19 November 2024

Estate planning is an essential step in safeguarding your assets and ensuring your wishes arefollowed after your death. Central to this is having a valid will, a document that provides clearinstructions as to how your estate should be distributed. If you pass away without a will yourestate will be distributed according to the laws of intestate succession, which follow a strictlegal formula that might not align with your personal preferences. The Concept of Intestate SuccessionIntestate succession refers to the statutory system that governs estate distribution when anindividual dies without a will. Under the Intestate Succession Act 81 of 1987, specific rulesdetermine who will inherit the estate based on their relationship to the deceased. In theabsence of a will, this process is intended to ensure that immediate family members and bloodrelatives are prioritised. However, it can be restrictive, as it does not allow any flexibility toaddress unique family situations, non-blood relations, or other wishes of the deceased. How is the Estate Distributed without a Will?In South Africa, the distribution of an intestate estate follows a set order of inheritance, whichprioritizes spouses and descendants. The key rules are as follows:Surviving Spouse Only: If the deceased is survived only by a spouse and has no children, thespouse inherits the entire estate.Surviving Children Only: If there are no surviving spouse, children will inherit the estate inequal shares. This applies to biological children and adopted children, but stepchildren mayonly inherit if legally adopted by the deceased.Spouse and Children: When both a spouse and children survive the deceased, the spousereceives either a “child’s share” or R250 000, whichever amount is greater. The remainingestate is then equally divided among the biological and adopted children. A “child’s share” iscalculated by dividing the estate by the number of children and the spouse.Other Blood Relatives: If there is no surviving spouse or children, the estate will go to theclosest blood relatives, including siblings, parents, or other extended family members. If theclosest living relatives are distant, the estate may be divided among them equally.No Surviving Relatives: Without surviving relatives, the estate will be held in the Guardian’Fund for up to 30 years. During this period, any unknown relatives may come forward to claimthe estate. If no legitimate heirs are identified, the estate will ultimately revert to the state. Why Having a Will is Crucial and key advantagesA will offers flexibility and legal certainty when planning the distribution of assets. It allowsindividuals to designate chosen heirs, specify who should receive particular belongings, andappoint guardians for minor children. It enables the selection of an executor to oversee theestate’s distribution, helping to minimize misunderstandings or conflicts among familymembers. In contrast, intestate succession does not account for the deceased’s personalwishes and can result in conflicts among surviving family members who may feel overlooked A testator may include a fideicommissum condition in their will where the initial beneficiaryreceives property with the requirement that it will pass to a subsequent heir after a certainperiod or upon specific conditions. For example, a parent might leave a house to a child withthe stipulation that it will eventually be inherited by the grandchild. This condition helpspreserve family assets across generations. Another advantage of a will is that it allows for the creation of a trust to manage assets forminor children until they reach a suitable age. By appointing a trustee, the testator can ensurethe inheritance is used for the children’s needs. Without such a provision, any assets inheritedby minors would likely be managed by the state’s Guardian’s Fund or a court-appointedguardian, potentially limiting access to funds and delaying distributions A testator can furthermore outline specific terms or conditions attached to an inheritance. ,testator could for example stipulate that a beneficiary may only receive their inheritance uponobtaining a university degree or reaching a certain age. These conditions must howeverremain reasonable and lawful in order to be valid. Requirements for a Valid WillFor a will to be legally valid, it must adhere to the formal requirements set out in the Wills Act7 of 1953. The testator must be 16 years or older and mentally capable of understanding thewill’s implications. The document must be in writing, signed by the testator and two competentwitnesses at the same time. When a mark, rather than a signature, is used, a Commissionerof Oaths must be present to confirm the Testator’s identity and to verify that the will belongsto the Testator. Failure to meet these requirements can result in a will being declared invalid. Challenging the Validity of a WillEven when a will exists, its validity can be disputed. Common grounds for contesting a willinclude non-compliance with the Wills Act’s formalities, fraud, forgery, or undue influence onthe testator. The courts generally try to uphold the wishes of the testator, but they may ruleagainst the will if there is sufficient evidence to prove on a balance of probabilities that it wasnot created voluntarily or does not reflect the deceased’s wishes. If a party wishes to disputethe validity of a Will, that party carries the burden of proof to support their claim. In the case of Kunz v Swart and Others 1924 AD 618 the court assessed the issue of forgery,examining whether the will represented the testator’s wishes. In Pillay and Others v Naganand Others 2001 (1) SA 410 (D), the applicants successfully contested a will’s validity, arguingthat the signature had been forged. These cases demonstrate the court’s role in protecting theintegrity of wills, ensuring they are genuine reflections of the testator’s intentions. ConclusionCreating a valid will is a powerful step toward ensuring your estate is distributed according toyour preferences. Without a will, intestate succession applies, and although it provides astructured approach to asset distribution, it is often rigid and may not reflect the deceased’sunique family dynamics or intentions. With a will in place, you can gain peace of mind knowingyour assets will be managed as you intended. Given the complexities of estate planning andthe possibility of disputes, it is advisable to seek professional assistance when drafting a will,ensuring that your hard-earned assets are preserved and passed on according

Selling Property? Here’s the Scoop on Who Pays: Transfer Duty or VAT! What is Value Added Tax?The Value – Added Tax Act No. 89 of 1991 (VAT Act) came into effect on 30 September1991, provisioning for an indirect tax, commonly referred to as Value Added Tax (VAT), tobe levied on the supply of goods and services supplied by a registered VAT vendor in thecourse and furtherance of any business carried on by such a vendor. It is important to understand that the VAT Act defines “goods” as any real right in any fixedproperty, to the exclusion of any right held under a mortgage bond/pledge of any fixedproperty. So, the disposal of property could be subjected to VAT, provided such atransaction falls within the ambit of the VAT Act. What is Transfer Duty?The Transfer Duty Act No. 40 of 1949 (TD Act) came into effect on 01 January 1950,provisioning for a tax levied on the value of a property acquired by any person. Thepurpose of this is to generate a form of income for national government as such a levy ispayable into the National Revenue Fund. Section 2 of the TD Act makes provision for transfer duty to be imposed on any propertywhich is acquired by a person by way of a transaction. Transfer duty can also be imposedon the amount by which the value of a property has been enhanced.Now… let’s delve a little deeper into the importance of knowing whether VAT orTransfer Duty is applicable to your transactionThe first step is to ascertain the status of the Transferor/Seller. Make use of this two-fold nested test question:Is the Seller/Transferor is a vendor, as defined in the VAT Act, for purposes of thetransaction? The likelihood is that VAT will be payable, however further enquiry isnecessary. Is the Seller/Transferor is a vendor, as defined in the VAT Act?How do I know who is a registered VAT vendor? Well, it’s quite easy, simply request thevendor to provide their VAT registration certificate also known as a VAT 103 or visit theSARS website @ www.sars.gov.za, on the filing page and use the VAT Vendor Searchfunction. For purposes of this transaction?Purpose is imperative here as the disposal of a vendor’s property is to be linked to hisbusiness. A vendor is considered to be someone, carrying on a business/enterprise on acontinuous/regular basis, within the Repubic or partially within the Republic, and throughthe course of this business, goods and services are supplied in exchange for aconsideration payable by the Transferee/Purchaser of those goods and services supplied. Yes, Yes, Yes!!!If this two-fold, nested test question is answered affirmatively, VAT becomes payable onthe transaction. The onus then lies on the Seller to ensure that negotiations include VAT.If the VAT levied on such a transaction is unspecified in the deed of sale, consider the VATinclusive in the price specified in the deed of sale as it is then deemed to be inclusive ofthe Purchase Price. Conveyancers and Real Estate Agents must be fastidious andexercise great caution in drawing up deeds of sales when acting on behalf of developers So! VAT does not apply to me, Does this mean that I have to pay Transfer Duty?Transfer Duty certainly becomes payable in the event that VAT is not applicable to yourtransaction. This duty is levied on the fair – market value of the property being disposed ofand is payable by the Purchaser. In practice, this amount is paid into the ConveyancersTrust Account who then pays it over to the Receiver on behalf of the purchaser. A transferduty receipt (TR) is provided to the conveyancer which serves as proof that transfer dutyis paid. Knowing whether Transfer Duty or VAT applies can make or break your property deal!Look out for Part 2 of this article where we will exolore certain VAT exemotions apolicableto Property Transfers. Download the full Property Practitioners Regulatory Authority Code of Conduct. Download