Inheritance law in South Africa
There’s nothing quite like a pandemic to make each and every one of us think carefully about our own mortality. No one likes to think about losing a loved one, but death is a fact of life and it’s best to be prepared for its eventual arrival. What does this entail? It means drafting or updating your will to ensure that your loved ones know exactly what to do in the event of your passing. To guide your loved ones when you’re no longer around, it’s a good idea to put together an “in case of death” folder. So much more than just a will, this folder should contain instructions on everything important that needs to be dealt with when you’re no longer around.
Why is having a will important?
In 2019 alone, 75% of estates that were dealt with by the Master of the High Court were for individuals who died without a valid will. In 2020 and beyond, it’s likely that those numbers will continue to increase, as a result of the Covid-19 pandemic.
What happens when you die without a will?
This is referred to as dying intestate, and the laws of intestate succession will apply to your estate. This means you will have no say in how your assets are distributed after your death.
A will is an important legal step you can take to protect your dependants (such as minor children and elderly parents) and your beneficiaries. In the absence of a will that provides for a testamentary trust, any inheritance due to minor children will need to go into the Guardian’s Fund, which is administered by the Master of the High Court on their behalf until they reach the age of 18.
What does a will do?
A will determines how your estate will be divided between your heirs on your death.
- Without a will, your assets will be distributed in terms of the Intestate Succession Act of 1987, where the laws of inheritance may not align with your actual last wishes.
A will decides who will wind up your estate.
- The executor you appoint will ensure your property is distributed properly and will deal with the administrative process.
- Without a will, it will be necessary for the Master of the High Court to appoint an executor, which is usually a family member.
A will specifies guardianship and who you would prefer to take care of your minor children.
- Without a will appointing a guardian, the state will decide who is in the best position to care for your children, and this decision might not align with your preferences.
A will can be structured to minimise estate duty and capital gains tax.
- Where assets are passed to the surviving spouse, it is possible to use section 4A and 4q of the Estate Duty Act to provide roll over relief in terms of estate duty and capital gains tax.
- Section 4A provides that the first R3.5m of the first dying spouse’s estate will not be subjected to estate duty charges, while section 4q allows for the value of any specific bequest to a surviving spouse to be exempt from estate duty.
- It will only be on death of the surviving spouse that the remaining assets will be taxed.
What are the requirements for a valid will?
There’s no point in going to the effort of drafting a will to stipulate your wishes, if it’s not going to stand up to a validity test. Where a will is contested and overturned, because it does not meet the legislative requirements for validity, your estate will be wound up as if you had died without a will, i.e: according to the rules of intestate succession.
The requirements for a valid will in South Africa are laid out in the Wills Act of 1953:
- A will is a legal document, which means it can only be drafted by someone who is older than the age of 16.
- A will must be in writing. (i.e: handwritten or typed.)
- It must be made by a person who is mentally capable of appreciating the nature and effect of making a will. (i.e: of sound mind)
- It must be signed by two competent witnesses who are 14 years or older, but they cannot be beneficiaries named in the will.
- Both witnesses and the testator must initial every page and sign the last page in the presence of the others, at the same time.
Is there a free template I can download to draft my will?
What can you do to guide your family in their time of loss?
You can tell them exactly what you would have wanted them to do in your absence and save them the stress of figuring it out on their own, while dealing with their grief. Without a will and your “in case of death” folder, it’s likely that you’ll leave behind an administrative mess, which can delay beneficiaries from their inheritances and drag out the process of winding up your estate. The longer this process takes, the longer your spouse and dependents will be without support, as they can only get paid out funds from your estate once it’s been successfully wound up.
Here are some things you should organise and place in your “ in case of death” folder:
- Your Will: this is one of the most important, self-explanatory components of your folder.
- Insurance Policies: You’ve got life insurance for a reason, right? Where you’re aiming to protect specifically designated beneficiaries, you can make it easier by keeping these documents together, along with instructions on how to claim from your insurer.
- Pension policies and annuities: it may be that your spouse or beneficiaries are entitled to your pension or annuities on your death, so you’ll want to leave behind statements with policy numbers and contact details to organise such payments quickly and efficiently.
- Contact details of key people: these are important contacts (who are likely to hold important documents or information) like your attorney, accountant, financial advisor, and the executor of your will.
- Important possessions: If you hold family heirlooms or you’ve got valuables stashed somewhere (a hidden safe or bank deposit box) make a note of where these items can be found.
- Funeral arrangements: If you’ve got any specific wishes (burial or cremation) or song requests or a guest list in mind, you’ll want to detail these so that your loved ones can carry out your wishes.
- Bank account details: this includes your online banking details, credit cards, PINs, and the like.
- Investments: Any important paperwork detailing investments must be included. If your financial adviser holds these, make a note of their values and include your financial advisors contact details.
- Official documents: Your birth certificate, passport, marriage certificate, and identity documentation should be easily locatable.
- Social media account details and technology passwords: it may be necessary for your loved ones to access information held on your computer. To save time and hassle let them know your login and password details, including how your social media accounts should be dealt with on your passing.
FinGlobal: Trusted financial services provider for South African expats
Handling matters of inheritance can be tricky when you’ve got assets or beneficiaries in South Africa and overseas. FinGlobal is ready to help South Africans access and transfer abroad the proceeds from a deceased estate. To find out how to claim inheritance money from South Africa, or how your estate will be dealt with if you’re an expat living abroad, get in touch!