INGÉ LAMPRECHT: People often draft a will with the best intentions, and even though the document may be technically sound, emotional decisions can have far-reaching consequences for the beneficiaries. They may even result in potential delays when winding up the estate.
To discuss the feelings or sentiments that could derail your estate planning, I’m joined by the CEO of the Fiduciary Institute of Southern Africa, Louis van Vuren. Louis, I’d like to discuss each of these emotions in some detail, but let’s unpack the issues first. What has been your experience? What are the five emotional issues that may create problems when winding up an estate?
LOUIS VAN VUREN: Ingé, firstly the desire to control – even after your death. Then also the desire to keep the peace – specifically in difficult family circumstances. Then there is also sympathy with struggling children, trying to look after your struggling children after your death, sometimes at the expense of other considerations. Feelings of guilt, or what I sometimes call debts of honour, when people feel they want to set the record straight or set things right in the will that they haven’t got round to during their lifetime. And then lastly feelings of superiority, whether it’s moral superiority or racial superiority or whatever. That also sometimes comes between a good, practical legally enforceable will and the wishes of the testator.
INGÉ LAMPRECHT: Louis, like you mentioned just now, impractical provisions in a will are often due to a desire to control or rule from the grave, so to speak. Why is this problematic and how do you avoid it?
LOUIS VAN VUREN: Ingé, the reality is that it doesn’t matter how carefully you think about things prior to your death, after your death circumstances can change drastically. And then if your will and the provisions of your will and how you would like things to happen after your death – sometimes for many years to come in certain cases – do not take into consideration the fact that circumstances can change drastically, this can lead to impractical situations, impractical solutions, etc.
One example would be: it has been, especially in the farming community, for many years customary to leave the farm and the farming operations to, let’s say, a son with the usufruct in favour of the surviving spouse, usually the wife. And the usufruct – in itself there is nothing wrong with it and it’s a perfectly legal structure – but the practical side of this is that often the farmers also try to limit the usufruct by stipulating that it will exist until the death or remarriage of the surviving spouse. And when people started living together and not necessarily getting married, there were all kinds of hilarious ways of trying to avoid a situation where the surviving spouse would still enjoy the usufruct after living with somebody.
An example that I came across many years ago was where the will stipulated that if the surviving spouse, the wife, stayed with any man under the roof of that farmhouse for more than five nights, the usufruct would be cancelled and everything would then go to the son. Now obviously the surviving spouse then found a very creative way around that. She married a year-long friend of theirs and they stayed in the house on the farm from Monday to Saturday morning, then went to town for the weekend and came back on the next Monday morning.
INGÉ LAMPRECHT: Very clever!
LOUIS VAN VUREN: Not breaking the conditions of the will. That’s just a hilarious example of where trying to rule from the grave didn’t work.
Then the other thing: there are conditions without sanction or an alternative bequest if the condition is not met. Now, that means nothing if you do not attach a sanction to a conditional bequest. An example of a conditional bequest would be: “I bequeath R1 million to my son, but he can only get it if he runs the Comrades Marathon in under six hours.” If you don’t set an alternative in the will, that means nothing because the condition is then unenforceable.
INGÉ LAMPRECHT: Louis, a lot of South African families are so-called “reconstituted” families. If this is your second or third marriage, there may be competing interests at play and a desire to keep the peace. What do you see in practice?
LOUIS VAN VUREN: Ingé, a reconstituted family can be a very simple situation, but it can also be a very complex situation. You can just think of all the different permutations with regard to children. In these families you get my children, your children, our children – and those are all competing interests. The current spouse may not be the natural parent of any of the children. Then you have the competing interests in the estate plan and, in crafting a practical and legally binding will, the challenge of addressing competing interests of looking after the surviving spouse, but at the same time protecting the interests of the children.
There is a slightly obscure provision in the Wills Act of 1953, which basically provides that if you bequeath something to the surviving spouse and a descendant or descendants – your children, for example – and let’s say one of the children renounces that inheritance, then that portion that would have gone to the child who renounced the inheritance will go to the surviving spouse. There is no way you can avoid it. You cannot write that legislative provision out of your will. It overrules any provision in your will. So that is not necessarily a problem if the children are all the children of the surviving spouse, the natural children of the surviving spouse.
But if the surviving spouse is not that natural parent of any of the children, that could become a problem. The conflict has to be managed – that conflict and those competing interests have to be managed in crafting the estate plan and drafting the will, making sure that you balance the interests of the surviving spouse and the children in a situation like that. If you don’t manage it at the planning and drafting stage, it will become messy after your death.
INGÉ LAMPRECHT: Louis, like you mentioned in the introduction, parents may also be concerned about their struggling children and include all sorts of provisions in the will to try and help them. What do they need to keep in mind?
LOUIS VAN VUREN: Sometimes people are so worried about children that they put the survivor at risk. For example, it is quite common for parents to leave the house to the children with the wish that the granny flat be added to the house or built on the same premises. That’s not necessarily a practical solution because in South African law the person who owns the land owns everything that is on it. So you cannot have a separate granny flat under normal circumstances.
The question then is so what happens if the child is transferred to another city and wants to sell the house? Now all of a sudden the surviving parent is without a place to stay. Or, worse, what if the child dies before the surviving parent, and the son or daughter-in-law remarries? Then you sit with somebody on the premises who may not necessarily want the surviving parent there because there is no blood relationship left with any of the people living in the main house on the property.
Then there is also the issue of substance dependence – alcoholism, drug dependence and so on – where you have to ask the question whether sometimes people are so sympathetic towards the child because they feel they may have been harsh during their lives to a child who struggles with alcoholism or drug dependence. And then they want to sort of rectify that in the will. Logic tells you that a person who has had a problem with substance abuse during the parent’s lifetime is unlikely to all of a sudden be rehabilitated just because the parent dies and leaves them some money in the will.
So it’s in things like that where you have to be as objective as possible and try and get the emotion out of the equation and try to ensure that you have a proper system or a proper scheme in place to manage, for example, a testamentary trust with that child as a beneficiary.
Incidentally, the previous example of a granny flat – the house could also have been left in a trust, for instance, and the parent can stay there as a beneficiary of the trust. But when the trust is terminated after the surviving parent’s death, the house will then be distributed to the child or children.
Obviously all these things have other implications. The point is not what is the solution to this. The point is get away from the emotion and get objective advice around it.
INGÉ LAMPRECHT: Do you find that testators sometimes feel guilty about people they treated unfairly in the past – for example, an illegitimate child or a sibling, and try to compensate for it through provisions in the will?
LOUIS VAN VUREN: Just a slight correction – we don’t have any illegitimate children in South African law any more. Since the late 1980s, early 1990s, being born in or out of wedlock has absolutely no influence on your right to inherit or any other rights. There are sometimes what I call debts of honour, and they demand to be settled. A child who was born out of wedlock, with the current spouse who maybe does not even know about the child. I came across a case like that a number of years ago, where the person wanted to know from me “how do I look after this child without my wife ever finding out about it?”
There are also situations where testators may feel that he or she treated a sibling or a previous spouse unfairly and now wants to compensate for that in the will. You have to again face the situation, try and cut the emotion out of it, and think about how to practically do it in a way that will balance all the competing interests. Good planning can assist there, but then you must seek the advice before it’s too late.
INGÉ LAMPRECHT: You mentioned the issue of feelings of superiority at the beginning of the conversation, Louis. Now, South African law holds the testator’s ability to dispose of assets in a will as he or she sees fit in very high regard. How do you balance that with the Bill of Rights in the Constitution?
LOUIS VAN VUREN: Interestingly, there was a Supreme Court of Appeal case in South Africa a couple of years ago in which the judge of appeal in the judgment linked freedom of testation to human dignity, which is one of the core values of our Constitution, which is entrenched in Section 1 of the Constitution. Be that as it may – and although we in South Africa have a very high degree of freedom of testation, you can basically bequeath as you see fit – you still have to balance that freedom of testation with Section 9 of the Constitution, which is the section in the Constitution, in the Bill of Rights, that prohibits unfair discrimination.
What it means is that you are in principle free to bequeath your property as you see fit, but within the limits of Section 9 of the Constitution. For example, nothing prevents you from disinheriting your son if you wish to do so, and there is nothing much that your son can do about that. But if your will states that you are doing it because you detest the fact that he married a woman of another race or religion, or because he is gay, you will create a potential constitutional challenge against your will on the basis that you are discriminating against him on one of the prohibitive grounds in Section 9 of the Constitution. And there is a whole list of them in, I think, Section 9, sub-section 3. They are race, religion, gender, sexual orientation, social or economic extraction, etc.
There was a very interesting Canadian case last year – incidentally, Canada also recognises a very high degree of testamentary freedom – and in that case, the example that I just used, their black Canadian testator disinherited his one daughter – just disinherited her. She then came to court and said: “Well, my father disinherited me because I married a white man.” And the high court in Canada in that particular state in Canada – I think it was Ontario – then ruled in her favour and ruled the fact that she was disinherited null and void and basically ordered that she be given half the estate because the only other heir was her sister.
But, on appeal in the Ontario Appeal Court, the Appeal Court said you cannot read into the will what isn’t there. So the court basically maintained the freedom of testation. But if you are going to say things in your will like “I disinherit my son because he’s gay” then you are very clearly in breach of the prohibitions in Section 9 of the South African Constitution.
Another example, for instance, is that you may probably succeed in leaving money to a charitable trust in your will for a bursary for study of the Afrikaans or the English or the Zulu literature at a particular university. But if you then go further and say that only speakers of that language or people of a certain gender or race will qualify for the bursary, then you are looking for trouble. There has been a whole list of cases in South African courts where that was held to be a problem and in contravention of the prohibition in Section 9 of the Constitution.
INGÉ LAMPRECHT: Louis, in summary, then, what is the best way to make sure emotional baggage doesn’t derail your will and estate planning?
LOUIS VAN VUREN: Ingé, I think the most important thing to remember is that estate and will planning is all about balancing your wishes – that’s the emotional side – with what are legally and practically sound solutions in your particular circumstances. So, to sum it up in one sentence, I would say be aware of your emotions and obtain objective advice and planning services while you still have time.
INGÉ LAMPRECHT: Thanks, Louis. Louis van Vuren is the CEO of the Fiduciary Institute of Southern Africa.
This article was brought to you by the Fiduciary Institute of Southern Africa.