If a person dies without a valid Will, or without any Will at all, her estate will be distributed in terms of the Intestate Succession Act which effectively sets out the rules according to which the deceased’s estate will be allocated amongst her heirs. However, the administration of an intestate estate can be slow and frustrating for the heirs. In this article, we summarise the consequences of dying intestate and subsequently the importance of having a valid Will.
Your heirs
In the absence of a valid Will, the aim of the Intestate Succession Act is to provide a streamlined set of rules for the distribution of the deceased’s assets – a process which is dependent on the nature of each heir’s relationship to the deceased at the time of death. Intestate heirs can include the spouse or life partner of the deceased, natural and adopted children, the parents and siblings of the deceased, and any other blood relatives. Once it has been determined that the deceased has no Will, or that his Will is invalid, the provisions of the Intestate Succession Act automatically apply – with the deceased’s spouse and children taking preference.
If you have a Will: A valid Will allows a testator to circumvent the laws of intestacy and to determine exactly how his earthly belongings should be distributed amongst his loved ones in the event of death. Through his Will, a testator can choose to leave assets to people other than his spouse or blood relatives and can nominate entities such as charities, trusts and companies to benefit in terms of his Will.
Your matrimonial property regime
It is important to remember that the nature of your marriage contract will have a bearing on the distribution of your intestate estate. If you and your spouse are married in community of property, your spouse is entitled to her half-share of the joint estate, meaning that only 50% of the joint estate will devolve onto your intestate heirs. If you and your spouse are married with the accrual system, keep in mind that your surviving spouse may have a claim against your deceased estate for her share of the accrual. Once all debts have been settled and your spouse has received her share of the accrual, the remaining assets in your estate will devolve according to the laws of intestacy.
If you have a Will: Freedom of testation means that the person drafting a Will can determine how his assets should be distributed in the event of death, subject to a few exceptions, one of them being the matrimonial property regime of the testator. As mentioned above, a testator who is married in community of property cannot dictate how his surviving spouse’s half-share of the joint estate should be treated in the event of death. Similarly, where a couple is married with the accrual system, they should bear in mind that if the surviving spouse’s estate is the smaller, she will have a claim against the deceased’s estate for her share of the accrual – meaning that only what remains thereafter can devolve in terms of the Will. Where a couple has expressly excluded the accrual, each spouse is free to distribute their assets in accordance with their wishes. That said, it is important to bear in mind that a spouse who has not been adequately provided for by her deceased spouse may have a claim against the estate in respect of the Maintenance of Surviving Spouses Act.
Executorship
In the case of intestacy, no executor would have been nominated by the deceased and the Master will need to appoint one – and this person is referred to as the executor dative. If the deceased has a surviving spouse, the Master may appoint that person as the executor of the estate. Alternatively, the deceased’s heirs can nominate an executor, but the appointment would still need to be finalised by the Master of the High Court, keeping in mind that if the value of the deceased estate does not exceed R250 000, the Master may dispense with the appointment of the executor and direct the estate to be liquidated and distributed. In terms of the Administration of Estates Act, the tariff laid down in respect of executor’s fees is 3.5% of the gross value of the deceased estate, plus VAT, as well as 6% of the income collected after the date of death, plus VAT.
If you have a Will: In general, a testator will nominate an executor in terms of his Will – and this person is referred to as the executor testamentary. If the testator has negotiated a more favourable executor fee, this agreement can be included in the Will. Keep in mind, however, that the nominated executor would still need to be approved by the Master by the issuing of Letters of Executorship.
Legal guardian for minor children
In the absence of a Will, if there is a surviving parent in the event of your passing, that person will be the legal guardian of your minor children. But, if both parents were to die simultaneously or in close succession, the appointment of a legal guardian will fall on the Master of the High Court – and while the best interests of the children are always paramount, the guardian chosen by the Master may not be the person you would choose to care for your children.
If you have a Will: If you have minor children, you can use your Will to nominate legal guardians for your children in the event of your death.
Inheritance of minor children
If your minor children inherit from you in terms of intestate succession, their inheritance will likely be placed in the state-run Guardian’s Fund where it will be administered on their behalf until they reach the age of majority. This is because children under the age of 18 do not have contractual capacity and, as such, cannot inherit directly. The Guardian’s Fund forms part of the Master of the High Court, with each Master’s Office having its own fund. However, the process of claiming from the Guardian’s Fund is slow and cumbersome, and the interest earned on invested funds is not market-related – meaning that your minor children’s intended inheritance could be compromised.
If you have a Will: To safeguard assets intended for your minor children, you can use your Will to set up a testamentary trust which comes into formation in the event of your passing. The trust instrument, being your Will, can name your minor children as beneficiaries to the trust and list those assets to be bequeathed to the trust in the event of your death. You can also nominate a set of trustees who will be responsible for managing the trust assets in the best interests of your children until they reach a pre-determined age.
Procedure for intestate inheritance
The strict guidelines laid down by the Intestate Succession Act ensure that the assets of the deceased are apportioned amongst his intestate heirs as follows:
(a) Surviving spouse and children: If the deceased leaves behind a spouse and children (including adopted children), then both spouse and children will inherit according to a set formula known as a child’s share. In terms of the Act, the surviving spouse is entitled to receive R250 000 or a child’s share, whichever is the higher. To calculate the child’s share, one must divide the value of the deceased estate by the number of children plus one (the surviving spouse). For example, the value of Sandra’s deceased estate is R2,1 million and she leaves behind a husband and two children. The estate would therefore need to be divided by three, and each heir would therefore receive R700 000 (being greater than the R250 000 child’s share). By way of another example, let’s assume Themba and Xolisa are married in community of property and their combined estate is valued at R1 million. On Themba’s passing, he leaves behind Xolisa and 3 children. As they are married in community of property, Xolisa would first receive her half-share of the estate, being R500 000. The remaining R500 000 would then be divided by 4 (i.e. Xolisa plus 3 children), being R125 000. Being the greater amount, Xolisa is entitled to the child’s share of R250 000, while her 3 children will each receive R83 333 (R250 000/3).
(b) Only a surviving spouse: If the deceased leaves behind a spouse but no children, the spouse will inherit the entire estate. In the case of polygamous marriages, each surviving spouse will be entitled to an equal share of the estate. A recent Constitutional Court ruling has confirmed that the definition of spouse in terms of the Intestate Succession Act includes both same-sex and heterosexual life partners who have undertaken a reciprocal duty of support, whereas previously cohabiting heterosexual partners did not qualify as intestate heirs. In terms of this ruling, Parliament has 18 months in which to rectify the relevant legislation.
(c) Only surviving children: If the deceased leaves behind children and no surviving spouse, the children will share equally in the estate. Remember, this would include adopted children of the deceased. Further, whether or not a child was born in or out of wedlock has no bearing on their status as competent heir.
(d) No surviving spouse or children: Where the deceased has no surviving spouse or children, the parents of the deceased, if both still alive, will each inherit one half of the estate. If only one parent is alive, the children and grandchildren of the deceased parent will inherit per stirpes.
(e) No surviving spouse, children or parents: In such circumstances, the deceased’s estate will be distributed equally amongst his siblings, once again per stirpes.
(f) No surviving spouse, children, parents or siblings: In the absence of all four categories of heirs, the closest blood relative to the deceased will inherit.
(g) No descendants: Where the deceased dies intestate and has no descendants as defined by the Act, the estate’s assets will be held in the Guardian’s Fund for a period of 30 years – and if no heirs come forward during this period, the money is forfeited to the state.
If you have a Will: By drafting a Will, you are able to override the automatic consequences of intestate succession to ensure that only those you intend to benefit from your estate actually do so, and in the amounts that you would like them to. Keep in mind that family dynamics and relationships change over time and, in the absence of a valid Will, a pre-determined set of relatives will inherit your assets which may be contrary to your intentions.
Have a great day.
Sue
