To give effect to an estate plan, a testator or testatrix will need to nominate certain people to perform specific functions or receive certain benefits in terms of their will. But, before making any nominations or appointments, it is important to fully understand the roles and responsibilities of each person mentioned in your will to ensure that they are appropriate to your estate plan.
At the beginning of your will, you are required to stipulate your marital regime and the nature of your matrimonial property regime. This is because your marriage contract directly impacts how you are able to bequeath your assets. For instance, if you are married in community of property, you and your spouse each own 50% of a common, joint estate – meaning that you are only able to bequeath half of the estate in terms of your will.
For estate planning purposes and when it comes to calculating estate duty, the Sars commissioner regards ‘spouse’ as any person in a marriage or customary union, unions recognised as marriages under tenets of religion, and same-sex or heterosexual unions which the commissioner is satisfied are intended to be permanent. As such, if you and your partner are living together but have not been legally married in terms of South African law, you run the risk of your partner not being considered as a ‘spouse’ in terms of the definition, and this can impact how the residue of your estate devolves on your heirs.
Note: If you and your partner live together in a long-term relationship, consider drafting a cohabitation agreement to set out the financial implications of your union.
In terms of South African law, a child under the age of 18 may not inherit lump sum payouts nor any other assets directly, because they are deemed not to have the legal capacity nor the ability to manage such assets. In providing for minor children, many testators choose to set up a testamentary trust with their minor children as the nominated beneficiaries. In the event of the testator’s death, the testamentary trust – which is formed in terms of the will – comes into formation, and all assets intended for the minor children are transferred into the trust where they will be administered on behalf of your children by the trustees you have nominated in your will. Failure to set up a testamentary trust may mean that assets bequeathed directly to your minor child will be held in the Guardian’s Fund where they will be administered until your child reaches the age of majority.
Note: If you have a special needs child who will never be capable of managing their affairs, you can set up a testamentary trust as a Special Trust Type A in terms of the Income Tax Act. This type of trust will remain in existence until the end of the year of assessment in which the special needs child passes. Further, there are significant tax benefits.
If you have minor children, it is important that you nominate a guardian for them in terms of your will, keeping in mind that the guardian will be responsible for caring for your child should you pass away. If you and the child’s other parent are still alive, your child has two natural guardians, and your legal guardian would only assume responsibility if you and your spouse (or the other parent) were to die simultaneously. On the other hand, if you are the child’s sole guardian, the legal guardian that you appoint in terms of your will would assume responsibility for your child in the event of your death.
In terms of the Children’s Act, you are able to nominate a legal guardian for your child in your will and, if the guardian accepts the position, they will acquire full parental rights and responsibilities. It is important to give careful consideration as to who would be best to care for your child, taking into account their cultural background, value system, religious beliefs, their location, and financial stability. The legal guardian is required to administer any property inherited by your minor child until they reach age 18 and will be required to make all decisions regarding your child’s schooling, extra-mural activities, and vocational guidance. The guardian will also be responsible for assisting or representing your minor child in administrative, contractual and/or legal matters until they reach maturity.
Note: Consider appointing an alternative guardian in your will in the event that the primary nomination is unavailable or unwilling to assume the appointment at the time.
The executor to your estate performs a vital role in administering your estate until it is wound up, and it’s important to give careful consideration to this appointment. Where you have nominated an executor in terms of your will, that person will need to apply to the Master’s office for what is known as Letters of Executorship which is effectively confirmation of their appointment.
Your deceased estate comes into effect immediately, and it is one of your executor’s first jobs to set up a preliminary interview with your loved ones, with the purpose being to prepare a rough inventory of your assets. The executor will be required to advertise for creditors and prepare a liquidation and distribution account. Once the L&D account has been signed off, the executor will need to pay estate duty, tax, and CGT, where applicable, and then distribute the assets accordingly. The job of an executor is an onerous one that requires in-depth legal, financial, and administrative know-how, so it is advisable to appoint an expert rather than a layperson.
Note: Be cautious of nominating a family member as executor. Family relationships and dynamics change over time, and you want to avoid an executor who will contribute to family tensions and stress during an already emotional time.
Master of the High Court
The office of the Master of the High Court is created by statute and its role is to serve the public in respect of deceased estate, liquidation, registration of trusts, tutors and curators, and the administration of the Guardian’s Fund. These five divisions serve to protect the financial interests of persons whose assets or interests are, for various reasons, being managed by others.
In terms of legislation, the job of the Master’s Office includes the administration of estates of deceased and insolvent persons, the protection of the interests of minors and legally incapacitated persons, and the protection and administration of the funds of minors, contractually incapacitated and undetermined and absent heirs, which have been paid into the Guardian’s Fund.
Its job also includes the safeguarding of all documentary material received by the Master in respect of deceased estate, the processing of enquiries by executors, attorneys, beneficiaries and other interested parties, and the appointment of impartial and capable persons as executors, trustees, curators, and liquidators.
Note: There are currently 15 Master’s Offices throughout South Africa. Generally speaking, if you were living in South Africa at the time of your death, your estate must be reported to the Master Office in whose area of jurisdiction you were living 12 months prior to your death.
Trustees play a vital role in managing and administering the assets bequeathed to your testamentary trust for the benefit of your minor children. As such, it is essential that your trustees have the appropriate financial acumen and understanding of the investment landscape. In managing the property of the trust, your trustees will have overall responsibility to manage the trust assets in compliance with the Trust Property Control Act, common law, and the trust instrument – and in doing so, will need to know and understand the scope of their powers, and ensure that they do not act outside of their mandate.
Also important to bear in mind is that trustees have a fiduciary duty in relation to the trust beneficiaries which is an onerous legal duty to act at all times in the best interests of the beneficiaries. In discharging their duties, trustees will need to take control of the trust assets, open a bank account in the name of the trust, and invest the assets for the benefit of the beneficiaries. They will also need to prepare accounts and records which must be made available to the Master.
Note: Although you can appoint your minor child’s guardian as a trustee, it is often advisable to keep these roles separate as a way of implementing checks and balances, and to avoid one person having complete autonomy and/or decision-making. Ideally, appoint an independent, professional trustee who has experience in managing trust assets.
Anyone who stands to benefit from a deceased person is called a beneficiary, although it is important to differentiate between a legatee and an heir. Where the testator or testatrix names a person in the will who would not otherwise have inherited in terms of intestate succession, that person is referred to as a legatee. In other words, if the will is found to be invalid, the legatee would not receive any benefit from the deceased as they are not recognised under the law of intestate succession. In terms of winding up the estate, keep in mind that your executor must pay your legatees first following which they can distribute the residue of your estate to your heirs.
Note: Because of this, it is important to ensure that there is sufficient liquidity in your estate after any bequests have been paid to your legatees to provide for your heirs as you had intended.
On the other hand, an heir is someone who is able to inherit via either testate or intestate succession. This means that, if your will is found to be invalid, your heirs would still receive their inheritance in terms of the principles of intestate succession. Our laws of intestate succession provide a strict set of guidelines for the order and proportions of your assets to be distributed amongst your spouse and blood relatives, keeping in mind that your spouse and children will always benefit first.
Note: Most wills include a residue clause that stipulates how the residue of your estate should be distributed. In the absence of such a clause, your estate may be found to be partially intestate, and the residue will be distributed to your heirs in accordance with the laws of intestate succession.
Anyone over the age of 14 and who is of sound mind is able to witness your will. Your witnesses are legally required to sign your will in your presence, and vice versa. If you and your two witnesses did not sign at the same time and place, your will can be rendered invalid. Remember, your witnesses are not required to read or understand the contents of your will. Their job is to attest that you signed the will in their presence.
While it is a legal requirement that you sign the last page of your will in the presence of two competent witnesses, it is advisable for both you and your witnesses to sign in full on each page and to ensure that your will is dated. Importantly, a beneficiary or the testator’s spouse should not sign as witnesses to the will as this could disqualify them from inheriting from the will.
Note: If a beneficiary who signed as a witness to a will is disqualified from inheriting, they will need to bring an application to the High Court to prove that they did not unduly influence or pressure the testator into signing the will.