Testamentary trusts still have their place
How you can protect your assets from predators—including SARS TRUSTS HAVE received a lot of bad press over the past few years, what with SARS taking a dim view of the use of trusts as a means of avoiding tax. A 2008 case involving a property trust, where the beneficiaries were changed in the hope of avoiding the payment of transfer duty, is but one example of SARS’ increased vigilance when it comes to trusts. In this particular case the loophole was closed, and the court found that transfer duty was in fact payable. So does this mean that trusts are dead? Not at all, provided that you use them for their proper purpose—protection of assets for beneficiaries—and not some kind of ‘tax eraser’. A question received from one of our readers has highlighted the need for a greater understanding of the more traditional role of trust structures. The person who sent in this question wants to put a commercial property into a testamentary trust, and is concerned about the potential transfer duty and Capital Gains Tax (CGT) consequences of such a decision. But firstly, a quick explanation of testamentary trusts. Known also as will trusts or trusts mortis causa, they are trust structures that come into being as a consequence of death, and the founding instrument is a clause contained in a person’s will. Such a clause would normally direct that any assets bequeathed to a particular beneficiary are to be held in trust for a finite or indefinite period. These trust clauses are usually encountered where the testator wishes to protect certain beneficiaries—usually minor children—who may inherit in terms of the will before they are of an age where they can exercise prudence in managing the assets inherited. A typical clause would, for example, direct that any bequests to minor children would be held in trust until the child reaches a certain age. However, the same degree of thought needs to go into the formation of a testamentary trust as you would do for a trust that you set up in your lifetime—especially since you will no longer be around to change your mind or clarify your intentions. A clause giving effect to a testamentary trust should therefore identify at least the following elements: The assets held. These include specific bequests in terms of the will, but can also include unspecified assets forming either a fixed percentage of the estate, or a portion remaining after all other bequests (known as the ‘residue’). The beneficiaries. These are normally named in the will, or referred to by relationship (e.g. the unborn child of a person named). The trustees. Someone needs to administer this trust after you are gone. Distribution conditions. These include how the capital asset and/or any income is to be distributed; to whom such distributions are to be made; and under what conditions (e.g. income distributed to minor children for education purposes only). Provision for termination. Many will trusts provide, for example, that the trust is to be wound up and all assets distributed to beneficiaries upon reaching a certain age. Formalities. These would include the number of trustees, discretion concerning the distribution of assets and income, requirements for audit, substitution of beneficiaries, etc. Since the formation of a testamentary trust involves the transfer of assets from a deceased estate to the trust, a number of tax consequences arise. Firstly, there is the question of transfer duty where immovable property is concerned. Fortunately, Section 9(1)(e)(i) of the Transfer Duty Act provides that no transfer duty is payable by an heir to immovable property transferred to them from a deceased estate, provided that they have received such property by testamentary succession. This means that a third party who purchases a property from a deceased estate does not enjoy such exemption, and is therefore liable for the transfer duty. However, in light of the aforementioned 2008 court case whereby the change of trust beneficiaries gives rise to a transfer duty liability, what would happen in a case where a will trust is set up for multiple beneficiaries, and one of those beneficiaries subsequently dies? For example, the reader’s question referred to above asks what would happen if the person’s wife and two children are beneficiaries of the will trust, and the wife subsequently dies. This situation is different to that covered in the court case referred to above. In that particular case, the trust was effectively ‘sold’ by virtue of a whole-scale change in both trustees and beneficiaries. A consideration was also payable, which led the court to conclude that the transaction resembled the sale of the property for a consideration, thereby rendering the transaction dutiable. While the Transfer Duty Act does not specifically cover the situation of the death of one of the beneficiaries as in this example, it is submitted that such an event does not represent the “purchase of the property for a consideration” by the remaining beneficiaries, and would therefore not give rise to a transfer duty liability. This brings us to the second part of the question, being that related to CGT. When a person dies, they are deemed to have disposed of all of their assets, and a potential liability for CGT may result. However, the property that is regarded as the deceased’s ‘primary residence’ will qualify for an exemption of the first R2 million of any gains made thereon. The deceased would also qualify for the following CGT exemptions (according to the SARS website): most ‘personal use’ assets (e.g. car, furniture, personal effects, jewellery, etc.); retirement benefits; payments in respect of original long-term insurance policies (which would include life cover, funeral cover, and endowment policies); and an overall exemption on the first R300 000 of capital gains in the year of death (this replaces the normal R40 000 annual exclusion). In the case of the surviving spouse (being a beneficiary of the testamentary trust), subsequently dying, the fact that she is no longer a beneficiary does not have any CGT
The formation of trusts inSouth Africa
A trust exists when the founder of the trust has handed over or is bound to hand over to another the control of property which, or the proceeds of which, is to be administered or disposed of by the other (trustee or administrator). Anyone who has the capacity to undertake contractual obligations or to make a will may create a trust. In addition, a trust may be set up by the court, by statute, or by statutory authority. In each case, however, an intention to create a trust must be present: By means of an agreement This trust is created by means of a stipulatio alterio. Inter vivos trust comes into existence through a contract between the trust founder and trustee which contains stipulations in favour of a third party. The beneficiaries acquire certain rights in the trust property only when they accept the benefit of the stipulation. Where there is no acceptance, there is no right (Crookes v Watson 1956 (1) (SA) 277 (A)). By means of a will In the case of a trust created by a will, the trust is formed by a testator bequeathing assets either to the beneficiaries, but because of incapacity such as when a minor is a beneficiary, the testator then also appoints trustees to administer the property so bequeathed to the minor, or the testator bequeaths assets to the trustees to administer it for the benefit of the beneficiaries (usually subject to some conditions and discretionary powers given to trustee). A testamentary trust must at all times comply with the formalities prescribed by the Will Act 7 of 1953. By means of a court order Although in some instances the court can be regarded as the founder, the initiative for creation usually comes from the parties seeking the order. Such a trust is normally created to address a particular problem such as the awarding of damages, or an amount of compensation to a person who is not capable of handling his own affairs or in a divorce where the parties seek to protect a family asset such as a house for children. In all these instances the tax implications (such as donations tax, transfer duty, capital gains tax and income tax) cannot be ignored and the trust deed as well as the passing of any funds or assets to the trust need to be structured very carefully in order to retain the protection qualities of a trust. Written by SINAZO MAU-MAU 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)
Customary union declared valid in wives’ dispute
The weight that customary marriages carry was highlighted once again during a legal wrangle between two widows. Both “wives” claimed that they were legally married to their now-deceased husband. The first wife stated that she married her husband in 1991 in terms of customary law. The second wife stated that she was the “true wife” because she had legally married her husband in 2007 in terms of civil proceedings. Both wives claimed that they were entitled to their late husband’s estate, and each requested the Gauteng High Court in Pretoria to declare her marriage as being valid. However, when Steve Sibanyoni died in December 2020, he had no idea that his marriage to the second wife was invalid because, according to the court’s verdict after his death, he was still married to wife number one. After the deceased’s death, his first wife attempted to report his estate but was advised by the Master of the High Court that the second wife had been appointed as executor by virtue of her civil marriage with the deceased. The first wife, who had been married to Sibanyoni for more than 30 years at the time of his death, went to the High Court to have the Master dealing with his estate recognise her as the true wife. The first wife obtained confirmation from a traditional authority as her customary marriage was not registered with Home Affairs. She maintained that her customary marriage was not dissolved by the time her husband married the second wife and said the recognition of the Customary Marriages Act made her the lawful wife. The second wife, on the other hand, stated that her marriage was solemnised in a public ceremony and that the first wife knew of her marriage with the deceased and had not objected to it. Judge Cassim Sardiwalla said marriage in terms of customary law gives rise to some legal complexities. Sardiwalla said it must be examined whether the customs, traditions or rituals that must be observed in the negotiations and celebration of customary marriages have been complied with. These include the negotiations leading to the agreement on lobolo, as well as any other tradition, custom or ritual associated with these. If a customary marriage has not been concluded in accordance with customary law, it cannot be regarded as valid. The court found that the requirements for a valid customary marriage are thus similar to those prescribed for a civil marriage, except that a customary marriage had to be negotiated and entered into or celebrated in accordance with customary law. The judge referred to an earlier court judgment on this subject, in which it was said: “No hard and fast rules can be laid down; this is because customary law is a flexible, dynamic system, which continuously evolves within the context of its values and norms, consistent with the Constitution, so as to meet the changing needs of the people who live by its norms”. Although the Recognition of Customary Marriages Act makes it obligatory to register such a marriage, it does provide that a failure to do so does not affect the validity of that marriage. Sardiwalla declared the customary marriage between the first wife and the deceased valid and the civil marriage between the second wife and the deceased null and void. The Minister of Home Affairs was directed to expunge the civil marriage between the second wife and the deceased from the marriage register and to register the customary marriage. Reference List: Recognition of Customary Marriages Act 120 of 1998 Marriages Act 25 of 1961 Phele and Another v Sibanyoni and Others – Judgment: 15 July 2022 Mbungela and Another v Mkabi and Others 2020 (1) SA 41 (SCA) 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)
Distributing retirement funddeath benefits
Step 1: Identifying and tracing dependents Section 37C of the Pension Funds Act places a clear and onerous duty on the board of trustees to determine the fair and equitable distribution of death benefits of fund members. The first step is to find and identify dependants. This article provides an overview of the different types of dependants, as well as nominated beneficiaries. In order to disburse a death benefit, there is a duty on the board of trustees to conduct a proper investigation to determine all the dependants. Section 37C excludes freedom of testation and overrides the laws of intestate succession or any other law that may be in conflict with the statutory scheme contemplated in the Section. This means that trustees can’t simply follow the wishes of a member as ex-pressed in their last will, or follow the beneficiary nomination made by the member during their lifetime – or, very often, dictates by family members that may have their origins in customary law or the common law. The board must establish who the persons are who fall within the ambit of ‘dependant’ as defined in the Pension Funds Act 1956 (‘the Act’). Identifying dependants and nominees Determining dependants and nominees can prove to be a challenging task for trustees, as they need to ensure that all dependants of the deceased member are taken into account in their decision-making processes. It is the duty of the board of trustees to correctly identify the members’ dependants and nominees in order to ensure the equitable and fair distribution of the death benefit. The Act defines three categories of dependants: Legal dependants This includes dependants in respect of whom the member owed a legal duty to support (meaning a duty that can be enforced in law), such as a spouse and children (including children born out of wedlock and adopted children). Parents, grandparents, grandchildren, and siblings can fall into this category, subject to certain provisions. In order to fall within the ambit of this category, the person claiming will have to prove that the deceased was legally obligated, i.e. in terms of legislation (Maintenance Act, 1998, Divorce Act 1979, common law, or a legal obligation) to maintain the person claiming. Factual dependants Those persons to whom the deceased owed no legal duty of financial support but who nevertheless factually depended on the deceased for maintenance. This would include a spouse in respect of whom the marriage or union is not recognised by any law or a financially independent major child. In order to fall within the ambit of this category, one would have to prove that the deceased financially maintained you despite not having any legal obligation to do so, or where the legal duty to maintenance has ceased to exist. Future dependants Those persons whom the deceased did not financially maintain at the point of their death, but whom they would have maintained in future, had they not died. This would typically include elderly parents, a fiancé, or an unborn child. In order to fall within the ambit of this category, one would have to prove that the deceased would have become liable to maintain you, had they not died. It is important to note that not all identified dependants automatically qualify to receive a portion or all of the death benefit. Once the board identifies a dependant as per the definition ‘dependant’ in the Act, such a dependant is only entitled to be considered by the board when making the benefit allocation decision. Nominated beneficiaries also do not have an automatic right to claim a death benefit. Nominated beneficiaries Apart from dependants, members of retirement funds are able to nominate beneficiaries. A nominee is someone who cannot, under the Act, be defined as a dependant but has been nominated, in writing, by the member to receive their benefit or a portion thereof. The member will fill out a nomination form, in which they will name all their financial dependants, as well as anyone else they wish to receive a portion of their pension in the event of their death. The member specifies what percentage they wish each of their nominees to receive. While the nomination form expresses the member’s wishes, it is only one of the factors considered by the trustees as part of the process of making an equitable distribution – being nominated in a nomination form entitles the nominee to be considered by the trustees, but does not automatically entitle the nominee to a portion of the benefit. A nominated beneficiary will automatically receive a portion of the benefit if no dependants have been identified in the 12-month period following the death of a member, and the nominee did not die before the member. The nominated beneficiary, unlike the dependant, does not need to prove their financial dependency on the member. A nominee qualifies by virtue of being nominated. Once all dependants have been identified, it is the duty of trustees to allocate and make benefit payments fairly, equitably, and within a reasonable timeframe. Written by ATLEHA-EDU 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)
Life partners now qualify for intestate succession
The Constitutional Court recently confirmed the October 2020 ruling of the Western Cape High Court that section 1(1) of the Intestate Succession Act is unconstitutional in so far as it excludes life partners in a relationship intended to be permanent, as per the definition of “spouse”. The Court ordered parliament to amend two laws to recognise the right of a surviving life partner in any relationship to inherit and claim maintenance after the other partner dies. The case arose after Jane Bwanya challenged the constitutionality of the Intestate Succession Act and the Maintenance of Surviving Spouses Act for discriminating on the basis of marital status. Ms Bwanya, originally from Zimbabwe, and the deceased, Mr Ruch, were involved in a relationship that comprised most, if not all, characteristics of a marriage. They met and entered into a romantic relationship in 2014. Later that year Mr Ruch asked Ms Bwanya to move in with him on a permanent basis. Ms Bwanya obliged. From then onwards, they split their time between Mr Ruch’s Camps Bay and Seaways properties. Ms Bwanya retained her place at the Meadows where she was employed as a domestic worker. Ms Bwanya’s and Mr Ruch’s friends were aware of the relationship. The pair used to accompany each other to various social gatherings. Mr Ruch introduced Ms Bwanya as his wife to his friends. They often hugged and kissed in the presence of other people. Mr Ruch referred to Ms Bwanya’s brother as his brother-in-law. In November 2015 Mr Ruch proposed to marry Ms Bwanya. She accepted the proposal. Preparations to travel to Zimbabwe began so that lobola negotiations could commence and Mr Ruch could meet Ms Bwanya’s family. These preparations involved selling the Seaways property. The proceeds were to be used to pay lobola and purchase a vehicle for the trip to Zimbabwe. The plan was for the pair to get married after the trip. On 23 April 2016, two months before the scheduled journey, Mr Ruch passed away unexpectedly. In his will he had nominated his mother as the sole heir to his estate. However, his mother had predeceased him. Ms Bwanya lodged two claims against Mr Ruch’s estate in terms of the Administration of Estates Act. They were for maintenance in terms of the Maintenance of Surviving Spouses Act and for inheritance in terms of the Intestate Succession Act. She based the claims on the fact that her permanent life partnership with Mr Ruch was akin to a marriage and that they had undertaken reciprocal duties of support towards each other. The basis of the claims was the following: the deceased was her life partner, they had been living together in a permanent, stable, and intimate relationship, and they were engaged to be married. Moreover, their partnership was analogous to, or had most of the characteristics of, a marriage: the deceased supported her financially and emotionally, and introduced her to friends as his wife. Furthermore, they had undertaken reciprocal duties of support and were to start a family together. The executor of the deceased’s estate rejected both claims on the basis that the Intestate Succession Act and Maintenance of Surviving Spouses Act conferred benefits only on married couples, not partners in permanent life partnerships. The majority judgment of the Constitutional Court, penned by Madlanga J, stressed that permanent life partnerships are a legitimate family structure and are deserving of respect and, given recent developments of the common law, entitled to legal protection. The judgment held that the definition of “survivor” in section 1 of the Maintenance of Surviving Spouses Act is unconstitutional and invalid insofar as it omits the words “and includes the surviving partner of a permanent life partnership terminated by the death of one partner in which the partners undertook reciprocal duties of support and in circumstances where the surviving partner has not received an equitable share in the deceased partner’s estate”. The judgment ordered that these words be read into the definition. “Spouse” and “marriage” are also declared to include a person in a permanent life partnership. The declaration of invalidity was suspended for 18 months to afford Parliament an opportunity to cure the constitutional defect. Additionally, the majority judgment confirmed the declaration of invalidity of section 1(1) of the Intestate Succession Act made by the High Court. Likewise, this declaration of invalidity was suspended for 18 months to afford Parliament an opportunity to cure the constitutional defect. The Bwanya judgment is a victory for permanent life partners, who now qualify as intestate heirs. If you wish to avoid uncertainty and prevent unintended consequences, then the best solution remains to execute a professionally drafted will and update it as and when necessary. Having a will is always extremely important. A valid will would have avoided the necessity for a court application in the case presented above. Executors should henceforth consider any claims from life partners under either of the mentioned Acts, as failure to do so could result in litigation. Reference List: Intestate Succession Act, 81 of 1987 Maintenance of Surviving Spouses Act, 27 of 1990 Bwanya v Master of the High Court, Cape Town and Others [2021] ZACC 51 https://collections.concourt.org.za 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)
Who qualifies for a special trust and how is it taxed?
Unlike “conventional trusts” that are taxed at a flat tax rate, a special trust is taxed on the same sliding scale applicable to natural persons. The Income Tax Act provides for two types of special trusts: a so-called type-A and type-B trust. In essence, a type-A trust is created for a person (or persons) having a disability, while a type-B trust is created on a testator’s death and can exist only while it has a minor as a beneficiary. The distinction between a type-A trust and a type-B trust is vital because a type-A trust qualifies for specific relief from capital gains tax but the same is not granted to a type-B trust. This article focuses on the characterises of a trust in order for it to qualify as a type-A trust. Characteristics of a type-A trust A type-A trust can either be: an inter vivos trust created during the lifetime of the founder of the trust; a testamentary trust created by, or under, the will of a deceased person (testator); or a trust created as a result of a court order in favour of a specified natural person. Type A special trusts must have the following characteristics to qualify for the favourable tax dispensation: The trust must be created solely for the benefit of one or more persons with a disability. In essence, this means that the trust deed must not provide for the possibility of any beneficiary who does not have a “disability” for as long as the person(s) with a disability is or are alive. For a trust to be a type-A trust, its beneficiaries must be incapacitated as a result of their disabilities from – earning sufficient income for their maintenance; or managing their own financial affairs. It is a requirement that at least one of the beneficiaries, for whose sole benefit the trust was created, should be alive on the last day of February of the relevant year of assessment of the trust. A trust will accordingly cease to be a type-A trust from the commencement of the year of assessment during which all the beneficiaries with a disability for whose sole benefit the trust was created, are deceased. A trust that is created solely for the benefit of more than one person with a disability must be for the benefit of persons with a disability who are each other’s relatives. The relationship between the founder or settlor and the beneficiaries is of no consequence. The requirement is that the beneficiaries having a disability must be relatives, not the founder or settlor. Accordingly, The relationship between the beneficiaries and founder or settlor has no impact on whether a trust qualifies as a type-A trust. It is important that where persons of disability are reliant on trust income to support their livelihood, these requirements be carefully considered and that the trust is correctly registered as a type-A trust with the South African Revenue Service. Should you require assistance in this regard, feel free to contact your tax adviser for more detail. 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?
We’ve all seen it in movies and novels: A young unsuspecting person wakes up one day to find out that they had been left an extraordinarily large estate from a distant relative that they hardly knew existed. We chalk it up to an absurdity. Something like that would never happen in real life, would it? Although it may seem farfetched, intestate succession happens far more often than one might realise. Statistics from the Master of the High Court in September 2019 showed that 70% of working South Africans do not have a will (or by extension, estate plan). Apart from the emotional distress caused by the death of a beloved, the families of these South Africans are in for a tough time should they pass away. When somebody over 16 years of age dies, their property will be distributed according to a will or estate plan. If there is no will to speak of, the estate of the deceased is distributed in accordance with the Intestate Succession Act 81 of 1987. In many respects, intestate succession is a complex and unnecessary complication in the distribution of an estate after death. Although somewhat clear cut regarding who is included in the distribution of the estate, the Intestate Succession Act leaves much of the how of the distribution and transfer of the estate to the inheriting parties. In the case of intestate succession, the estate of the deceased will be distributed in accordance with a predetermined line of succession, which usually includes their spouse, children and/or parents. Intestate succession can lead to procedures that take time, money and energy, which are luxuries for those who are mourning and settling the estate. One should keep in mind that the largest part of any estate is often real and private property. Without a plan for the distribution of one’s estate, it means that the physical property of the deceased also becomes part of a plan for distribution, which can take extremely long to settle (since assigning a monetary value to physical assets depends on valuation). As for the how of the distribution of the estate, it ends up falling on the shoulders of the heirs to the estate to nominate someone to act as executor, failing which an executor is appointed by the Master of the High Court. For this reason, family disputes are a commonplace in intestate succession as the fair distribution of the estate is brought into question. More often than not, there is very little liquidity in the estate to cover debts and taxes related to the property to be inherited. Since most of the real and private property does not have an immediate monetary value, any possible liquidity in these assets are locked up until the executor makes a decision on how the property is to be managed. Having a will is one thing, but estate planning goes further than a mere will, in that it gives direction for the management of the estate in preparation for when you die. Where a will only gives an indication of how assets should be distributed, a complete estate plan will give guidance as to how money is made immediately available to those who need it and how investments and financial assets are to be managed. Issues of custody, settling of debt, the continuation of school fees, and management of digital assets, among many other urgent matters, can also be simplified through a well-developed estate plan. The purpose of an estate plan, then, is to guide the management of your assets in a way that a will cannot. Good estate planning can speed up the processes that take so long when executing a will and comprises a holistic strategy to ensure that your loved ones are cared for after you die. In the case of estate planning, the adage holds true: Failure to plan is planning to fail. Don’t leave your dependents in a vulnerable position while they mourn. Instead, give them the best chance to live the life you’ve always hoped for them. References: Wills Act 7 of 1953 Intestate Succession Act 81 of 1987 https://www.moneyweb.co.za/financial-advisor-views/no-will-in-place-it-will-have-consequences/ This article is a general information sheet and should not be used or relied upon as 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 adviser for specific and detailed advice. Errors and omissions excepted (E&OE).
Determining the validity of your will
I gave instructions to my attorney to prepare a Will for me as my most recent Will no longer reflected my wishes. My attorney emailed the Will to me with clear instructions as to how I should go about signing the Will. I asked my neighbours to act and sign as witnesses. My neighbours signed the Will on all the pages and left before I signed the Will on all the pages. I am now worried about the validity of my Will as the email from my attorney states that I have to sign the Will in the presence of two witnesses. Is my Will valid? The formalities for the valid execution of a Will are set out in the Wills Act. Section 2 of the Wills Act, Act 7 of 1953, reads: “No will executed … shall be valid unless the will is signed at the end thereof by the testator… and such signature is made by the testator… in the presence of two or more competent witnesses present at the same time and such witnesses attest and sign the will in the presence of the testator and of each other…”. Therefore, for a Will to be valid, it must be signed in the presence of two witnesses, both witnesses being present when the Will is signed by the testator. The two witnesses signed your Will in the presence of each other, but not in your presence. A similar set of facts presented itself in a court case heard by the Gauteng Local Division of the High Court. In this matter, the two daughters of the deceased, who lost out on their inheritance in terms of the Will of their father, claimed that it was never their father’s intention for his much younger lover to inherit his total estate. The testator was 85 years old at the time of his death and he had been living with a woman 38 years his junior, for 8 years. The deceased executed two wills during his lifetime. One on 6 November 2011 (“the 2011 Will”) and another on 7 January 2014 (“the 2014 Will”). The 2014 Will was signed shortly before his death, leaving the bulk of his estate to his much younger lover. One of the witnesses called to testify in court was a witness to the 2014 Will. Her testimony focused on the circumstances surrounding the signing of the 2014 Will. She testified that she and her husband met the deceased in the street. As they were acquainted, they engaged in social conversation. She and her husband were informed that the deceased was on his way to the police station to sign a Will. She and her husband were asked if they would accompany the deceased to sign the Will as witnesses. They were assured that the process would not take long so they agreed to assist. She and her husband signed the Will and immediately left before witnessing the deceased signing the will. Hence, the 2014 Will was not signed by the deceased in their presence even though it reflects their respective signatures as witnesses. The evidence assessed collectively established that the deceased signed the 2011 Will and that he signed the 2014 Will. However, the 2014 Will was signed by the deceased after the two witnesses to the Will had already left and therefore was signed in their absence. The court referred to Section 2 of the Wills Act, in terms whereof no Will is valid unless the signature made by the testator is made “in the presence of two or more competent witnesses present at the same time”. The court confirmed that this requirement is mandatory and, if not met, the Will is not valid for want of compliance with a statutorily required formality. The court, therefore, found the 2014 Will to be invalid and, as there was no evidence that there was any irregularity in the execution of the 2011 Will, the 2011 Will was declared the Will of the deceased. This judgement of the High Court once again emphasizes the importance of complying with the Wills Act. Your Will is thus invalid and it is advisable for you to print the Will again and to sign it in the presence of two competent witnesses or, even better, for you to make an appointment with your attorney in order to sign the Will at his office. Reference List: Twine and Another v Naidoo and Another [2017] ZAGPJHC 288; [2018] 1 All SA 297 (GJ) Wills Act, Act 7 of 1953 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)
Get organised by putting these essential documents in place
If you can believe it, we are already at the end of January. With all the beginning-of-year struggles and excitement, there is something to keep in mind – your New Year’s resolutions. It is never too late to become better organised. One of the best ways to become better organised is to put life’s most essential documents in place. No one really wants to think about serious illness or death. While you may not want to think about these things at the start of a new year, going without planning can be problematic on many levels. If you want to make sure that your loved ones and your assets are secure, it is time to get better prepared by having those essential documents in place. Consider having these three documents prepared and signed: Last Will and Testament You really meant to get around to updating your Will after your wedding… the birth of your child… your divorce… your big move…but you just haven’t found the time. The right time is now! A Will is the only method by which you can ensure that your assets, including items of monetary and/or sentimental value, are properly protected and distributed in accordance with your wishes. A Will can have a great influence on the well-being of the persons that you care about, and when you draft a Will you ensure that they will be looked after when you are no longer there for them. Ensure that your Last Will and Testament leaves a legacy of love and not a deluge of destruction. Your Will should be a practical document in simple language which records your intentions and is easy to understand and execute. Living Will A Living Will is a document regarding healthcare at the end of your life. It states that any treatment that would otherwise lengthen your life should be withheld in specific circumstances, such as being in a permanent vegetative state, irreversibly unconscious or terminally ill. Through a Living Will, you express the desire to die a natural death, free from having your life extended artificially using life support in any form such as a life support machine, tube feeding, or medication. In other words, by way of a Living Will, you tell your family and your doctor that you do not consent to being kept alive artificially. A Living Will provides peace of mind as it enables you to express your choice of medical care should you be unable to communicate. A Living Will can also assist in settling disagreements amongst family members and medical professionals regarding appropriate treatment. Power of Attorney Power of attorney is one of those phrases that you hear quite often, and there can be some very real implications for a person that signs it over. Understanding exactly what a Power of Attorney is, and how it can affect you after certain life events, is very important. A Power of attorney is essentially a notice by way of which one person, known as a Principal, appoints and authorises another person, known as an Agent, to act on their behalf and make decisions for them. This can be for specific matters (Special Power of Attorney) or for all matters (General Power of Attorney). A Power of Attorney is a valuable tool when you are absent or become too frail to physically sign documents. These are a few suggestions to help you get administratively organised. It is all about peace of mind and knowing that your loved ones are cared for and aren’t put in a position to make difficult decisions. Having these documents in place might be one of the final acts of love you show your family. 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 do I register a trust?
A trust is an agreement between the person who owns the assets and the appointed trustees. A trust can be a good way to preserve your wealth for your family and children. A well-managed trust will make sure that anyone who is a beneficiary of the trust benefits from it. The trustees have the important job to administer the trust and its assets objectively with the best interests of the beneficiaries in mind. Trusts and their administration fall under the Trust Property Control Act no 57/1988. What types of trusts are there? It’s important to note that there are two types of trusts. An inter vivos trust and a testamentary trust. A testamentary trust is one that’s formed from the will of a deceased person. In the case of a testamentary trust the deceased’s last will serves as the trust document. An inter vivos trust is created between living persons, and will form the basis of this article. Inter vivos trusts can limit estate duty and preserve your assets and wealth for your descendants. Certain financial institutions assist in setting up a trust and can act as trustees. Registering an inter vivos trust To register an inter vivos trust with the Master of the High Court, the following documents must be lodged. Original trust deed or notarial certified copy thereof. Proof of payment of R100 fee, for registration of a new Trust. Completed Acceptance of Trusteeship (J417) and Acceptance of Auditor Application (J405) forms. Bond of security by the trustees – form J344 (if required by the Master) * There are no costs involved in amending an existing Trust. These documents are also required for the Master to issue the trustees with letters of authority for administering the trust. A trustee may not proceed to administer the trust without the written authority of the Master. If the trust’s assets or majority of its assets are located in a particular area, then the inter vivos trust has to be registered with the Master who has jurisdiction in that area. De-registering of a trust The Master can de-register the trust only once it has been terminated. The common law makes provision for the termination of a trust as the Trust Property Control Act makes no such provision. The following circumstances can be grounds for a trust to be terminated: by statute fulfilment of the object of the trust failure of the beneficiary renunciation or repudiation by the beneficiary destruction of the trust property the operation of a resolutive condition You will still need the original letter of authority, bank statements reflecting a nil balance on the final statement and proof that the beneficiaries have received their benefits. Administering the trust Trustees are required to comply with the Trust Property Control Act, which determines how trusts should be administered and the role of the trustees. If trustees fail to comply with the Act they may face criminal prosecution. The trustees have to always act with the best interests of the beneficiaries in mind. Some legal requirements of trustees include not being able to make secret profits, taking care and being objective when administering trust assets and always acting in good faith. Reference: Justice.gov.za. The Department of Justice and Constitutional Development, Administration of Trusts. [online] Available at: http://www.justice.gov.za/master/trust/ [Accessed 19/05/2016]. Sanlam.co.za. Sanlam Trusts. [online] Available at: https://www.sanlam.co.za/personal/financialplanning/willstrustsestates/Pages/trusts/ [Accessed 20/05/2016]. 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)