Case Law Update – Trinity Asset Management (Pty) Limited v Grindstone Investments 132 (Pty) Limited 2018 (1) SA 94 (CC)
March 20, 2018
A conceptual overview of the age-old acquisitive prescription of immovable property, expropriation & Section 25 of the Constitution
April 19, 2018
Show all

When I ‘split’, how will they ‘split?’

It was Benjamin Franklin who famously stated that only two things in life are certain: Death and Taxes, these are unavoidable. In the case of the former a crucial question is what happens to one’s estate upon the occurrence of this certainty? The Law of Succession provides for this eventuality, it prescribes who the beneficiaries of one’s estate are (or may be) and which assets or rights they shall (or are entitled to) inherit.

In order to safeguard one’s assets and to ensure that their estate is devolved according to their wishes, we have previously advised individuals to approach an attorney to draft their last will and testament in line with the formalities prescribed in the Wills Act 7 of 1953 (‘Wills Act’). In this article we shall explore the notion of natural persons and their capacity to inherit under a last will and testament under specific circumstances.

The general rule is that all natural persons are capable of inheriting. In other words, every person, regardless of their age, mental or legal standing is capable of acquiring a vested right to an inheritance. Notwithstanding the general rule, an important caveat is that one might have the right to receive an inheritance yet their ability to enjoy such benefit could be delayed or frustrated.

We shall demonstrate the above principle by way of a hypothetical factual scenario, addressing specific instances.

Scenario

Imran is a wealthy businessman who lives in Constantia with his wife Lesego. He has four children, three with Lesego and one with his childhood sweetheart Whitney. Upon death in his last will and testament he left the following for each child:

  • A Ferrari sports car for his 21 year old daughter Thandiwe who is a student at the University of Cape Town;
  • An amount of R 500 000.00 and a Fiat Palio vehicle to his 16 year old daughter Aqeelah who attends Westerford High School;
  • His farm to his 36 year old son Zack who is mentally disabled and resides at Lentegeur Psychiatric hospital (‘Lentegeur’);
  • His trucking business to his 40 year old insolvent son Atul whom he had with Whitney;

Major beneficiary of sound mind and legal standing can inherit and enjoy

The general principle is that any mentally stable major who does not reject an inheritance shall acquire a vested right to inherit upon the death of the testator and they shall also have unlimited use and enjoyment of the bequeathal.

Thandiwe is above 18 years of age and thus a major, she is a student which is an indicator of mental stability. In short, unless these state of affairs are disproved she would inherit the Ferrari and could drive it to Camps Bay with her friends as she pleases.

Minor beneficiary can inherit, but not fully enjoy

A minor is a person under 18 years of age and such persons have the right to inherit but the use and enjoyment of the inheritance is limited. A minor’s use and enjoyment of an inheritance is administered by their guardian with the oversight of the Master of the High Court (“the Master”)

Aqeelah is 16 years of age and is thus a minor; therefore the Fiat Palio would vest to her but her enjoyment would be curtailed. This means that the car could be registered in her name and Lesego, in her capacity as the guardian, would be required to ensure that the vehicle is used to the benefit of Aqeelah. An example would be that Aqeelah could instruct Thandiwe to use the vehicle to drop and fetch her sister from school.

With regards to the R 500 000.00, S 43 (1) of the Administrations of Estates Act 66 of 1965 (‘Administrations Act’) requires the money to be invested into a guardian’s fund, which is to be administered by the Master. Lesego would be permitted from time to time to draw funds for Aqeelah’s maintenance, however, if the amount sought is above R 250 000.00 then the Master would not be permitted to disburse funds toward the maintenance of the minor without the leave of a court of law.

Persons of unsound mind can inherit, but not fully enjoy

A beneficiary who is of unsound mind, or mentally incapacitated, shall be able to inherit but not necessarily enjoy the inheritance free from restrictions. A beneficiary of unsound mind is treated in a similar fashion to a minor; their inheritance is managed by a third-party for their benefit. In terms of S 43 of the Administrations Act, only a court of law can declare a person of unsound mind and thereafter a curator bonis is appointed by the court to administer the inheritance on the beneficiary’s behalf. Lastly, in terms of Uniform Rule of Court 57 (10) and (12) the onus is on the applicant to prove on a balance of probabilities that the beneficiary is unable to administer their inheritance in a sensible manner.

Zack is of legal age to inherit and enjoy the benefit of the farm bequeathed by Imran; however, he is mentally unstable and thus lacks capacity to maintain or realise value from the farm. The executor of the estate or anyone that has sufficient interest in the matter would be able to apply to a court of law to confirm that Zack is indeed mentally incapacitated. The fact that Zack is an admitted patient at Lentegeur would most probably prove sufficient evidence to attain the court order confirming the above. After attaining such order the court would appoint an competent individual to administer the farm on behalf and for the benefit of Zack.

Extra-marital children and Insolvents can inherit but not always enjoy

Under the common law children born of incestuous, adulterous, or extramarital relationships could only inherit under special circumstances. S 2 D (1) (b) of the Wills Act changed this position and has granted all children the same status to inherit from testate or intestate succession.

Insolvent persons retain their right to inherit but their ability to enjoy is frustrated. Their inheritance shall fall into the insolvent estate and is to be managed by the trustee to the benefit of the creditors.

Atul is a major and has not been declared to be of unsound mind thus it seems he shall inherit. He is not born of a marriage but this shall not affect his ability to inherit because of the change brought about by the Wills Act. In other words, he is in the same position to inherit like all Imran’s other children.

Lastly, unless there is a clause indicating otherwise, the fact that he is insolvent shall not affect his ability to inherit. If he elects to accept the benefit of the trucking business then it shall effectively be managed and liquidated by the trustee in favour of the creditors in the order of preference.

Conclusion

The reader of this article should internalise two things. The first is that it is important to approach an attorney in order to draft a last will and testament so that the testator wishes are honoured and assets are protected. Second, when drafting the last will and testament one should be mindful that although a beneficiary may qualify to inherit on the face, the law can enforce specific limitations to the enjoyment of such inheritances.

Prepared by:

Arthur Johannes | Attorney | Trust and Estates

Fezile Nqiwa | Candidate Attorney

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)