In the Land of the Will, Clarity is King

In the Land of the Will, Clarity is King

“The golden rule for the interpretation of testaments is to ascertain the wishes of the testator from the language used. And when these wishes are ascertained, the court is bound to give effect to them, unless we are prevented by some rule or law from doing so.” (Quoted in the judgment below)

When drawing up your will (“Last Will and Testament”), remember that “clarity is king”. Ambiguity is one of the cardinal sins of will-drawing because it exposes your loved ones to the risk of uncertainty, dispute, rancour, and quite possibly expensive litigation.

Worse, if in the end a court has to try and decipher what you actually intended, there is no guarantee that it will be able to correctly ascertain your true wishes.

A case of different interpretations and a bitter dispute

A recent SCA (Supreme Court of Appeal) case confirms once again the need to express your wishes clearly and unambiguously in your will –

  • A bitter dispute between a widow on the one hand and her three step-children on the other had its roots in a deceased father’s ownership of two plots. On the one plot the father had built houses for his two daughters, with his son building flatlets for renting out on the same plot. He and his wife lived in their house on the other plot.
  • The dispute centered on two different interpretations of a clause in the father’s will in which he had left both plots to his daughters, but subject to a right of habitatio in favour of his wife. That, said the executor of the deceased estate, gave the widow the right to live in, and to rent out, the buildings on both plots.
  • The widow’s step-children on the other hand argued that it could not have been their father’s intention to give his wife such rights to the plot in question in light of all the “surrounding circumstances”. They made much of the fact that their parents’ ante-nuptial contract referred only to the other plot (the one with the marital home) in that context. They also pointed out that they had all agreed informally to each of the siblings being allocated a “portion” of the disputed plot.
  • The siblings accordingly refused to pay out any rentals to the executor, and the dispute eventually found its way into the courts – first the High Court and then the SCA.
  • In confirming the widow’s right to live in the buildings and to let/sub-let them out and receive rentals from both plots, the SCA confirmed that a court will establish the intention of the deceased from the language used “in its contextual setting”. In other words, “the will must be read in the light of the circumstances prevailing at the time of its execution.” Thus, in this case it was relevant that the father had not changed his will to reflect the informal allocation of “portions” of the disputed plot between his children, and that he had probably intended his wife to benefit from the receipt of rentals for her financial well-being and maintenance.
  • But beyond that, there is no place for the introduction of “extrinsic evidence” or “surrounding circumstances” if the wording of the will is clear and unambiguous – as it was in this case.

Bottom line – it is critical that the wording of your will be drawn professionally to correctly, clearly, and concisely set out exactly what your wishes are.

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

A Valentine’s Day Thought for Life Partners: What is a “Universal Partnership”?

A Valentine’s Day Thought for Life Partners: What is a “Universal Partnership”?

“Marriage is the chief cause of divorce” (Groucho Marx)

This Valentine’s Day, think about the legal aspects of your romantic relationship. They’re a lot less exciting than the traditional declarations of love backed up by chocolates and flowers, but they’re just as important in ensuring a strong, committed life partnership in which both of you is clear as to how your respective financial and legal responsibilities are defined.

A recent High Court decision once again puts a spotlight on the fact that “life partner” couples are at ongoing legal and financial risk unless they sign both cohabitation agreements and updated wills.

The problem – there’s no such thing as a “common law marriage”

Our law does not recognise the concept of a “common law marriage”. Either you are formally married, or you miss out on many of the legal protections available to married couples. The result – if you split, or when (not if) one of you dies, the less financially strong life partner could well be prejudiced, perhaps even left destitute after many decades of life together.

The solution – a cohabitation agreement with updated wills

Luckily these two documents give both of you quick and effective protection –

  1. A cohabitation agreement tailored to meet your particular circumstances and needs. It should at the minimum cover questions such as whose name assets and liabilities will be in, who will cover what expenses, how you will split your financial affairs if you part ways, your undertakings to each other regarding financial support and maintenance, parental rights and duties regarding children and so on.
  2. A will (“Last Will and Testament”). You could make two separate wills or one joint one but either way make sure to comply with all formalities to ensure validity and set out your respective wishes clearly and unambiguously. A vital (and all-too-often overlooked) aspect here is to diarise regular reviews of your will/s in case they need updating to take account of ongoing life and financial changes.

Let’s turn now to a “second prize” alternative – proving a “universal partnership”.

What is a “universal partnership” and how do you prove it?

If for whatever reason you don’t have both a cohabitation agreement and wills in place, you may still have a “get out of jail free” card in the form of a universal partnership.

These extracts from the High Court judgment (formatting supplied) set out what you’ll need to prove –

  • “A universal partnership is an agreement between individuals to share their property and their gains and losses. The partnership need not be formed for a commercial purpose.
  • It regularly comes into existence, whether expressly or tacitly, between unmarried cohabitees, although cohabitation is not essential.
  • The requirements for the existence of a universal partnership are the same as those for partnership in general.
  • Where a tacit universal partnership is alleged, a court will confirm its existence if the conduct of the parties is such that it is more probable than not that such a partnership agreement had been reached between them.
  • A partnership exists if “each of the parties brings something into the partnership or binds themselves to bring something into it, whether it be money, or labour, or skill”; if the agreement is struck for “the joint benefit of both parties”; and if the object of the partnership is material gain.
  • The question is … whether, on evaluating those facts as a whole, the probable inference is that there was a universal partnership.”
A bitter family fight shows why it’s second prize
  • In the case in question, life partners had for 26 years shared all their assets “akin to a marriage in community of property”. Importantly, they had shared the “benefits and burdens” of a number of property development ventures. They had, said the Court, each brought something into the partnership, her contribution being mostly financial, his (as an architect) mostly in “sweat equity”. Their partnership was not just a life partnership, it “was also plainly at least partly about material gain.”
  • Their relationship was terminated by the death of the one partner, who died “intestate” (leaving no will in place) after developing dementia. The other partner had suggested they each execute wills leaving everything to each other and he had done so, but she had declined as she was unwilling to contemplate her mortality
  • Her daughter as executor of her mother’s deceased estate refused to recognise any claim by the surviving life partner. Quarrels and evictions followed, with ultimately a hard-fought High Court battle.
  • The Court found that the survivor had on the facts succeeded in proving the existence of a universal partnership. Critically, it held that the parties’ partnership “was also plainly at least partly about material gain” and that the surviving partner should anyway inherit half of the deceased’s estate in terms of a principle previously accepted by our courts that “partners in a permanent life partnership in which the partners have undertaken reciprocal duties of support are entitled to inherit as spouses would.”
  • Accordingly, the survivor gets a full half of the deceased partner’s entire estate, whilst the daughter is removed as executor and ordered her to pay the legal costs.
The winner is…

The bottom line however is that the element of “material gain” which so clearly applied to the joint acquisition of assets in this particular life partnership will be absent (or at least extremely difficult to prove) in many other cohabitation agreements.

First prize must therefore always be to avoid the risks, delay, stress and cost of trying to prove the existence of a universal partnership and/or reciprocal duties of support by having in place both a comprehensive cohabitation agreement and a joint will or reciprocal wills.

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

Estate Planning: Remember your Pets!

Estate Planning: Remember your Pets!

“The greatness of a nation and its moral progress can be judged by the way its animals are treated.” (Mahatma Gandhi)

For many of us our pets are a central part of our lives, our much loved “fur babies”, our companions, exercise partners, even therapists through the hard times.

But what will happen to them after we die? Or if we lose the ability to make the decisions necessary for their welfare? Unless you make specific provision for your beloved pets to address these situations, their fate could be a grim one. When you die for example, the executor of your estate will have no option but to hand pets over to your heirs as “property”. And if your heirs are unable or unwilling to give them a good home and have no guidance from you as to what your wishes are, your beloved pets could end up needlessly euthanised or in a shelter.

Let’s look at a few ways you can avoid that –

A “Living Will for Pets”

In the “when you are gone” section below we will discuss options that only apply after your death, but in contrast a “Living Will” applies when you are still alive but no longer able to make your own decisions.

Thus, your own personal “Living Will” or “Advance Medical Care Directive” sets out what medical treatment you consent to receiving when you are no longer able to speak for yourself.

Similarly, you may want to do something like that for your pets, setting out what is to happen to them when you are no longer able to make such decisions yourself. You could leave specific care instructions (including perhaps veterinary care instructions and authority for euthanasia in specific circumstances) or you could appoint a trusted heir or animal welfare organisation to make those decisions for you. Note that you cannot leave money or assets to anyone in a living will – bequests can only be made in your actual will.

Three alternatives for when you are gone
  1. A clause in your will: As “property”, your pets cannot inherit from you, but you could provide in your will (“Last Will and Testament”) for a named heir to inherit them, ideally with a bequest to help them cover the costs of pet ownership. Make sure your chosen heir is on board with your plan!
  2. A directive – in your “important information” file, or in a separate letter of wishes: In addition to your will, you should always leave your executor and heirs a comprehensive file of important information and documents to assist them in winding up your estate. It should include a “My directives” section with instructions as to what is to happen to your pets. Alternatively, you could set that all out in a separate “letter of wishes”. These directions aren’t legally binding on anyone, but they do provide guidance to those winding up your affairs as to your wishes.
  3. A testamentary trust: This will be overkill for most situations, but if you want to leave a lot of money to care for your pet/s, you might be advised to set up a testamentary (i.e. set up in your will) trust. You would appoint trustees to manage a bequest to the trust, with guidance on how the money is to be spent for your pets’ benefit.

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

Plan Your Estate to Protect Your Family – Two End-of-Year Questions to Ask Yourself

Plan Your Estate to Protect Your Family – Two End-of-Year Questions to Ask Yourself

“It’s the most wonderful time of the year!” (Songwriters Pola & Wyle)

As the end of another year approaches, with its family celebrations and holidays, take the time to check that your estate plan really does ensure that your loved ones will be looked after when you are no longer here for them.

Here are two questions to ask yourself right now –

  1. “Is it time to review my will?”

    The heart of any estate plan is of course your will (“Last Will and Testament”) and it is essential to review it regularly. Check for the following –

    1. Changes in your financial or personal circumstances. If you have changed your circumstances in any way – perhaps you have a new spouse or life partner, perhaps you have divorced or had another child, perhaps your assets and liabilities are different now – whatever it is, you may well want to change the relevant provisions in your will.
    2. Changes in your family’s circumstances. Similarly, changes in a family member’s personal or financial circumstances could trigger a need for change.
    3. Changes in tax or other laws that might affect your estate. As in everything else in life, constant change is a feature of our legal and tax landscape – your estate plan may need to adapt accordingly.

    To update your will, ask your lawyer whether a “codicil” to your will is enough, or whether it would be better to execute a brand-new will.

  2. “Is there enough “ready cash” in my estate?”

    Something easily overlooked in the estate planning process is the need to provide your loved ones and your executor with “liquid” funds – readily-available cash or other accessible funds.

    Without that, your family is at risk in two respects –

    1. They may struggle to make ends meet while your estate is being wound up. 

      Winding up a deceased estate is a specialised process which can take a long time. Your family needs something to live on in the interim, and although your executor has the power to advance monies to heirs in certain circumstances, first prize will always be to leave your loved ones a source of income outside of that whole process. Remember that your bank accounts and the like will be frozen as soon as the banks learn of your death.

    2. Your family could even face homelessness. 

      That’s not an exaggeration – it’s exactly the prospect confronting a widow after a recent High Court order authorised an executor to sell the deceased’s family home. The problem was that the executor needed to have sufficient funds to pay creditors, the administration costs of the estate, the advertising, the Master’s fees and the executor’s fees – in that case, just over R206,000.

      The only way he could raise enough cash was to sell the house in the estate, because the sole heir (the deceased’s widow) had declined to make the necessary cash contribution to the estate to avoid that. The Court ordered the Master of the High Court to set the manner and conditions for the sale accordingly – the widow will have to move.

      In many estates there will be assets other than the family home that the executor can sell to raise cash, but it will always be best to avoid that – it could be your business for example, or a valuable heirloom.

      So how do you prevent that unhappy scenario?

The answer is simple – find another way to leave your family access to ready cash outside of your estate. Commonly recommended strategies include separate bank accounts controlled by family members, family trusts, life policies and living annuities with family members nominated as beneficiaries, really anything accessible directly to your family members outside the estate. Professional advice specific to your circumstances is a no-brainer here.

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

Can a Video Call be a Valid Will?

Can a Video Call be a Valid Will?

“Death is not the end. There remains the litigation over the estate.” (Ambrose Bierce)

It may well be that in the future, we will be able to make a perfectly valid will (“Last Will and Testament”) by way of a video recording or other electronic means, but that day has not yet arrived.

For now, it is essential that your will be properly drawn, not only to clearly reflect your last wishes, but also to comply with all the formalities laid out in our Wills Act.

In summary (ask your lawyer to explain the finer points, they are important), wills must be in writing and signed by you on all pages, in the presence at the same time of two competent witnesses who must sign the end page (preferably all pages, but that’s not a formal requirement). Note that neither witnesses nor their spouses can inherit or be appointed as executor, trustee or guardian.

Video wills – are they valid?

Bearing in mind those required formalities, and the fact that an attempt to rely on a video recording as a will was abandoned in the case discussed below, it would be rash to assume that a “video will” ever be accepted as valid even though the concept has not to date been directly tested in our courts.

Rather observe all the formalities listed above, and think of using a video recording just as an adjunct to your formal will. For example, recording the will-signing process itself could help avoid any future dispute over your written will’s validity, whilst an informal video message to your family explaining to them why you have drawn your will the way you have could provide clarity and comfort to them when the time comes.

Non-compliance with formalities – there are “escape hatches”, but …

There are “escape hatches” in that our Wills Act provides that a document not complying with all formalities can be accepted as a valid will if it was drafted or executed by the deceased and if it was intended to be their will. You can also be authorised to both inherit and act as an executor, even if you or your spouse signed as a witness, if you can prove that there was no fraud or undue influence over the deceased. You can also be taken to have revoked a previous will in various ways.

But as we shall see from the two recent High Court cases discussed below, relying on any of those escape hatches is extremely unwise. At worst, your last wishes won’t be honoured, and at best you will be exposing your loved ones to the risk of prolonged and bitter litigation at the very worst time.

Case 1: A Covid-19 video-call attempt to replace a will fails
  • A father had left everything to his children in a 2018 will. But, dying in hospital of Covid-19 in 2021, he made a video call to his farm manager indicating his wish to revoke the will and saying that his final instructions were that everything be left to his farming trust.
  • As requested, the farm manager had a will to that effect drawn by attorneys and delivered it to the hospital (he was unable to deliver it personally due to Covid-19 restrictions then in place), but the father died before it could be given to him for confirmation and signature.
  • The trust asked the High Court for an order declaring the 2018 will revoked and the 2021 unsigned will accepted as valid (it seems to have abandoned an argument that the video call itself was a will). The disinherited children opposed this application vigorously.
  • The Court declined to validate the unsigned 2021 document, pointing out that the Wills Act’s provisions in this regard must be interpreted and applied strictly and narrowly. It’s analysis of the trust’s argument that the “impossibility principle” applied will be of great interest to lawyers, but the practical point of issue to most of us is that although it seems clear that the father wanted to make a whole new will, on the facts of this case only his written and signed 2018 will could be accepted as valid.
Case 2: Brothers at war, and a non-compliant will accepted as valid
  • Another tragic case of a dying father trying to change his will, this time to disinherit one son (“JP”) in favour of the other (“SG”).
  • The new will did not comply with the Wills Act’s formalities. Three witnesses signed it but not in each other’s presence, whilst the fact that one of the witnesses was SG’s wife formally disqualified him from inheriting or acting as executor.
  • JP asked the Court to declare the will invalid so he could inherit under the laws of intestacy, whilst SG asked the Court to accept the will despite the non-compliance, and to allow him to inherit and to act as executor.
  • On the particular facts of this case, including undisputed evidence of a major rift between JP and his father (in contrast to an extremely close relationship between SG and the father), the Court exercised its discretion in favour of SG.
  • Firstly, it held that the will, despite the failure to comply with formalities, was indeed drawn by the father and intended by him to be his will. It was therefore accepted as valid.
  • Secondly, it held that SG could both inherit and act as executor because he had proved a lack of fraud or undue influence over his father.

Different outcomes but a clear principle – failure to comply with all formalities risks your last wishes not being implemented and exposes your loved ones to dispute and litigation.

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

How to Protect Your Children’s Inheritances from Ending Up in the Guardian’s Fund

How to Protect Your Children’s Inheritances from Ending Up in the Guardian’s Fund

“Live each day as if it were your last… because one day, you’ll be right.” (Benny Hill)

It’s always tempting to procrastinate about decisions that force us to address the inevitability of our own mortality. But we have no choice when it comes to protecting our loved ones after we are gone, because to protect them a will (“Last Will and Testament”) is not a nice-to-have, it’s a necessity. And it’s urgent. No one – young or old, healthy or ill, wealthy or of limited means – can guarantee that they’ll be alive tomorrow.

How to structure your will? One potential risk area when it comes to your children’s inheritances is the Guardian’s Fund. The Fund serves a vital purpose, but it has featured regularly in the media over the past few years for all the wrong reasons – ongoing losses to cybercriminals and fraudsters (the last reported loss was R17m), SIU (Special Investigating Unit) probes into allegations of misconduct and corruption, and the like.

How is that relevant to you? Well, if you have minor children, it confirms once again that your will should be professionally drawn to avoid any chance of your children’s money ending up in the Guardian’s Fund.

Dying “intestate” means trusting a State-run entity with your children’s money

Without a will, you die “intestate”, which means that the law makes your decisions for you. You have lost the right to choose a trusted executor, you have lost the right to specify how your estate is distributed to your loved ones, you have lost the right to nominate a guardian for your children. Perhaps most importantly of all, you have lost the right to protect your minor children’s inheritances as you see fit.

That’s a problem because, unless you leave a will structured to provide a mechanism for looking after your children’s inheritances until they reach majority (i.e. turn 18), those moneys might well end up in the Guardian’s Fund.

What is the Guardian’s Fund?
  • The thought behind the Guardian’s Fund is a laudable one – it was created to hold and protect money (including inheritances) for minors and other people who are legally incapable of managing their own affairs. For those vulnerable people whose money it safeguards, it performs a most valuable service.
  • All money is invested with the PIC (Public Investment Commission) and earns interest at a rate set from time to time by the Minister of Finance.
  • The Fund is audited annually and is managed by the Master of the High Court (actually by one of several Masters around the country, each of whom runs a separate Fund), without charge.
  • A child’s guardian can approach the local Master to pay over accrued interest (and in need up to R250,000 of the capital) for maintenance needs.
So, what’s the problem?

Knowing that your children’s money is to be held in an audited, managed-for-free fund administered by independent and senior government officials is certainly a lot less alarming than many of the possible alternatives, but it is by no means ideal –

  • The media reports of hacking, theft, fraud, police probes into allegations of misconduct and corruption etc that we mentioned above hardly inspire confidence in the Fund’s ability to manage and protect your children’s inheritances, even if only one or two “bad egg” employees are involved.
  • Your children’s guardian must jump through all sorts of administrative hoops to draw money for maintenance, education, clothing, medical costs and so on. The delays and dysfunction which reportedly still plague many Master’s Offices won’t help.
  • As mentioned above, Fund monies are paid a government-fixed rate of interest, currently 4.25% p.a. That’s both below inflation and an unattractive alternative to the earnings potentially available to discretionary funds.
  • When your children turn eighteen, they are again faced with red tape and bureaucracy before they can access whatever is left of their money.
The best protection?

The good news is that you can easily protect your vulnerable minor children from all those risks and negatives. These are the two essentials –

  1. Leave a valid will, professionally drawn to protect all your loved ones and in particular those most vulnerable such as your minor children, and
  2. Make sure that your will nominates a guardian for your children and includes a mechanism to protect their inheritances so as to avoid any risk of their money having to be paid into the Guardian’s Fund.

    The most commonly advised protection mechanism to avoid that unhappy scenario is a trust – either an existing trust (if fit for purpose), or a new “testamentary trust” which will come into existence when you die. The alternative is to provide for the children’s guardians to administer their inheritances for them, but a trust is almost always the better, safer, and more practical option. Either way, make sure that your will’s provisions correctly and clearly set out your wishes in that regard.

    Bear in mind that anything to do with trusts of any kind calls for specific professional advice – there are complex legal, financial and tax considerations involved.

Bottom line – have your attorney draw your will (or update your existing will) to ensure that your children’s inheritances are properly protected and don’t end up in the Guardian’s Fund!

Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice.

© LawDotNews

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