Estates and Estate Planning
ESTATE PLANNING
Your estate includes everything which you own and owe, from property (for example fixed property, such as a home) and vehicles to investments (for example shares or certain insurance policies), debts and tax liabilities. In order to ensure that your estate is well managed after your death in the interest of your intended beneficiaries, you should pay attention to your estate and plan and administer it properly while you are still alive. Two of the most important mechanisms for achieving this end are trusts and wills.
Proper estate planning will seek to ensure the realisation of a number of goals. Your first priority may be to ensure that your estate is dispensed in line with your vision for the distribution of your worldly assets among your dependants and others that you deem worthy (for example charities). The taxman and other creditors always have first claim on the assets in your estate. If possible you should ensure that your estate will provide appropriately for your dependants, especially minor dependants. Estate planning should also be aligned to your business interests. Certain provisions in a Shareholders’ Agreement, for example, need to be compatible with the objectives of your Estate plan.
“As for the future, your task is not to foresee it, but to enable it“
Antoine de Saint Exupéry The Wisdom of the Sands (1948)
TRUSTS
A trust can be used to export certain assets from your estate either while you are still alive or on your death. When a trust is used during your lifetime it is normally referred to as an inter vivos trust. An inter vivos trust must be distinguished from a so-called living will: a living will is a document in which a person expresses the wish that if that person becomes disabled at some stage he or she would wish not to receive medical care that will only serve to prolong life when a person has limited quality of life. Inter vivos trusts are often used for business purposes or to protect the rights and interests of people who are not in a position to administer their own affairs, for example a person who is in a coma or who has some other impairment affecting his or her judgment. The use of trusts for business purposes can be very complex. There should ideally be a number of trustees to ensure that the trust is validly established and administered. Depending on the circumstances at least one of the trustees should be an independent professional person.
TRUSTS AND MARRIAGE IN COMMUNITY OF PROPERTY
When you are married in comunity of property, it has certain implications for your ability to establish and manage a Trust. It is very important to remember that you and your spouse only have one mutual estate when you are married in community of property and that certain actions on your part would require permission from your spouse.
Where a couple is married in community of property the consent of each spouse is for example required for the other spouse to:
Where a couple is married in community of property the consent of both spouses is also required for the one spouse to receive any money due or accruing to the other spouse or the joint estate by way of –
The consent required for the performance of the following acts should be in writing:
DONATIONS FROM A SPOUSE MARRIED IN COMMUNITY OF PROPERTY TO A TRUST:
When a spouse in community of property wants to donate certain assets to a Trust, permission is required from the other spouse to make such donation of any asset of the joint estate, excluding an asset of which the donation does not and probably will not unreasonably prejudice the interest of the other spouse in the joint estate.
In determining whether a donation or alienation does or probably will unreasonably prejudice the interest of the other spouse in the joint estate, the court shall have regard to the value of the property donated, the reason for the donation, the financial and social standing of the spouses, their standard of living and any other factor which in the opinion of the court should be accounted for.
We would recommend that written consent from your spouse be obtained for all major transactions, even though no deeds registry entry in respect of a particular transaction may be required.
Notwithstanding the above, a spouse married in community of property may for example, without the consent of the other spouse, in the ordinary course of his or her profession, trade and perform certain acts, for example entering into business transactions;
TESTAMENTARY TRUSTS
A Trust can be established in your will in order to hold and administer assets on behalf of a beneficiary after you have passed away. A Testamentary Trust only comes into existance when you pass away. Whether it makes sense to set up a Trust fund depends on the beneficiary’s circumstances and the value of the assets. Some reasons for setting up a Testamentary Trust include:
One of the main advantages of setting up a trust is that it affords the testator peace of mind that assets will be administered, invested and managed for the beneficiaries’ benefit by the trustee of the testator’s choice. It is however important to ensure that your will grants your trustees sufficient powers to enable them to make decisions for the benefit of the trust beneficiaries.
Your estate includes everything which you own and owe, from property (for example fixed property, such as a home) and vehicles to investments (for example shares or certain insurance policies), debts and tax liabilities. In order to ensure that your estate is well managed after your death in the interest of your intended beneficiaries, you should pay attention to your estate and plan and administer it properly while you are still alive. Two of the most important mechanisms for achieving this end are trusts and wills.
Proper estate planning will seek to ensure the realisation of a number of goals. Your first priority may be to ensure that your estate is dispensed in line with your vision for the distribution of your worldly assets among your dependants and others that you deem worthy (for example charities). The taxman and other creditors always have first claim on the assets in your estate. If possible you should ensure that your estate will provide appropriately for your dependants, especially minor dependants. Estate planning should also be aligned to your business interests. Certain provisions in a Shareholders’ Agreement, for example, need to be compatible with the objectives of your Estate plan.
“As for the future, your task is not to foresee it, but to enable it“
Antoine de Saint Exupéry The Wisdom of the Sands (1948)
TRUSTS
A trust can be used to export certain assets from your estate either while you are still alive or on your death. When a trust is used during your lifetime it is normally referred to as an inter vivos trust. An inter vivos trust must be distinguished from a so-called living will: a living will is a document in which a person expresses the wish that if that person becomes disabled at some stage he or she would wish not to receive medical care that will only serve to prolong life when a person has limited quality of life. Inter vivos trusts are often used for business purposes or to protect the rights and interests of people who are not in a position to administer their own affairs, for example a person who is in a coma or who has some other impairment affecting his or her judgment. The use of trusts for business purposes can be very complex. There should ideally be a number of trustees to ensure that the trust is validly established and administered. Depending on the circumstances at least one of the trustees should be an independent professional person.
TRUSTS AND MARRIAGE IN COMMUNITY OF PROPERTY
When you are married in comunity of property, it has certain implications for your ability to establish and manage a Trust. It is very important to remember that you and your spouse only have one mutual estate when you are married in community of property and that certain actions on your part would require permission from your spouse.
Where a couple is married in community of property the consent of each spouse is for example required for the other spouse to:
- alienate, cede, or pledge any shares, stocks, debentures, debenture bonds, insurance policies, mortgage bonds, fixed deposits or similar assets, or any investment by or on behalf of the other spouse in a financial institution, forming part of the joint estate;
- alienate or pledge any jewellery, coins, stamps, paintings, livestock, or any other assets forming part of the joint estate and held mainly as investments;
- alienate, pledge, or otherwise burden any furniture or other effects of the common household forming part of the joint estate;
- enter as a credit receiver into a credit agreement;
- enter as a purchaser enter into a contract as defined in the Sale of Land on Instalments Act, 1971 and to which the provisions of that Act apply;
- bind the one spouse as surety.
Where a couple is married in community of property the consent of both spouses is also required for the one spouse to receive any money due or accruing to the other spouse or the joint estate by way of –
- remuneration, earnings, bonus, allowance, royalty, pension or gratuity by virtue of the other spouse’s employment, profession, trade, business, or services rendered by him or her;
- inheritance, legacy, donation, bursary or prize left, bequeathed, made or awarded to the other spouse;
- dividends or interest on or the proceeds of shares or investments in the name of the other spouse; or
- the proceeds of any insurance policy or annuity in favour of the other spouse; or
The consent required for the performance of the following acts should be in writing:
- any such act which entails the registration, execution, or attestation of a deed or other;
- document in a deed registry;
- an act binding a spouse as surety.
DONATIONS FROM A SPOUSE MARRIED IN COMMUNITY OF PROPERTY TO A TRUST:
When a spouse in community of property wants to donate certain assets to a Trust, permission is required from the other spouse to make such donation of any asset of the joint estate, excluding an asset of which the donation does not and probably will not unreasonably prejudice the interest of the other spouse in the joint estate.
In determining whether a donation or alienation does or probably will unreasonably prejudice the interest of the other spouse in the joint estate, the court shall have regard to the value of the property donated, the reason for the donation, the financial and social standing of the spouses, their standard of living and any other factor which in the opinion of the court should be accounted for.
We would recommend that written consent from your spouse be obtained for all major transactions, even though no deeds registry entry in respect of a particular transaction may be required.
Notwithstanding the above, a spouse married in community of property may for example, without the consent of the other spouse, in the ordinary course of his or her profession, trade and perform certain acts, for example entering into business transactions;
TESTAMENTARY TRUSTS
A Trust can be established in your will in order to hold and administer assets on behalf of a beneficiary after you have passed away. A Testamentary Trust only comes into existance when you pass away. Whether it makes sense to set up a Trust fund depends on the beneficiary’s circumstances and the value of the assets. Some reasons for setting up a Testamentary Trust include:
- To provide for maintenance obligations.
- To ensure that minors' inheritances are invested until a certain age (age of majority is 18).
- To administer assets on behalf of immature/handicapped beneficiaries during their lifetime.
One of the main advantages of setting up a trust is that it affords the testator peace of mind that assets will be administered, invested and managed for the beneficiaries’ benefit by the trustee of the testator’s choice. It is however important to ensure that your will grants your trustees sufficient powers to enable them to make decisions for the benefit of the trust beneficiaries.