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Collation

“Collation Bonorum”, also referred to as collation, is a common law principle whereby the descendent returns all assets, whether movable or immovable property, to the deceased`s estate, upon the latter’s death. Collation is not an automatic principle, but may be applicable to both testate[1] and intestate[2] estates, collation restores the deceased’s estate to its financial position prior to the issuing of any money or property to its heirs. This ensures the fair distribution of the estate’s wealth among all beneficiaries. Descendants for the purpose of this principle, includes all heirs namely: children of the deceased, to the exclusion of close their relatives such as siblings, grandchildren, legatees and their creditors.

As an illustration, assume that John and Mary White each receive the amount of R 10 000 and R 3000 from their father during his lifetime. Assume further that on his death the gifts need to be collated with them the only beneficiaries in the estate. The award, bringing collation into consideration, would appear as follows in the distribution account:

 

Distribution account

The balance available for distribution is R 86 000,00.

The amount to be collated is R 13 000,00.

Whereby John received, R 10 000,00 and Mary R 3000,00.

The balance for distribution, namely R 86 000,00 and the collatable funds of R 13 000,00 amounts to a total of R 99 000,00 whereby the estate’s worth.

Taking the aforesaid into consideration, the awards ought to be assigned as follows:

John White, major son of the deceased’s, ½ share:                                             R 49 500,00

in terms of Clause 3 of the Last Will & Testament

Less the collatable amount of R 10 000,00, allows for the distribution of               R 39 500,00

Mary White, major daughter of the deceased, ½ share:                                          R 49 500,00

in terms of Clause 3 of the Last Will & Testament

Less the collatable amount of R 3 000,00, allows for the distribution of                    R 3000,00

Thus, an amount of R 46 500,00 is available for distribution, totalling to an award of R 86 000,00.

Collation clauses are practically applicable in testamentary instruments, namely Last Wills and Testaments. Expressly read as follows, I direct that, during my lifetime, I awarded my daughter, Honey Blu R 120 000 (One Hundred And Twenty Thousand South African Rand) for the furtherance of her studies. Upon my death these funds ought to be recovered from her before the assets in my estate can be distributed.”

The inverse is permitted whereby the operation of testamentary instruments can operate to the exclusion of the collation clause, reading as follows: “I direct that my children need not return any donations nor collatable assets whether it be movable or immovable property received during the course of my lifetime.”

It should be acknowledged that, subject to the necessary provision, an exemption could be extended to a collating heir, to allow collatable assets to be retained by this heir while their share to an inheritance lessens.

Collation is not expressly applicable to intestate estates. An heir who has been unduly enriched during the lifetime of the Testator or Testatrix will be liable to refund the estate for the money or other assets received. In this case, the Executor must show that collation had taken place. Any Application undertaken herein will be paid from the estate funds. Alternatively, the estate’s Executor and Heirs may agree that the collated amount be deducted from the enriched heir(s)’ inheritance upon distribution of the asset or that collation will not be enforced.

In conclusion, the Collation Clause is a mechanism which the Testator or Testatrix can apply to ensure that there is an equal distribution of the assets amongst the Heirs.

Sources

  • The Law of Succession in South Africa, 3rd Edition, Oxford, Juanita Jamneck;

Christina Rautenbach & Others

  • PLT -LSSA, Commercial Litigation 2002

[1] Testate refers to an estate that is administered in terms of a valid Last Will and Testament.

[2] Intestate refers to an estate that is administered without a valid Last Will and Testament, in accordance with the provisions of the Intestate Succession Act 81 of 1987.

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