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Complex Wills - continued

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Addenda to a will (codicil)

 

Avoid any addenda to a will, since it carries risks.  The law sets strict requirements to which one must comply and which could cause both the will and addenda to be invalid.

Description of all assets

It is not advisable to try and describe all your assets in your will. You risk leaving out assets obtained later. Describe only those assets that will be bequeathed to specific heirs and bequeath the rest of your assets in set proportions to specific heirs.

Ambiguous terms

Terms such as "cash" and "movable goods" should not be used unqualified in a will, since this may be interpreted in different ways. This could lead to serious problems and fighting amongst heirs.

Complex business affairs

It is important that you make provision for the transfer or continuation of your business after your death.  This should ideally happen while you're still alive and by way of agreements with partners and shareholders. It is vitally important that agreements must be in writing and not be only verbal. Verbal agreements are very difficult to prove after the death of one party.

Unfinalised contracts

Your death does not mean the end of contracts entered into before you died, unless it was a contract of a personal nature that requires your personal skills.  In all other cases, the executor of your estate is bound to your contracts. It may be necessary to grant express and specific authorisation in your will to the executor in order to execute contracts.

Insolvent heirs

If some of your heirs are insolvent at your death, their inheritances will form part of their insolvent estates and will be used to pay creditors.

To avoid this, the benefits should not be bequeathed directly to the heir, but to a discretionary testamentary trust to be administered to the benefit of such an heir until rehabilitated. This way, the heir's inheritance will be safeguarded for him and his children.

Accrual claims

If you and your spouse are married under the accrual system, the spouse whose estate accrues the least in value during the marriage will have a claim against the spouse whose assets grow the most.

The abovementioned claims is handled just like any other claim against the estate of the deceased. It is critically important that you plan your estate accordingly.

If the heir refuses

Much has been said about wills being your last word here on earth. They could also be described as a manual for the execution of the last wishes of the deceased. This is not wrong, but what about the wishes of the heir? How does this affect him or her?

Normally one doesn't hear from those who inherit, that they complain or get involved in court cases. It may sound strange to say that a person does not need to accept an inheritance, but it can happen - usually for financial reasons. It is known in legal circles as doctrine of election. In more fancy language it is known as adiation (acceptance) and repudiation (refusal) of the inheritance as set out in a will.

To use an example: a father bequeaths certain assets to his son or daughter, but places a certain obligation on one of them, such as to stipulate that the heir must give a part of the inheritance to another member of the family.

In short, the doctrine of election makes it possible to receive something in exchange for the heir paying or giving something to another person. This is when the heir has the choice of accepting or refusing his inheritance.

If a man and a woman are married in communion of property, for instance, and have a house worth R500 000 and an investment of R800 000, everything is usually divided equally.

When the man says he bequeaths his entire estate to his wife, he actually says he is bequeathing half of the estate to his wife thus half the house and half the investment. The other half already belongs to her according to their marriage contract.

But if he says he bequeaths the house to their child, he can only bequeath half the house. The intention is that the child should get the whole house, but then he has to ensure that his wife is in a position in which she can do without her portion of the house. If not, the child cannot get the full house, since his wife owns half.

Their will has to stipulate that his and his wife's portion of the house is bequeathed to the child and that the balance of his estate is bequeathed to his wife that is, half of the investment. Remember, half of it belongs to her already.

When the estate is administered, the wife has to elect. She could either accept or decline the will. She should choose between foregoing half the house, in other words foregoing R250 000 in value in order to get her husband's portion of the investment, namely R400 000. She can't do both she has to choose: either the house or the investment.

It is however not that simple: If she says no, she does not accept the will and loses all benefits therein, because she has refused the will. There is therefore no heir for the rest of the estate (the R400 000 investment). At this point, the Intestate Succession Act comes into play, which determines how the rest of the estate will be dealt with. In other words, the law determines what will happen to the husband's share of the estate.

In such a case, the wife will get the greater of a child's portion or R125 000. The number of children plus one determines a child's portion. In this case, there is only one child, so the estate is divided into two. The son thus inherits, intestate, R200 000 cash and the wife the other R200 000.

Complex Wills - Page 1

 

The Difference Between An Income Beneficiary Of A Testamentary Trust And A Usufructuary

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