Attorneys often emphasise the fact that you should have a will drawn up and revise it regularly in order to facilitate the bequeathing of your possessions after your death. Many people still omit to do this. The problem is that, should a person die without leaving a valid will, in other words intestate, his/her estate will be administered and distributed according to the stipulations of the Intestate Succession Act No 81 of 1987.
Below is a basic example of the effect an intestate death will have on the distribution of an estate. Should the composition of the beneficiaries of the deceased be more complex, the administering of the estate in terms of the Intestate Succession Act will also become more complicated.
Let us assume that person A dies and the value of his estate is R1.8 million. He is survived by his wife (B) and 2 children, of which one is of age and the other is a minor.
Scenario 1:
A and B is married out of community of property.
B inherits R125 000 or a child’s portion, whichever is the largest.
A child’s portion is calculated by dividing the total value of the estate by the spouse and number of children, in other words R1.8 million/3 = R600 000.
The spouse and children therefore inherits R600 000 each.
The inheritance of the minor will be paid to the Master’s Guardian’s Fund, as there is no will which determines that the minor heir’s inheritance should be placed in e.g. a Testamentary Trust, where the funds will be administrated on behalf of the minor until he/she becomes of age or reaches any other specified age.
Scenario 2:
A and B is married in community of property.
B inherits 50% of the estate due to the marriage in community of property.
B also inherits R125 000 or a child’s portion, whichever is the largest, with regard to the other half of the estate.
A child’s portion is calculated by dividing half of the total value of the estate by the spouse and number of children, in other words R900 000/3 = R300 000.
The spouse inherits R1.2 million and the children R300 000 each.
The inheritance of the minor will be paid to the Master’s Guardian’s Fund, as there is no will which determines that the minor heir’s inheritance should be placed in e.g. a Testamentary Trust, where the funds will be administrated on behalf of the minor until he/she becomes of age or reaches any other specified age. It is therefore clear that Intestate inheritance may result in an unpractical and often even impracticable division of assets.
The fact that the inheritance of the minor will be paid to the Master’s Guardian’s Fund may place the spouse in such a dilemma that she has to devise plans to finance the amount payable to the Master’s Guardian’s Fund to the benefit of the minor heir. Alternatively she could register a mortgage against an immovable property in favour of the Master’s Guardian’s Fund.
In case of death without a valid will there will of course be no person or institution appointed to support the surviving spouse in the administering of the estate. This should not usually present a huge obstacle, but the spouse should consider carefully which person or institution she appoints to assist her in this task. She should also negotiate the Executor’s fee with the relevant person or institution before the administering of the estate commences.
This newsletter is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.