Estate planning: Lessons from legal battles after death and divorce

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AMANDA VISSER: Families are complicated, and if there’s no last will and testament in place it can become really messy. This was certainly the case with the Lorenzo family, where the mother went behind the children’s back to get her way with the distribution of their late father’s assets.

But let’s get Louis van Vuren, CEO of the Fiduciary Institute of Southern Africa, to tell us all about it. Louis, what is the background to this case?

LOUIS VAN VUREN: In this matter, the surviving spouse of a deceased person was the spouse in a second marriage and the stepmother of the deceased’s two daughters from a previous marriage. One of the daughters was appointed co-executor with the surviving spouse by the Master of the High Court, and the administration of the deceased estate started on the basis that it would be distributed according to the rules of intestate succession. In other words, it was assumed that the deceased died without a will.

During the administration of the estate, the stepmother and the co-executor started disputing how the assets should be distributed, particularly some assets situated outside of South Africa.

The stepmother then, without the knowledge of her co-executor or the other daughter from the previous marriage, went to court with a document and asked the court to declare that document the last will and testament of the deceased.

The document in question was a set of instructions to a trust company to draft a will for the deceased and this set of instructions was signed by the deceased.

However, the document did not comply with the formal requirements for a valid will in that it wasn’t co-signed by two witnesses in the presence of the testator when the deceased person signed the instructions. The surviving spouse, the stepmother, approached the court on the basis of the court’s power to condone such a document under Section 2, Sub 3 of the Wills Act and was successful.

However, the stepmother did not notify her co-executor, one of the daughters, nor the other daughter of this application to the court. Only the Master of the High Court was cited as a respondent in this application. The court granted the order as there was no opposition noted in the high court in the application process.

Later the co-executor daughter realised what had happened. The daughters were notified by the trust company to whom the instructions were given to draft a will, and they then went to court [with] an application to have the order of the court declaring that document [a] will to rescind that declaration of the court.

During this hearing, it came to light that there may have been an earlier will, a joint will, and the stepmother argued that because it was the daughter’s mother who stood to inherit under that earlier joint will, which was not placed before the court, that the daughters did not have the necessary legal standing to bring the application because they were not interested parties.

Now the court did not think much of that argument, and in its judgment said that one of the daughters was the co-executor [with] the stepmother and as such was an interested party. And the stepmother, by referring to an earlier will in which the previous spouse was the only heir, acknowledged that she did not notify all interested parties of her prior application to have the set of instructions in that document declared a will by the court.

So the court then granted the application for a rescission of its previous decision to declare that document a will.

What was interesting in the case is the court took a dim view of the actions of the stepmother and gave a punitive cost order against her and ordered her to pay the costs of the application by the two daughters on the so-called attorney-and-client scale of costs.

AMANDA VISSER: What’s the most important lesson that we learned from this case?

LOUIS VAN VUREN: There are a couple of lessons here.

The one – and to me, the most important one – is if the deceased had proper estate planning in place and had an up-to-date and appropriate validly executed will, none of this would’ve happened.

This point is even more important if one takes into consideration the situation in this family where there is a second spouse and children from a previous marriage – what is sometimes quaintly these days called ‘a reconstituted family’. In most cases, in this kind of situation the estate planning has to be absolutely in place and well thought through, and the will has to form part of a logical unit with the estate plan in order to avoid situations like this.

There’s a further important point here, and that is that there is a provision in the Wills Act – Section 2B of the Wills Act of 1953 – that says: ‘Upon divorce a person has three months to write the ex-spouse out of the will.’ If the testator dies within the three months, it is interpreted as if the ex-spouse has died before the date of divorce and can therefore not benefit from a provision in a will bequeathing assets to my spouse.’

If you do not amend your will during the three-month grace period, the ex-spouse comes back to life, so to speak, and will inherit again from that will if the will refers or bequeaths assets to my spouse.

AMANDA VISSER: Louis, there was another interesting case relating to this rule. Will you tell us about it?

LOUIS VAN VUREN: Yes. The case was cited in the Western Cape High Court initially as ‘JW v Williams-Ashman N O and Others’. The ‘N O’ just indicates that Williams-Ashman acted in an official capacity and not in his personal capacity. The applicant in that case was just called JW. This happens often in divorce matters where parties are not identified fully.

In this case, the applicant, JW, was married to a lady in 2011 out of community of property, but with the inclusion of accrual. In 2015 their marriage came under stress and the final divorce order was issued on October 24, 2016. And the divorce order incorporated the consent paper about the division of the assets, as is usual in uncontested divorce matters.

The previous wife in this marriage passed away in December 2016, which was within the three-month period. Just before the marriage in 2011, she executed a will in which she bequeathed the full residue of the estate – in other words after liabilities and costs – to ‘my husband’, which was the applicant in this matter, JW, and she nominated Williams-Ashman as the executor of the estate.

So this was a classic case where Section 2B of the Wills Act came into play and the Western Cape High Court dismissed the application by JW, the ex-husband.

He brought an application on the basis that Section 2B of the Wills Act conflicts with the Constitution. He said it’s in conflict with the right to property as enshrined in Section 25 of the Constitution, as well as the right to access to the courts in Section 34. His argument was basically that this section of the Wills Act denies persons the right to bequeath as they wish by creating this presumption that they would not want to benefit the ex-spouse. It also denies them the right to go to court and bring evidence to the court that the deceased spouse, the testator in the will, actually intended the ex-spouse to inherit.

So the court dismissed that application and said, well, it doesn’t infringe your right to property because you can still do in your will as you please. It just creates a presumption, and you can approach [a] court to set that aside. So it also does not take away your right of access to courts.

So JW wasn’t happy with that. He appealed to the Supreme Court of Appeal, and earlier this year the Supreme Court of Appeals dismissed his appeal.

What was important in the judgment of the Supreme Court of Appeal is the court said the only expression of a deceased person’s intention as to who should inherit from that deceased person is what is written in the will, and that our law is very clear that you cannot go outside the four corners of the will when trying to understand and interpret what the deceased person meant, and that that was not unconstitutional because it also is linked to the property clause in the Constitution, Section 25, as well as to the fundamental right to human dignity in Section One of the Constitution.

What this case underlines is the importance of actually amending your will within three months of divorce. It is extremely important after a divorce to sit down and decide whether you still want to benefit your ex-spouse and, if you don’t, then within the three months to execute a new will excluding the ex-spouse.

AMANDA VISSER: Well, there you have it. Make sure you have a proper will in place before you die or after your divorce.

Thank you Louis. Louis van Vuren is the CEO of the Fiduciary Institute of Southern Africa

Brought to you by the Fiduciary Institute of Southern Africa (Fisa).

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