At dinner parties one often hears of the horrors of dying without a valid Will. How the bulk of the estate was forfeited to the Government; how an excessive amount of Estate Duty or executors fees was payable; that rightful heirs were disinherited and every other calamity possible.
Actually, according to David Knott, a fiduciary specialist at Private Client Trust, a division of Private Client Holdings, none of this is true and the only real negative to not having a valid Will is that your estate will devolve amongst your close relatives in terms of a formula set out by our law-makers, which could cause an inconvenient division of your estate. This formula is known as The Intestate Succession Act 81 of 1987 which applies to persons dying after 18th March 1988 either wholly or partly intestate.
“A person could die without a valid Will – thereby being wholly intestate, or could die leaving a Will but portions of that Will might be impossible to implement,” says Knott. “For example, a legatee could have pre-deceased the testator without any provision allowed for substitution of that bequest. Partial intestacy would then apply to that bequest with the balance of the estate devolving in terms of the Will.”
Knott explains that the manner in which the estate devolves in terms of intestacy will differ as to whether the deceased was married, and if so, how they were married; if there are survived by a spouse and if also survived by children. “To determine who the intestate heirs are, and to give each their share could sometimes cause extended delays in finalising an estate, hardships and unnecessary forced sales.”
For example, Mr X, married out of community of property without the accrual regime, dies without a Will leaving an estate consisting of a residential property worth R3 million, a share portfolio of R2 million and cash in the bank of R60,000 – in total an estate of some R5,060,000. He is survived by his spouse and three minor children. In terms of the law of intestate succession, his estate is to be shared by his spouse and his children; the estate is shared four ways. The spouse and each child is to inherit R1,265,000.
“One might consider this devolution to be no real problem,” says Knott, “until you realise that the residential property must now be registered in the names of all four intestate heirs resulting in an almost impossibility should the spouse need to sell to move to a more modest home. The spouse would need to convince a Court that the sale was in the best interests of the three children. If the sale was approved, the children’s share of the proceeds would be lumped together with their share of the portfolio proceeds and this cash would be paid over to the Guardians Fund, essentially a savings account run by the Master of the High Court.
When the children successively attain the majority they would be at liberty to claim their inheritance plus simple interest from the Guardians Fund. The widow would almost certainly experience financial hardship in the meantime.”
“This example would have a very different devolution if Mr X was married in community of property, was married in terms of the accrual regime or was single. However, the simple solution to avoid the vagaries and consequences of the Intestate Succession Act 81 of 1987 is to consult with a trusted advisor and to ensure that a valid Will is in place before you die. A Will must be reviewed whenever one’s circumstances change and is probably the most important document one could ever sign,” concludes Knott.