PLANNING POINTS:
By Hester van der Merwe
There was a High Court judgment that caused a stir recently. It ruled that certain sections of the Intestate Succession Act were unconstitutional because they discriminated against heterosexual unmarried life partners. Two people living together in a long-term heterosexual relationship were not protected by the Act. In other words, if one partner died intestate (without a valid will), the other partner would not automatically inherit from the estate.
The Act did provide for married couples, for obvious reasons, and it also provided for same-gender life partners due to the historical difficulty that those couples faced getting married in a traditional fashion. In both of the above situations, the surviving partner would automatically inherit.
Having heard about the ruling, a few clients asked me to clarify what the change to the legislation might entail in reality, and if there’s anything that unmarried couples should do to make sure their estate is handled swiftly and fairly in the event of a death.
What does the ruling mean?
Put simply, the same inheritance rules should now apply for all permanent partnerships, whether the couple is married or not and regardless of gender or sexual orientation. The ruling also challenged parts of the Maintenance of Surviving Spouse Act on the same grounds, which means that unmarried life partners in a heterosexual relationship are now also entitled to maintenance from the estate – along with potential inheritance – if the other partner passes away.
These rulings are important because they respect that there are many reasons why people might choose not to get married while remaining committed to each other. Nobody should be prejudiced simply because they don’t want to go through the rigmarole of declaring themselves to each other in front of a priest or marriage officer.
On the other hand, some couples might have chosen not to get married precisely because they didn’t want the law to apply! This opens up many more questions, and it emphasises that regardless of how you choose to live your life, the only way to guarantee that your loved ones will be looked after according to your intentions is to prepare a will.
Be safe, not sorry
No heir wants to be dependent on court rulings in the winding up of an estate, regardless of how “fair” the law has become. Dying with a will is always preferable to dying intestate – it’s the only way for you to ensure that your legacy is honoured exactly according to your wishes.
So, even if you and your partner have no intention of ever walking down the aisle, my advice is to consult a Certified Financial Planner or a fiduciary professional and start the process of drafting a will.
Why is a will important?
There are so many reasons, but here are the main ones. A will allows you to select an executor of your choice, and to determine the fee, instead of having an executor appointed by the state. You can also set up a testamentary trust for minor children, and you can nominate the trustees. If you don’t do this, your children’s inheritance will go to the state’s Guardian Fund to be administered by someone who doesn’t know you or your family. Also keep in mind that the funds will be released to the child at the age of 18, which might not be the best idea!
In your will, you can also make specific bequests to individuals or institutions. You can bequeath a certain item, for example, or a pre-determined amount of money. This way, you can continue supporting the causes you supported during your life.
Lastly, but no less important, are the substantial tax benefits. With a properly drafted will, you can ensure that you receive the best possible tax relief for your estate that the law allows.
The bottom line
The High Court judgment takes South Africa one step closer towards a fair society. The Constitutional Court still needs to confirm the ruling, but this should be a matter of formality. Ultimately, it’s a welcome move in the right direction.
This is all well and good. But South African law – unlike the law in many other countries – also gives us the privilege of freedom of testation: you can specify exactly how you want your estate to be distributed upon death. Provided you have a valid will, that is…
Make sure you have a valid will. You’ve taken great care to look after your finances in life; this is the only way to ensure that the same care will be taken when you are gone.
Hester van der Merwe is a Certified Financial Planner at Ultima Financial Planners and Wealth Management in Pretoria. She is the 2020 Financial Planner of the Year.
PERSONAL FINANCE