AN INTERESTING MORNING ON INVASIVE ALIEN PLANTS

A1_BOn the morning of 11 March 2016 our firm hosted a seminar on the topic of Invasive Alien Plants. We were honoured to have had outstanding experts in the environmental field as presenters. Our presenters included Elbi Bredenkamp, the director of Enviroworks, Louise Stafford, the Head of Green Jobs at the Environmental Resource Management Department of the City of Cape Town, Professor Johan Du Preez, the director of EnviroNiche Consulting and Livhuwani Nnzeru, an Environmental Officer at the Department of Environmental Affairs.

Invasive Alien Plants (IAPs) are widely considered as a major threat to biodiversity, human livelihoods and economic development. IAPs cost South Africa tens of billions of rands annually in lost agricultural productivity and resources spent on management.

Thus far, this information has not been made known sufficiently to estate agents, which may in part have contributed to many of them ignoring the new legislation. Knowledge of this legislation by all parties will hopefully help prevent non-compliance with the Act.

On 01 August 2014, the Minister of Environmental Affairs published the Alien and Invasive Species Regulations which came into effect on 1 October 2014. The Regulations were conceptualised in a bid to curb the negative effects of IAPs and other Alien Invasive Species (AISs). The Regulations call on land owners and sellers of land to assist the Department of Environmental Affairs to conserve our indigenous fauna and to foster sustainable use of our land.  The Regulations identify a total of 559 alien species, including 383 plant species as invasive which are divided into four different categories.

According to Regulation 29(3) of the National Environmental Management: Biodiversity Act 10 of 2004 (NEMBA), the seller of immovable property must, prior to the conclusion of the relevant sale agreement, notify the purchaser of that property in writing of the presence of listed invasive species on that property.

In practice, an estate agent can add value by guiding a seller in adhering to Regulation 29 of NEMBA. An estate agent should ask a seller of a property to declare in writing whether they are aware of any AISs on their land or if they hold a permit for species that require permits to be held. If, following an enquiry of an estate agent, it is established that AISs have been found on the land for sale, or that the seller holds a permit, then a copy of this confirmation must be handed to a prospective purchaser. The purchaser’s offer should include an acknowledgement by the purchaser that he has been advised of the invasive species on the property.   Property sale agreements subsequent to 1 October 2014 should incorporate a clause in terms of which the purchaser acknowledges that he has acquainted himself as to the nature of the property he is purchasing, and that he accepts the property as such, including the vegetation present on the property.  The declaration by the seller resulting from an inquiry of an estate agent could well assist in adhering to Regulation 29 and thus avoid the heavy punishment imposed by the Regulations.

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).

IMPLICATIONS OF ESTATE DUTY

A4_BEstate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

  1. Insurance policies
  1. Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.
  2. The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.
  3. If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.
  4. Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.
  1. Donations at date of death

Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.

  1. Claims in terms of the Matrimonial Property Act (accrual claim)

An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.

  1. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions

Some of the most important allowable deductions are:

  1. The cost of funeral, tombstone and deathbed expenses.
  2. Debts due at date of death to persons who have their ordinary residence in South Africa.
  3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.
  4. Foreign assets and rights:
  5. The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.
  6. However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.
  1. Debts and liabilities due to non-residents:
  2. Debts and liabilities due to non-residents are deductible but only to the extent that such debts exceed the value of the deceased’s assets situated outside South Africa which have not been included in the dutiable estate.
  1. Bequests to certain public benefit organisations:
  1. Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes.
  1. Property accruing to a surviving spouse [Section 4(q)]:
  1. This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.
  2. Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).
  3. Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.
  4. Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

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)

HOW TO REGISTER AN INTER-VIVOS TRUST

A3_BIn South Africa there are mainly two types of trusts that are registered. An inter-vivos trust can be created between living persons, and a testamentary trust is created in the will of a deceased.

An inter-vivos trust is registered at the office of the Master of the High Court in whose area of jurisdiction the main assets of the trust are or will be held.

The first step is to draw up a valid trust deed. A trust deed is a contract between the founder of the trust and the trustees, for the benefit of a third party or parties, known as the beneficiaries. In terms of the trust deed, the founder agrees to transfer certain assets to the trustees of the trust for the benefit of the beneficiaries. The trust deed must stipulate who the first trustees of the trust are going to be. In many instances the Master will insist on at least one independent trustee to be appointed. This means that the independent trustee will receive no benefit from the trust assets apart from the specified and reasonable trustee remuneration. The beneficiaries must be specified in the trust deed, as well as their entitlement to either the capital of the trust, the income of the trust assets, or both.

A trust deed is a valid contract and therefore subject to all applicable laws. Furthermore, there are significant tax, financial and other consequences of being involved in a trust, whether as trustee, founder or beneficiaries. Therefore it is imperative to seek professional advice when drawing up this deed.

The duly signed and witnessed trust deed must be submitted to the Master of the High Court, together with the completed and signed Acceptance of Trusteeship for all trustees and certified copies of their identity documents. This Acceptance of Trusteeship states the basic information of the trustees that the Master requires, as well as certain declarations made by the trustee. If the Master requires the trustees to furnish security, proof of the bond of security by those trustees must be provided to the Master when the trust is registered. Form JM21 sets out certain requirements and information that must be supplied to the Master together with the other documents set out in this paragraph. This information include details on the professions or business occupation of the trustees to be registered, any previous experience that these trustees might have in the administration of trusts, the name and branch of the bank where a bank account will be opened for the trust, and so forth. An original undertaking by an auditor or accounting officer must accompany form JM21. Lastly, proof of the payment of the prescribed fee of R100 must be submitted.

On receipt of the above documents in accordance with all the requirements, the Master will issue a Letter of Authority to the trustees. The trustees may then act on behalf of the trust.

Any amendments to the original trust deed must be placed on record with the Master of the High Court where the original trust deed is on record.

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)

GETTING MARRIED? LET SCHNETLER’S GUIDE YOU IN CHOOSING A MARITAL REGIME TO SUIT YOUR REQUIREMENTS

A2_BIn our last month’s newsletter, we provided some insight into marriages which are classed as “In Community of Property”. In this month’s newsletter, we shall address “Out of Community of Property” marriages and the impact of the “accrual system”.

Should you wish to read last month’s article, you may find it on our website under the “News” tab, titled “Let Schnetler’s help you to tie the knot”.

ANTENUPTIAL CONTRACTS

An Antenuptial Contract is a marriage contract which is entered into between two persons who are intending to be married to one another. In this contract, the terms and conditions which will govern the marriage will be set out, more particularly the matrimonial property system which is to apply to their marriage.

There are two options of such Antenuptial Contract:

  1. excluding the accrual system
  2. including the accrual system

OUT OF COMMUNITY OF PROPERTY WITH THE ACCRUAL SYSTEM

The accrual system is, in theory, the best of all matrimonial property systems. During the subsistence of the marriage, the spouses have separate estates. The accrual of the estates of each spouse is the amount by which the nett value of the estate at dissolution of the marriage (either by death or divorce) exceeds the nett value of the estate at the commencement of the marriage. Hence, the nett value of the estate at date of marriage is deducted from the nett value of the estate at date of dissolution thereof. If the result is zero, then there has been no accrual.

There are, however, certain items which are not included in the value of the spouses’ estates at date of dissolution of the marriage:

  1. Monies received by a spouse by way of damages for non-patrimonial loss e.g. payment received in a civil litigation for defamation of character.
  1. Any asset which the spouse has excluded from the accrual in the Antenuptial Contract, as well as any asset which has been acquired by virtue of such excluded asset e.g. property which is sold with a new property being bought with these proceeds.
  1. Inheritances, legacies and donations which accrued to the spouse during the marriage, as well as any asset acquired by virtue of such inheritance, legacy or donation.
  1. Donations between the spouses.

OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACCRUAL SYSTEM

The exclusion of the accrual system can be explained as follows – each spouse has a separate estate from the other. Thus, at termination of the marriage, each spouse retains their own estates, with there being no division whatsoever.

The main disadvantage of being married without the accrual system, is that no matter how long the marriage has endured, and how much one spouse has contributed to the other spouse’s success, he/she does not have a right to share in that person’s gains.

Should you wish to discuss the Marital Regime options further, or should you wish to have an Antenuptial Contract drafted, kindly contact one of our Notaries who will be pleased to help you reach the best decision for your future marriage.

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).