You can also listen to this podcast on iono.fm here.
AMANDA VISSER: Dying without a will means that your assets will be distributed by the state in a one-size-fits-all manner. The Intestate Succession Act rules are very specific and may have some undesirable outcomes.
My name is Amanda Visser and with us today is Dr Eben Nel, national chairperson of the Fiduciary Institute of Southern Africa, to highlight some of the implications when you die without a will. Eben, tell us briefly about the Intestate Succession Act.
EBEN NEL: Amanda, the law of intestate succession determines who a person’s heirs are, inasmuch as the deceased did not do so himself or herself by way of a valid will. In a will, a person can appoint legatees and heirs, as well as nominate an executor, a guardian for minor children – and trustees if a trust is to be formed for minors, for instance.
Now if the person dies without a valid will, the heirs will be determined by way of the rules of intestate succession, and specifically the Intestate Succession Act.
The executor, trustee, or guardian will be appointed by the Master of the High Court or another court, or in some cases the guardian, for instance – without input from the deceased. So that is not ideal.
The rules of intestate succession are fixed and no one can change them or interfere with them. So intestate succession works with concepts such as blood relations, descendants, ancestors and collaterals. The collaterals can be either full-blood or half-blood, which means the deceased has either two or one ancestors in common with the heirs.
Now it’s important that, if you do not have a will, you at least understand what these concepts mean, and what the impact will be if you should die without a will.
AMANDA VISSER: Is there a specific formula that they use between all those categories that you’ve just mentioned?
EBEN NEL: Simply put, we will always say it first goes down; that means to your children. If there are no children, it goes up to your parents.
If there are no parents – so [if] there are no descendants [and] there are no ascendants or ancestors – then it goes sideways to your collaterals.
And from there it can even go to your siblings and from there it can go down to your siblings’ children.
So yes, there is a formula prescribed by the act.
AMANDA VISSER: Just explain to us a little bit more about the ‘collaterals’.
EBEN NEL: The collaterals, as I say, can be half-blood or full-blood [relatives]. That means your siblings, your brothers and sisters or half-brothers and -sisters, where you share only one ancestor. And then if that brother or sister is also [deceased], [it goes] to their children and even further down to their grandchildren, etc.
AMANDA VISSER: Thank you for that clarification, Eben. Is there any cost to the estate?
EBEN NEL: Amanda, it is not necessarily more expensive because it is intestate; but the process will take longer – and that may result in some costs ultimately.
The process will be a bit different because there’s no will to be lodged with the Master of the High Court which the Master can accept and use to instruct the executor to administer the estate in terms of that will. So both the Master and the executor will immediately look at the situation regarding intestacy.
One will have to determine the exact composition of the family – and the broader family in some cases.
And then someone must report this estate because no executor has been nominated.
Any person with an interest can report it and must then share with the Master the family dynamics and set out the composition of the family. From there the Master will then determine who will be appointed as executor.
AMANDA VISSER: How does he decide that – who then becomes the executor?
EBEN NEL: That is quite a process sometimes, which is why it can be very time-consuming.
It can take weeks or even months because the Master would usually expect the family to nominate someone as executor, and the family members or the intestacy heirs will not necessarily all agree with one another.
There can even be competition among them as to who must be appointed because they may not trust someone or may feel that they will be prejudiced in the process.
But the Master would usually expect that everyone who is an heir in terms of the rules of intestate succession must agree. If they cannot agree and there’s conflict, then the Master does have the authority to appoint anyone the Master feels is adequate to do this. But that is a bit of a last resort for the Master and that’s why it may take a substantial period of time to get an executor appointed.
AMANDA VISSER: What happens if the family is not happy with the division of the assets?
EBEN NEL: Well, the intestate succession rules are clear, so there shouldn’t normally be a dispute, and nobody has the authority to override them.
But if there is a dispute, maybe regarding whether somebody is a blood relation or something like that, there will have to be evidence of some sort.
If somebody claims to be a family member or related to the deceased, he or she will have to prove that if it’s disputed.
Otherwise, if there is a question regarding the way the executor dealt with it or the interpretation of the actual instance, then the Master can give direction to the executor. But in the last resort, if somebody is not satisfied with the way the Master or the executor deals with it, one will have to approach the High Court for a final decision.
AMANDA VISSER: On that note, Eben, are there some practical implications that you’ve come across that have made things quite complicated and difficult?
EBEN NEL: Yes. I think the first challenge is that the reporting of the estate and the appointment of the executor, as I already explained, may be delayed if there’s no valid will.
The person who applies for the appointment will have to get the support of the deceased’s heirs, otherwise the Master will not appoint him or her – and often there are competing parties.
So I think that is the first hurdle to cross in practice. Even if a fiduciary practitioner is approached to handle this process, he or she will still be challenged with the same issues regarding nomination by the heirs, and irrespective of the poor relationship with a family it will be difficult if a missing descendant must inherit.
So, for instance, if there’s a family member who is an heir in terms of the intestate succession rules, and that person cannot be located or that person just refuses to cooperate and refuses to sign any nomination documentation, that is the first and, I think, biggest challenge we have with intestate succession.
The second problem is something like if the deceased was married, when the surviving spouse will qualify only for a child’s share of the intestate estate, and this may place that surviving spouse in a very difficult financial position with inadequate assets to survive on.
He or she will not inherit everything just because they are a spouse.
He or she will only inherit a portion equal to the portion that the children inherit, except if the estate is smaller than R250 000.
That R250 000 is a cut-off figure that the act allows, so that the share of the surviving spouse will not be smaller than R250 000, except obviously if the whole estate is worth less than R250 000.
But for instance, if it’s an estate worth R2 million and there are three children, it means that the surviving spouse will receive R500 000 of the R2 million. I hope that example is simple enough. So that obviously can be quite a devastating effect on the surviving spouse.
AMANDA VISSER: Is it expensive to have a will? Why would one not draft a will?
EBEN NEL: That is a very good question. It’s often very difficult to understand why people are so reluctant to have a will drafted.
Many institutions or private fiduciary practitioners will be prepared to draft a proper will at a nominal fee of a few hundred rand.
We sometimes say it’s cheaper to have a will drafted than to have maybe a meal for the family at a fast-food restaurant.
But there’s some form of resistance against that.
Professional people would usually expect to be nominated as executives, otherwise they may say ‘We will not draft a will’. But it is really money well spent, as I say, most of the time costing not more than a few hundred rand.
But it is so important to have a proper will, partly because it is so important to nominate a professional executor, particularly if the estate is anything larger than R250 000, because then the process is quite complicated and extensive.
AMANDA VISSER: Why is it advisable not to draw up your own will?
EBEN NEL: I think people may underestimate the potential technicalities in a will. It is all about language. Every term in a will has a meaning, and it does not necessarily have the meaning that you expect it to have in legal terms.
A will doesn’t have to be complicated, but it is advisable to keep it as simple as possible under the circumstances.
But sometimes the composition of the families is of such a nature or the wishes of the testator are not as simple as people think. And the complexity does not relate necessarily directly to the size of your estate. So some people feel, well, my estate is small, so it is not a problem.
But the size of the estate does not determine the potential complexity of the family composition or even the nature of the assets.
So the important thing is that it must be technically correct; if you don’t have the necessary expertise and legal background you may make technical mistakes in a will. Nobody else can step in after your death and say ‘The testator actually meant something else’, or ‘This was not really the way he wanted us to interpret it’.
It will be interpreted in terms of the rules of succession and I think it’s dangerous not to get a professional to draft a will. We see that so often because it is not a good idea just to copy somebody else’s will or to copy and paste from another will, and then think this will be suitable for my circumstances.
AMANDA VISSER: There you have it. Thank you. That was Dr Eben Nel, national chairperson of the Fiduciary Institute of Southern Africa, shedding light on the implications of not having a will.
Brought to you by the Fiduciary Institute of Southern Africa (Fisa).
Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.