvry moontlik vir jou geliefdes te maak.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

DIE BENOEMING VAN ‘N EKSEKUTEUR IN MY TESTAMENT

DIE BENOEMING VAN ‘N EKSEKUTEUR IN MY TESTAMENT

A1Hierdie is ‘n onderwerp waaroor al hoe meer besprekings en argumente plaasvind en dit is ook so dat individue meer ingelig raak oor wat die fooie is waarop die Eksekuteur van ‘n boedel geregtig is en hoe die fooie bereken word.

Soos ons in vorige atikels melding gemaak het, word die maksimum vergoeding waarop ‘n Eksekuteur geregtig is deur wetgewing vasgestel. Die huidige Eksekuteursvergoeding waarop ‘n Eksekuteur geregtig is, beloop tans 3.5% van die bruto boedelwaarde plus 14% BTW (indien die Eksekuteur natuurlik vir BTW geregistreer is).

Op die oog af blyk dit dat die vergoeding teen ‘n billike of selfs baie lae persentasie gehef word, maar kom ons illustreer dit met ‘n voorbeeld:

Kom ons veronderstel die bruto boedelwaarde beloop R2 miljoen. Neem kennis dat weens die drastiese stygings in die waarde van onroerende eiendomme oor die laaste paar jare, ‘n boedel met ‘n bruto waarde van R2 miljoen maklik haalbaar en baie realisties is indien u onroerende eiendom besit.

R2 miljoen x 3.5% = R70 000-00

Plus 14% BTW = R9 800-00

Totale Eksekuteursvergoeding = R79 800-00

Laasgenoemde Eksekuteursvergoeding sluit nie enige ander administrasiekostes bv. oordragkostes van die onroerende eiendom of begrafniskostes in nie. Dit is dus duidelik dat kostes om die administrasie van ‘n boedel met ‘n waarde van R2 miljoen af te handel maklik meer as R100 000 kan beloop. Die gevolg is dat individue al hoe meer oorweging daaraan gee om die langslewende of ‘n ander familielid as Eksekuteur te benoem, met die veronderstelling dat die genomineerde Eksekuteur dan in ‘n posisie geplaas word om die Eksekuteursvergoeding met ‘n instelling te onderhandel, wat dan as die genomineerde Eksekuteur se agent sal optree.

Dit gebeur egter dat die genomineerde Eksekuteur (bv. die langslewende gade) nie deeglik ingelig word oor wat hy/sy te doen staan indien sy/haar gade te sterwe sou kom nie en gevolglik stel hy/sy die eerste agent aan wat sy/haar dienste aanbied, geen onderhandeling vind plaas nie en die agent hef dus maar nog steeds die volle tarief wat deur wetgewing vasgestel word.

Ons aanbeveling is dus die volgende:

  1. Benoem die langslewende of ‘n ander familielid as Eksekuteur van jou boedel, maar maak seker dat die benoemde Eksekuteur deeglik kennis dra dat hy/sy die Eksekuteursvergoeding met ‘n instelling kan onderhandel; of
  2. Indien jy voldoende vertroue in ‘n instelling het, benoem die instelling as Eksekuteur van jou boedel, maar onderhandel die Eksekuteursvergoeding voortydig en maak die ooreengekome tarief in die testament vas. Moet dit dus nie aan iemand anders oorlaat om na jou afsterwe oor Eksekuteursfoooie te onderhandel nie.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

WHY SHOULD I DRAFT A WILL

WHY SHOULD I DRAFT A WILL

A3bAs per the famous quote by Benjamin Franklin, “In this world nothing can be said to be certain, except death and taxes.”

Nobody wants to think about losing a loved one, especially when we are young and healthy.  Unfortunately, it is a reality that we have to face at some stage.  When this happens, the last thing your loved ones should be concerned about, is the administration of your estate.

Let’s look at Anton’s circumstances.  He is a fit and healthy 32 year old man, married with two young children.  He owns a house with an outstanding mortgage, the furniture in the house, a car and a savings account.  He is under the impression that he does not need to have a Will as he is still young and will not leave a huge estate behind, and in any event, should he pass away, his wife will inherit all his assets…right?

Should Anton pass away without leaving a valid Will, his estate will be divided in terms of the Intestate Succession Act 81 of 1987.  What this means for Anton’s family (as in the scenario above), in terms of the Intestate Succession his wife will inherit R250 000 or a child’s share of his estate, whichever amount is the greater, and his children will each inherit a child’s share. A child’s share is calculated by dividing the value of the estate by the number of children and surviving spouses.  Suppose the value of Anton’s estate amounted to R1 200 000, a child’s share will then be calculated as R1 200 000 ÷ 3 (his two children and his wife) = R400 000.  His wife and each of his two children will inherit R400 000. The child’s share is then greater than the minimum of R 250 000 stipulated by the Act. If the value of Anton’s estate amounted to R300 000, his wife will inherit R250 000 and his two children R25 000 each.

Despite the fact that this situation does not reflect Anton’s wishes at all, the possibility exists that the executor of his estate may have to sell the family home to pay off the outstanding mortgage. (Kindly note that this is not always the case, just a possibility depending on the circumstances.)

It is extremely important to consult an expert for help and assistance with the drafting of a Will.  As your living conditions change, you will also have to update your Will regularly to give effect to your changing needs or wishes.

First of all a Will enables you to express your wishes clearly.  Anton will be able to specify  that his wife is to inherit his entire estate, which could enable her to possibly utilize the cash in his savings account to pay a part of the outstanding mortgage.  This could literally mean the difference between keeping and losing their family home.  It is important to ensure that no ambiguity arise from your wishes, as you will not be here to explain your true intent.

Anton might feel different in a few years’ time and now wish to include his children in his Will.  He can then create a Testamentary Trust in his Will for the benefit of his minor children.  His Will can indicate among others, the Trustees of the Testamentary Trust, who will manage the Trust Assets on behalf of his minor children, as well as the age when their inheritance should be paid out to them.

Furthermore, an expert will be able to give Anton advice on the costs associated with the administration of an estate and the importance of having sufficient cash available in the estate to settle any debt and costs payable during the course of the estate process.  This will ensure that the surviving spouse is not forced to sell assets to pay debt.

Anton will also be able to appoint an Executor in his Will who will be responsible for the administration of his estate.  Since the estate process is a specialized task, it is recommended to appoint an expert in this field.  However, a surviving spouse may be appointed as executor of an estate, who can in return consult with a specialist for assistance.

The death of a loved one is a painful experience, it is important to do everything in your power to make the administration of your estate as carefree as possible for your loved ones.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

APPOINTMENT OF THE EXECUTOR OF MY WILL

APPOINTMENT OF THE EXECUTOR OF MY WILL

A1This is a subject which causes more and more discussion and people become more knowledgeable about Executor’s  and how it is calculated.

As mentioned in previous articles, the maximum Executor’s fee is fixed by law.

The current maximum permissible Executor’s fee is 3.5% of the gross estate value plus 14% VAT (should the Executor be registered for VAT).

It seems as though this fee is very fair or even at a very low percentage, but let us illustrate with an example:

Let us suppose that the gross estate value is R2 million. Due to the drastic increase in the value of fixed property over the last few years it is quite possible to attain a gross estate value of R2 million and very realistic if you own fixed property.

R2 million x 3.5% = R70 000-00

Plus 14% VAT = R9 800-00

Total Executor’s fee = R79 800-00

This Executor’s fee does not include any additional administrative costs such as transfer fees of the fixed property or funeral costs. Thus it becomes clear that the cost of administering an estate to the value of R2 million could easily escalate to R100 000. The result is that more and more individuals consider appointing the person who lives longest or another family member as Executor, assuming that the appointed Executor is then enabled to negotiate an Executor’s fee with an institution which will then act as the appointed Executor’s agent.

It does happen, however, that the appointed Executor (e.g. the surviving spouse) is not well-informed about the actions he/she should take when his/her spouse dies, therefore he/she often appoints the first agent who offers his/her services. No negotiation takes place and the agent imposes the maximum tariff as fixed by the law.

Our recommendation is therefore the following:

  1. Appoint the person who lives the longest or another family member as Executor of your estate, but ensure that the appointed Executor is fully aware of the fact that he/she may negotiate the Executor’s fee with an institution; or
  2. Should you have every confidence in an institution, appoint that institution as Executor of your estate, but negotiate beforehand and fix the agreed tariff in your will. Do not leave it up to any other person to negotiate Executor’s fees after you have passed away.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.