MANAGING DISPUTES OVER A DECEASED RELATIVE’S ESTATE

If someone leaves a sizeable estate behind, it may cause conflict among the possible heirs. The help of an attorney, when settling an estate after a death, can avoid unnecessary troubles.

The Administration of Estates Act, 1965, determines what must happen with an estate after a person’s death. There are certain steps that should be taken to ensure the process is legal. However, if the estate is worth a lot of money or the deceased has children, then it is a good idea to seek the assistance of an attorney, as family disputes and debts of the deceased can be confusing. In order to do this an executor will be appointed to act on behalf of the estate.

Finding the will of a deceased relative

If the deceased person left a will the first thing to do is find it. If they did not tell you beforehand where their will was, you can try calling the probate court in their district or the office of the Master of the High Court to check if they have a copy of the will. Other places to call would be the deceased’s life insurance company, bank or lawyer. Otherwise, the deceased might have left a copy of it somewhere secure in their home.

Who is the executor?

An executor is the person appointed to handle the process of settling the estate. The executor will either be mentioned in the will of the deceased or appointed by the Master of the High Court. The Master will ultimately decide who will take the role of executor. If the chosen executor doesn’t know how to handle the estate or is unfamiliar with the legal procedure, he or she can go to a lawyer for help. Once the executor has been chosen, the Master will give them “Letters of Executorship”, which will give only them the authority to handle the estate.

What does the executor need to do?

The executor has several responsibilities such as arranging the valuation of the estate’s property and assets. They will also be responsible for contacting and dealing with all the beneficiaries.

Some other responsibilities of the executor include:

  • Arranging provisional payments for the family’s immediate needs.
  • Opening a bank account for the estate and depositing the estates money in it.
  • Paying all the necessary estate duties.

It’s important that any person who wants to act on behalf of the deceased person’s estate have the Letters of Executorship. If not, their actions would be considered illegal. This also applies to the spouse of the deceased person. This eliminates the possibility of several different family members trying to influence the estate’s dealings. The executor will also decide how the assets will be divided between the heirs and if any or all assets need to be sold. If a will is in place the executor will base his/her decisions on it.

Eventually, the executor will prepare a liquidation and distribution account. This would include what they intend to do with all the assets left after expenses. This account would be delivered to the Master, who will check to see if the executor’s actions reflect the will of the deceased and that all legal requirements have been fulfilled.

Important things to keep in mind?

The Master of the High Court should be notified of the deceased person’s estate not later than 14 days after the death. According to the Department of Justice, the death of anyone who owned property in South Africa must be reported to the Master, whether or not they died in the country.

All estates that exceed R50 000 should be reported to the Master of the High Court directly because magistrate’s offices have limited jurisdiction. If reported to the magistrate’s office, estates will usually be referred to the Master.

This article 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. Errors and omissions excepted (E&OE).

References

The Department of Justice and Constitutional Development. 2012. “Reporting the estate of the deceased”. Accessed from: http://www.justice.gov.za/services/report-estate.html/ on 11/05/2016.

Administration of Estates Act 66 of 1965. Accessed from: http://www.justice.gov.za/ on 11/05/2016.

AN EX-SPOUSE REFUSING TO PAY MAINTENANCE?

If a couple has gotten divorced and they have a child, then it’s the responsibility of both parents to support the child. The duty to pay maintenance cannot be avoided, regardless of either parents’ situation. If one parent refuses to pay maintenance, then the other parent can go to a court and make a claim. Being a single parent doesn’t mean being the only one to contribute to maintenance.

What should I do about it?

To deal with a spouse who refuses to pay maintenance you would first need to inform the maintenance officer. The maintenance officer can apply to the court for:

  1. A warrant of execution;
  2. An attachment order against the defaulter’s salary;
  3. An order to attach any debts; and
  4. A criminal prosecution.

Does the non-paying parent have a defence?

The only defence that a parent could have for not paying maintenance is having a lack of income. However, if the parent is unwilling to work, such as laziness, then this will not count as a defence. Failure to pay maintenance is taken very serious, guilty parents won’t get much sympathy from the court or others. If the parent is capable of working, then they will be expected to pay maintenance.

But I can’t find my ex-spouse?

Non-paying parents may think that they’re being clever by changing their address and not notifying the court. This is considered a criminal offence, and will result in punishment. Fortunately, it’s not the responsibility of the single parent to find anyone. A maintenance investigator will track down and find a non-paying parent.

How to claim maintenance

If you want someone to pay maintenance or believe that they are not paying the proper amount, then you can follow these steps at your local magistrate’s court. Remember to go the court in the district where you live.

  1. Go to the court and complete the form “Application for a maintenance order (J101)”.
  2. Also submit proof of your monthly income and expenses.
  3. A date will be set on which you and the respondent (the person whom you wish to pay maintenance) must go to the court.
  4. A maintenance officer and an investigator will investigate your claim and look into your circumstances.
  5. The court will serve a summons on the respondent.
  6. The respondent then has to either agree to pay the maintenance, or challenge the matter in court.

If found liable to pay maintenance

If the court finds someone liable for paying maintenance, it will make an order for the amount of maintenance to be paid. The court will also determine when and how the payments must be made. There are several ways the payments could be made. The court can order that the maintenance be paid at the local magistrate’s office or that the amount to be paid into the bank account chosen by the person claiming. The payments could also just be made directing to them. According to the new Maintenance Act (1998), an employer can deduct payments from an employee’s salary, if they’re liable for paying maintenance.

This article 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. Errors and omissions excepted (E&OE).

AM I STILL LIABLE FOR MY SPOUSE’S DEBT AFTER DIVORCE?

A husband and wife buy a house together. Their marriage takes a tumble, along with their ­finances, and they have to sell their home and are left with an outstanding mortgage bond. They subsequently got divorced. The couple is concerned about what will happen to the debts and who will be ­responsible for paying them.

Who pays what after divorce?

If the couple was married in ­community of property, the debt on the property is a joint debt. They will be jointly and severally liable. This means that each partner is not just liable for half the debt now that they are divorced, in fact the bank can seek the full amount from either of them. The one spouse who is held liable by the bank would then have a claim of 50% of the debt against the other, but it would be his or her responsibility to collect that debt (not the bank’s). Alternatively, the bank may agree to accept 50% from one person and release them from the ­liability, but it does not have to.

Sometimes, the divorce settlement makes a special mention of the mortgage. But if there is no clause in the divorce, the joint liability principle applies. After a divorce, the husband and wife should present their bank with a copy of the divorce settlement. This will remove any uncertainty about ownership and liability for bond payments.

Getting divorced while under debt review

If you get divorced while you are under debt review and you have the debt review court order in place, then this will need to be rescinded and for new debt counselling applications to be started, as in order to follow on with the debt counselling process you will need to reapply, but will now need to be seen as two single applications. A new budget and new proposals will also have to be drawn up.

This article 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. Errors and omissions excepted (E&OE).

References:

“Debt And Divorce”. News24. N.p., 2017. Web. 12 June 2017.

“Debt Review After A Divorce Settlement – Debt Review”. Debtbusters. N.p., 2017. Web. 13 June 2017.

THE BENEFITS OF CREATING A TRUST

Trusts are well-known to facilitate effective estate planning and continuity planning strategies. That said, setting up a trust – whether an inter vivos (between the living) or a testamentary (created in a will) − should be carefully considered and not just implemented blindly.

The difference between testamentary and inter vivos trusts

  1. A testamentary trust is established when a person (the founder) makes provision for establishing a trust in their will. The trust does not come into existence until the founder dies.
  2. An inter vivos trust is set up between the living. In other words, property is transferred before death to the trust by its founder and managed by the trustees for the benefit of another person or persons.

The death benefits of creating an inter vivos trust exceeds the cost – both in time and money. According to The Estate Duty Act, upon death, a duty is levied against your estate known as estate duty. The nett value of any estate will be determined by deducting all liabilities from your assets of your estate, both real and deemed.

Should you create a testamentary trust, upon death the assets are in your name and will need to be transferred to the trust posthumously, meaning all assets are taken into account when assessing the duty payable.

Advantages

Taking the above into account, here are some benefits you could experience from creating a trust:

  1. Reducing estate duty: Inter vivos trusts can be used to minimise estate duty. No estate duty should be payable on assets owned by the trust as a trust does not die.
  2. Protection against creditors: As the trust’s assets are not owned by the beneficiaries, creditors do not have a claim on the assets. This advantage is especially important for people who could be exposed to potential liability. Companies as well as individuals are able to transfer assets into trusts.
  3. Efficient succession: Since trusts never die, beneficiaries will be able to continue enjoying the assets if one beneficiary were to pass away.

Disadvantages

Despite the advantages, there are also some disadvantages of having a trust. They include the following:

  1. Costs: The costs of setting up a trust can be high. If assets are transferred into the trust, then transfer duty needs to also be paid.
  2. Duties of trustees: Trustees could find themselves personally liable for losses suffered by the trust if it can be proven that they did not act with care, diligence and skill according to Section 9 of the Trust Property Control Act.

This article 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. Errors and omissions excepted (E&OE).

References:

https://www.iprotect.co.za/articals-trust-info/article-arcives/why-an-intervivos-trust-as-opposed-to-a-testamentary-trust.html

http://www.entrepreneurmag.co.za/advice/starting-a-business/start-up-advice/should-i-set-up-a-trust/

https://www.findanattorney.co.za/content_inter-vivos-trust

FEARING FORECLOSURE: WHAT ARE YOUR RIGHTS AS THE HOMEOWNER?

The recent junk status announcement has shaken us into a quick action of tightening our belts and letting go of luxuries to afford our day to day expenses. This financial condition inhibits the possibility of purchasing a new house, let alone affording your current home. Have you thought about what you would do if your foreclosure wiped its shoes on your doormat?

You have the option to sell

Selling, rather than waiting for foreclosure, offers a greater possibility of you receiving greater value for your home. You may choose to sell privately or through an estate agent. It is advisable that your qualified conveyancing attorney be notified of any concerns, as well as any interests of potential buyers. During this time, look for alternative home solutions, and consider a suitable transfer date.

Prior to the signing of the agreement of sale and the transfer of ownership, the property still belongs to you.

You have time

Before receiving a foreclosure notice, the bank allows a grace period for you to catch up on your bond instalments. It may be difficult to do so, considering your finances have already been tightrope walking over the past few months. Meeting with your bank allows the opportunity for a payment restructure to be discussed and agreed upon.

The repossession procedure is paused during the time you are in application of or in debt review. The National Credit Act allows this opportunity.

Approach your lawyer

If, after attempting to recover payments, you receive foreclosure summons, contact your lawyer. As stated by section 26(3) of the South African Constitution, your eviction may not be finalised without an official court order. The courts consider all relevant circumstances before reaching a final eviction decision.

You may not be arbitrarily removed from your home.

You won’t be homeless

You have the right to adequate housing, despite your previous or current economic standing. Adequacy is determined by a place to eat, shelter, a place to sleep, and a place to raise a family, and this accessibility is the responsibility of the state. Following the outcome of the sale by the bank, the home is no longer in your ownership, and the state classifies you as an unlawful occupier.

The eviction process will then follow that of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act.

This article 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. Errors and omissions excepted (E&OE).

References:

National Credit Act

Constitution of the Republic of South Africa [1996]

Prevention of Illegal Eviction from and Unlawful Occupation of Land Act [No. 19 of 1996]

CAN I AMEND MY WILL?

Having a will is a final statement of how you want your assets to be managed after your death. However, sometimes you may want to change it. You may have had a child, for example, and what to add him/her into your will. You may have also acquired more assets and would like to reconsider how they get divided among your possible heirs.

What is a codicil?

When you want to add something to your will or make a minor change, then you can make use of a codicil. A codicil is a schedule or annexure to an existing will, which is made to supplement or to amend an existing will. A codicil must comply with the same requirements for a valid will. A codicil need not be signed by the same witnesses who signed the original will.

What if I want to amend my will?

  1. Amendments to a will can only be made while executing a will or after the date of execution of the will.
  1. Amendments to a will must comply with the same requirements for a valid will and if you cannot write, with the same requirements listed under that heading.
  1. When amending a will, the same witnesses who signed the original will need not sign it. 

Must I amend my will after divorce?

A bequest to your divorced spouse in your will, which was made prior to your divorce, will not necessarily fall away after divorce.

  1. The Wills Act stipulates that, except where you expressly provide otherwise, a bequest to your divorced spouse will be deemed revoked if you die within three months of the divorce.
  1. This provision is to allow a divorced person a period of three months to amend his/her will, after the trauma of a divorce.
  1. Should you however fail to amend your will within three months after your divorce, the deemed revocation rule will fall away, and your divorced spouse will benefit as indicated in the will.

This article 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. Errors and omissions excepted (E&OE).

References:

http://www.justice.gov.za/master/m_deseased/deceased_wills.html

ANTENUPTIAL CONTRACTS: CAN I GET ONE AFTER MARRIAGE?

Couples who are interested in an antenuptial contract often make the decision to get one before they are married. That is the ideal scenario. However, some couples may have already gotten married in community of property, and later decide to change to another form of marriage contract.

Can it be done?

The Matrimonial Property Act allows a husband and wife to apply jointly to court for leave to change the matrimonial property system which applies to their marriage.

  • According to South African law, the parties who wish to become married out of community of property must enter into an antenuptial contract prior to the marriage ceremony being concluded.
  • If they fail to do so then they are automatically married in community of property. Of course, many people are unaware of this provision and should be able to satisfy the court that it should change their matrimonial property system if it was their express intention that they intended to be married out of community of property.

What are the requirements?

In order for the parties to change their matrimonial property system, the act mentions the following requirements:

  • There must be sound reasons for the proposed change.
  • The Act requires that notice of the parties’ intention to change their matrimonial property regime must be given to the Registrar of Deeds, must be published in the Government Gazette and two local newspapers at least two weeks prior to the date on which the application will be heard and must be given by certified post to all the known creditors of the spouses.
  • The court must be satisfied that no other person will be prejudiced by the proposed change. The court must be satisfied that the rights of creditors of the parties must be preserved in the proposed contract so the application must contain sufficient information about the parties’ assets and liabilities to enable the court to ascertain whether or not there are sound reasons for the proposed change and whether or not any particular person will be prejudiced by the change.

What is the downside?

The downside is that the application is expensive because you and your spouse have to apply to the High Court on notice to the Registrar of Deeds and all known creditors, to be granted leave to sign a Notarial Contract having the effect of a postnuptial contract. You must also have solid grounds for wanting to switch to an antenuptial contract. Therefore, it’s not something you can do on a whim.

This article 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. Errors and omissions excepted (E&OE).

References:

The Matrimonial Property Act 88 OF 1984

WHAT IS THE SALE AGREEMENT?

Whenever you buy or sell a house you will encounter the sale agreement, which is also called an “offer to purchase”. This is a contract between a buyer and seller and covers the terms and conditions governing the sale of the property. Buying or selling a house can be stressful and sometimes confusing, however, the sale agreement doesn’t have to be.

An agreement of sale is a written agreement signed by both the buyer and the seller (and also by the seller’s spouse if he’s married or subject to the laws of a foreign country), whereas an offer to purchase may be either oral or written. If it’s in writing and signed by the buyer and accepted by the seller, an offer to purchase constitutes a binding agreement of sale, whereas an oral offer isn’t binding.

What should a sale agreement include?

These are a few things a sale agreement should include:

  • The names, identity numbers and marital status of all the parties.
  • The buyer’s address.
  • Description and size of the property as detailed in your deed of transfer.
  • The selling price and whether a deposit will be payable. If so, the deposit money will be held in the trust account by the transferring attorney.
  • A provision that the buyer pays all transfer and bond costs.
  • The name of the attorney handling the transfer.
  • The date of taking possession and occupation.
  • The provision that the buyer is responsible for all taxes and other municipal charges from the day of taking possession.

Who is responsible for the sale agreement?

The agreement, or contract, is usually an offer by the interested buyer. The buyer presents the offer to the owner of the property, who will accept it by signing it. This forms a binding contract. It is necessary to always consult a property lawyer who can assist you in a sale agreement.

This article 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. Errors and omissions excepted (E&OE).

References

Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

Legalwise.co.za

THE BASICS OF CREATING A LAST WILL & TESTAMENT

Who your property is passed on to depends on whether you have a valid will or not. If you do have a valid will, then your property will be divided according to your wishes stated therein. If you die without a will (called “intestate”), then your property will be divided amongst your immediate family according to the laws of intestate succession. 

How can I create a Will?

If you are older than 16, you have the right to create a will, to state who you would want your property to go to when you die. In order for your will to be valid, it needs to be compiled in the proper way.

  1. According to the law, you have to be mentally competent when you compile your will; this means that you must understand the consequences of creating a will and that you must also be in a reasonable state of mind when you do so.
  2. You must make sure that your will is in writing in order for it to be valid.
  3. Two people older than 14 years must witness the creating of your will (these witnesses cannot be beneficiaries).
  4. You have to initialise every page of the will and then sign the last page. The witnesses must also initialise and sign the will.
  5. You can, and should, approach a lawyer to help you draw up your will to avoid creating an invalid will.

You can appoint an executor in your will to divide your property amongst your loved ones. An executor is the person who will make sure that your property is divided according to your wishes, as set out in your will, and he/she will also settle your outstanding debts. If you don’t choose an executor yourself, then the court will appoint someone, which is usually a family member.

What are the risks of not having a Will?

If you don’t have a valid will when you die, your property will be divided according to the rules set out by the law. These rules state that a married person’s property will be divided equally amongst their spouse and children. If you don’t have a spouse or any children, then your property will be divided between other family members. If you also don’t have any blood relatives, then the property will be given to the government. You might think that you do not need a will, as your family will divide your possessions amongst each other, but you must keep in mind that delays in dealing with your estate could affect your family negatively; they might be relying on their inheritance for an income.

  • The beneficiaries of your estate will be determined according to the laws of intestate succession, if you die without a will.
  • This law determines the distribution of your assets to your closest blood relatives, meaning that your assets may be sold or split up against your wishes.
  • Some of your assets could be given to someone in your family that you did not intent to benefit from your estate.
  • Without a will, you cannot leave a specific item to a specific family member or friend.
  • If you live with someone but are not married to them, the law will not necessarily recognise him/her as a beneficiary of your estate, unless you have left a will naming them as a beneficiary.

This article 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. Errors and omissions excepted (E&OE).

References:

Western Cape Government. (2017). Making a Will. [online] Available at: https://www.westerncape.gov.za/service/making-will [Accessed 22 Jun. 2017].

Momentum.co.za. (2017). Drafting a will and setting up a trust. [online] Available at: https://www.momentum.co.za/wps/wcm/connect/momV1/f150ba2e-3724-4b42-9265-332106cb6b83/drafting+a+will_E+vs+2+%2807032013%29%5B1%5D.pdf?MOD=AJPERES [Accessed 22 Jun. 2017].

HOW DOES INHERITANCE WORK?

When someone dies they normally have what is called a ‘will’. The people who benefit from this ‘will’ are known as the heirs. Upon someone death, the heirs receive an ‘inheritance’. The person who administers the will of the deceased is called an ‘executor’.

What legislation affects inheritances?

South Africa’s inheritance laws apply to every person who owns property in South Africa.

The three main statutes governing inheritances in South Africa are:

  1. The Administration of Estates Act, which regulates the disposal of the deceased’s estates in South Africa;
  2. The Wills Act, which affects all testators with property in South Africa;
  3. The Intestate Succession Act, which governs the devolution of estates for all deceased persons who have property in the Republic and who die without a will.

All property located in South Africa is subject to these laws, and there are no separate laws for foreigners. Immoveable property is not treated any differently to other types of moveable assets for inheritance purposes. Inheritance issues of foreigners and South African citizens are primarily dealt with by the Master of the High Court; however, if a dispute arises, then the case can be heard in any High Court of South Africa.

Foreigners who acquire immovable property in South Africa through purchase or inheritance must register their transfer of ownership by registering a deed of transfer with the Registrar of Deeds in whose area the property is situated. The process of registering a deed of transfer is carried out by a conveyancer, or specialised lawyer, who acts upon a power of attorney granted by the owner of the property.

Tax and inheritance

In South Africa, there is no tax payable by the heirs who get an inheritance. Capital Gains Tax (CGT) is also not payable by the recipient of an inheritance. Estate Duty and CGT, where applicable, are usually payable by the estate. If it is a foreign estate, it will be subject to the taxes of its country of origin.

What about donations or gifts?

Donations and gifts are treated differently to inheritance. For individuals, donations are subject to a Donations Tax of 20%, with an annual exemption of up to R100,000 of the value of all donations made during the tax year.

  • Non-residents are not subject to Donations Tax. However, in cases where the resident donor transfers his property to a non-resident (donee), and the resident donor fails to pay the Donations Tax, the non-resident (donee) and the resident (donor) will be jointly and severally liable for the tax.
  • Donations between spouses are exempt from Donations Tax, as are donations made to certain public benefit organisations. 

This article 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. Errors and omissions excepted (E&OE)

Reference

The South African Revenue Service (SARS)