What Does Intestate Mean and Why Should You Care? Intestate succession happens when a person passes away without a valid will. In legal jargon, “dying intestate” simply means dying without a will. The absence of a will brings in its wake numerous challenges, especially when minors are part of the equation. In South Africa, the assets left behind in such scenarios are usually managed by the Guardians Fund, administered by the Master of the High Court. Intestate Succession Law governs how assets are distributed and almost always leads to a mess you want to avoid.
Legal Landscape: Intestate Succession Law in South Africa
In South Africa, if you’re 16 years or older, you have the freedom to create a will that outlines how your assets should be distributed after your death. If you pass away without a valid will, then Intestate Succession Law takes over (as defined in the appropriate Act). This law sets a predefined order of beneficiaries. The order in which beneficiaries inherit in this case are as follows: 1) Spouse 2) Descendants 3) Parents – only if no surviving spouse and kids 4) Siblings – only if one or both parents no longer alive. Notably, legal precedent has modified how estates are administered, assigning the Master of the High Court as the sole authority for overseeing deceased estates.
It’s also important to note that various types of marriages and relationships are considered when determining “spouses” for the purpose of intestate succession. This includes civil marriages, customary marriages, and even certain religious marriages. The Act, or intestate succession law, also covers children born out of wedlock and adopted children, treating them the same as children born within a marriage for the purposes of asset distribution.
The Nitty-Gritty: Pitfalls and Challenges of Dying Intestate Involving Minors and the Guardians Fund
Delay in Accessing Funds
When someone dies intestate, it’s not just a matter of distributing assets. The assets are essentially frozen until the intestate succession process takes its course. This could mean a lengthy wait for the funds that are crucial for the minor beneficiaries’ upkeep and general well-being.
The Guardians Fund doesn’t just hold the assets; it pretty much calls the shots. The appointed guardian of the minor might find themselves in a bind, as their control over the assets is curtailed. This limited authority can result in decisions that might not align with what’s best for the minor.
If you thought bureaucracy was just for renewing your license, think again. The Guardians Fund involves heaps of paperwork and strict reporting requirements. Plus, there might be instances where you’d need court approval for particular transactions. Talk about time-consuming and pocket-draining!
Lack of Customisation
Dying without a will is basically relinquishing the steering wheel. The distribution of assets will follow a one-size-fits-all legal formula, leaving no room for tailored solutions that consider the family’s unique needs and circumstances.
Potential for Family Conflict
As if losing a loved one wasn’t enough, intestate succession can open the floodgates to family disputes. Who gets to be the guardian? How should the assets be managed? These questions can lead to emotional and legal tussles among family members.
Costs and Fees
Ah, yes, the Guardians Fund isn’t a charity. There are fees for the fund’s administrative services, and they can eat into the asset value over time. Add legal fees to the mix, and you’ve got a costly affair on your hands.
Limited Investment Options
The Guardians Fund usually opts for conservative investment strategies. While this may offer some degree of security, it might not optimize the asset’s growth potential, affecting the long-term financial stability of the minor beneficiaries.
The Fix: How to Sidestep These Pitfalls
Appointing a Guardian
A will lets you handpick the legal guardian for your minor children. It’s your chance to nominate someone you absolutely trust.
A testamentary trust can be established in your will to hold and manage assets for your minor beneficiaries. Trusts offer a greater level of control and flexibility than the Guardians Fund.
Naming an Executor
Your will should also designate an executor who will ensure the efficient distribution of assets and that your last wishes are honoured.
Seek Legal Advice
Last but not least, consult a pro—someone who specializes in estate planning. They can help you create a will that’s not just a legal document but a well-thought-out plan.
Intestate Succession Example
Let’s say a person dies intestate (without a valid will) and leaves behind a net estate valued at R10 million. This person is married in community of property and leaves behind a surviving spouse and two adult children.
1. In a marriage in community of property, one-half of the estate (R5 million in this case) automatically goes to the surviving spouse.
2. The remaining R5 million is then subject to the rules of intestate succession.
What is a Child’s Share?
A “child’s share” is calculated by dividing the intestate estate (R5 million in this example) by the number of heirs, which includes the surviving spouse and the two children. The law says that the spouse (or in instances where this is more than one spouse like customary marriages) should receive the greater of R250,000 or a child’d share.
How the Assets Would Be Distributed:
- Each child would inherit a “child’s share,” amounting to R1,666,667. If the children were minors this money would go to the Guardians Fund with all the hassles and complexities referenced above.
The surviving spouse, in addition to the R5 million from the COP marriage, would also inherit a “child’s share” from the intestate estate. So the total inheritance for the spouse would be R6,666,667.
This example illustrates the importance of understanding intestate succession, especially in the context of marriages in community of property. It also demonstrates the need to consult professionals in estate planning to ensure that your assets are distributed according to your wishes.
Read Next: The importance of a properly drafted will
By taking these steps, you’re not just drafting a will; you’re ensuring that your children avoid the snags and snares of intestate succession and the Guardians Fund. Planning today can save your loved ones a world of complications tomorrow. At Henceforward, making sure our clients have their estate planning needs in order is a critical component of what we do, which includes making sure their wills are valid and up to date.