2016 - Page 2 of 3 - Miltons Matsemela

03 Oct 2016

LOST VIEWS & RISING DAMP – Lessons for Home Buyers

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.” (Eleanor Roosevelt)

Here’s the story of yet another bitter dispute between neighbours over the loss of a treasured view. The setting this time is a group housing development which was specifically designed to give each and every house views of both the sea-shore and of Table Mountain.

Front row v Back row: A sad tale, and a warning

Buying a property for its stunning views and sunny aspect is a great idea, but only if you do your homework properly. A new High Court decision highlights the downside of getting it wrong –

A sea-facing development in Cape Town contained two rows of houses –
- A front row of single-storey houses
- A back row of double-storey houses.
Two front row owners decided to convert their houses to double-storey, and their building plans for the conversion were approved by the municipality.
Unsurprisingly, the back row owners who stood to lose their views took fright and applied to the High Court for the municipality’s plan approval to be reviewed and set aside. When their application was refused, they appealed to a Full Bench.
They lost again, the Full Bench dismissing their appeal. Unless they fund a further appeal they are stuck with watching helplessly as the neighbours’ builders deprive them of both their views and their sunlight. Their panoramic vistas across Table Bay will it seems give way to damp, moisture and mildew – not to mention a substantial drop in their houses’ market values.

What to watch for – a checklist

The judgment, in discussing the various arguments unsuccessfully relied on by the back row owners, provides a handy checklist for prospective buyers –

Always check the local zoning scheme – in this case for example the area’s height restriction was three storeys, which should have been a clear warning to the back row owners to investigate further.
What counts is enforceable legal rights, not promises and good intentions. The developers and architects told the Court that in designing the development the “sacrosanct fundamentals” were to ensure that all the houses would have access to both views and “maximum light penetration”. Critically however they failed to translate these intentions into legal obligations. They could, said the Court, have formally restricted the front row houses to a single storey limit by using legal options like –
- The imposition of a servitude,
- Restrictions on the title deeds,
- A specific site development plan imposing a land use condition, or
- Registration of a homeowners’ association.
If you are buying into a group housing scheme, don’t rely on the fact that it must be “planned, designed and built as a harmonious architectural entity”. This concept, held the Court, doesn’t give you any rights to a view, privacy or light.
Equally, don’t put yourself in the position of having to prove any of the factors that would cause a municipality to reject building plans. These include factors like the building will be “dangerous to life or property”, or will “disfigure” the area, or will be “unsightly or objectionable”, or will “derogate from the value of adjoining or neighbouring properties”. None will be easily proved. For example there cannot, held the Court, be a derogation of value solely based upon a loss of view when the alteration complies with the law “unless the nature or appearance of the building are so unattractive or intrusive that it exceeds the legitimate expectation of parties to a hypothetical sale”.
Indeed, if you are going to rely on having bought with a “substantive legitimate expectation” of your view remaining intact, make sure you keep proof. In this case, for instance, one of the affected owners testified that before buying her house she had undertaken a “due diligence investigation” by contacting the City and being advised by an official of the Planning and Development Department that the front row houses could not be converted to double-storey. But she could not recall the official’s name and the Court rejected her justification as vague and non-specific.

The bottom line is this – before you buy, have your attorney check that your views, privacy and access to light will be protected by enforceable legal rights!

03 Oct 2016

ALIEN AND INVASIVE SPECIES REGULATIONS, 2014

NATIONAL ENVIRONMENTAL MANAGEMENT:
BIODIVERSITY ACT 10 OF 2004 ; ALIEN AND INVASIVE SPECIES REGULATIONS, 2014
Published under Government Notice R598 in Government Gazette 37885 of 1 August 2014.

CATEGORIES OF LISTED INVASIVE SPECIES

Species which must be combatted or eradicated.
Species which must be controlled.
Species which require a permit.

Section 29. Sale or transfer of alien and listed invasive species

If a permit-holder sells a specimen of an alien or listed invasive species, or sells the property on which a specimen of an alien or listed invasive species is under the permit-holder’s control, the new owner of such specimen or such property must apply for a permit in terms of Chapter 7 of the Act.
The new permit-holder contemplated in sub-regulation (1) will be subject to the same conditions as the permit-holder who has sold the specimen of an alien or listed invasive species, or the property on which a specimen of an alien or listed invasive species occurs, unless specific circumstances require all such permit conditions to be revised, in which case full reasons must be giving in writing by the issuing authority.
The seller of any immovable property must, prior to the conclusion of the relevant sale agreement, notify the purchaser of that property in writing of the presence of listed invasive species on that property

INVASIVE SPECIES CLAUSE:
“The Seller hereby records that to the Seller’s best knowledge and belief there are no Listed Invasive Species mentioned in terms of the Regulations to the National Environmental Management: Biodiversity Act 10 of 2004 upon the Property. It is however recorded that as the Seller is not sufficiently qualified to identify such Species that the Purchaser accepts the risk inherent in purchasing the Property with any Listed Invasive Species which might be thereon.”

27 Sep 2016

THE DAVIS COMMISSION AND PROPOSED ATTACKS ON TRUSTS AND THE WEALTHY

As mentioned in our Newsflash which followed on the Budget Speech of our Finance Minister for this 2016 Tax Year, the Government was planning to ‘turn its guns’ onto Trusts. To cut a long story short the Government was plainly of the view (with some justification) that Trusts were being used to unfairly reduce Income Tax and Estate Duty (death tax) burdens on taxpayers.

The first salvo has been presented to us in draft legislation intended to become law as of 1st March 2017. This first salvo addresses the matter of loans made to Trusts by “connected” entities. In this regard and by way of a very simple example, if I were to establish a Trust for myself today, it will be a very impoverished Trust. Although like any newborn, it will exist, it will (save for something very nominal) have no wealth at all. If it accordingly wishes to say, buy a house, it would have to borrow money and the most obvious person to ask for such loan would be me. If I agree to lend it the money it would owe that money to me until it is repaid. I would be said to have a loan account in the books of account of the Trust. For reasons that are fairly obvious, such loans do not normally stipulate for interest to be payable. It would, after all, be somewhat silly for me to burden my own Trust with an interest bill. It would effectively amount to me charging myself interest! The new Tax Law proposed by SARS stipulates that even though I might not wish to charge my Trust interest, interest is deemed to accrue on such loans (existing ones and future ones) at a market-related rate. I will, in other words, be obliged to declare such income in my personal tax return and pay tax on it! To add insult to injury, the law requires my Trust to actually pay that interest to me within a period of three years of the interest accruing, failing which the law will assume that I have donated that interest to the Trust and Donations Tax of 20% will be levied!

The genesis of the abovementioned amendment to the Tax Laws is to be found in the recommendations of a Commission of Enquiry which is currently being conducted at the instance of our Government under the stewardship of Judge D Davis. That Commission was asked to review all Tax Laws and make recommendations to the Government. Sadly for those of us who are heavily committed and invested in Trusts or those of us who have fairly significant financial means, Judge Davis has not, by any means, finished looking at Tax Laws and has made a whole host of other suggestions to the Government. Whether they will all become law is of course debatable but bearing in mind our Government’s determination to close the gap between the ‘haves’ and the ‘have nots’, I am personally of the view that all of the recommendations will be implemented in one way or another and probably as aggressively as possible.

Herewith then a view of Judge Davis’ further thoughts (in no particular order):

Estate Duty – As the law now stands if I die, Estate Duty (death tax) is payable at the rate of 20% on the value of my estate over and above R3.5 Million. It is proposed that :
- Nominating one’s spouse as beneficiary of one’s estate will no longer postpone the implementation of the Estate Duty. In this regard and in terms of the law as it stands, the implementation of Estate Duty is postponed until my spouse’s death in respect of anything which I leave to my spouse in my Will. In other words if I die today and if my estate is worth more than R3.5 Million, Estate Duty will be payable by my Executor. If on the other hand I left my estate to my spouse, the Estate Duty will not be payable now. It will only become payable when my spouse dies. The idea behind the current law is to ensure that me passing away does not affect the standard of living of the spouse who survives me.
- The threshold for Estate Duty should be raised from R3.5 Million to R15 Million. That would seem to put Estate Duty issues beyond the concerns of most people but I am personally of the view that our Government will seize the idea of reviewing the threshold, but set it much lower!
- Estate Duty will be raised from 20% to 25% for estates having a value in excess of R30 Million. This amendment also seems to put the issue of Estate Duty beyond the concerns of most people but I am personally of the view that our Government will seize the idea of reviewing the percentage but set the threshold much lower! It should be noted that if Estate Duty increases Donations Tax will increase by the same amount as the two taxes are always the same.
Donations Tax – As the law now stands and barring a certain nominal permitted amounts, any donation made by a taxpayer is subject to Donations Tax of 20%. This does not however apply to donations between spouses which are permitted without any tax consequence. Judge Davis proposes that this privilege will be removed and that save for a few fairly insignificant exceptions, this privilege will be ended and donations between spouses will be subjected to Donations Tax. As already intimated under the topic of Estate Duty, I predict that Estate Duty will be raised and that Donations Tax will accordingly be likewise raised.
Capital Gains Tax – As the law now stands if I die I am deemed to have sold all my assets for their market value and if that results in me having made a deemed capital gain (profit), Capital Gains Tax will apply to that profit. In very similar fashion to Estate Duty the implementation of this tax is currently postponed to the date of the death of my spouse in respect of assets which I leave to my spouse. Judge Davis proposes that this postponement of tax be removed but that the threshold for payment of this tax be raised from R300 000 to R1 Million.
Trusts – Judge Davis has recommended to the Government that the ‘first salvo’ against Trusts dealing with interest on loan accounts should be broadened and that if no interest is charged on such loans, all the assets of my Trust should be deemed to belong to me at the time of my death and be exposed to Estate Duty. In other words that the Government be entitled to effectively ignore the existence of the Trust completely. In addition to this Judge Davis has recommended that the ‘flow-through principle’ should be blocked and only allowed in very limited circumstances. In this regard and as the law stands, Trustees can decide to pass on to Beneficiaries of the Trust, pre-tax income where the tax will then be payable by the Beneficiaries. This is done quite regularly to benefit from the difference between individual and Trust tax rates.

From the above it seems fairly obvious to me that Judge Davis and his Commission have finally decided that one of the best ways to “redistribute wealth” and to “undo the injustices of the past” is to tax the wealthy when they die. After all the dead don’t complain!

If I already have a Trust and have over the years and in accordance with the law as it currently stands accumulated all the wealth in my Trust which would otherwise have been mine and thereby built up a significant loan account, what can I do to avoid the attack on Trusts which Judge Davis has initiated? If I do nothing, there are going to be changes which will make it very expensive for me and possibly enable the Government to look right through my Trust and deem all my Trust’s assets to be mine and to be subject to the higher rates of Estate Duty which I have predicted. The answer lies in a donation. In other words, what I should do (as expensive as it might be) is donate my entire loan account to my Trust (in other words release my Trust from that debt) immediately and pay the Donations Tax at the current rate of 20%. If I wait and as already intimated by Judge Davis, that Donations Tax (and Estate Duty of course) is perfectly likely to increase. A donation now will make sure that the Government’s plan does not denude my Trust’s assets at the time of my death and enable those assets to be applied to the welfare of my wife and my children. A bitter pill to swallow but then I suppose, like most medicines, one has to endure the bitterness to get the benefit.

Milton Koumbatis
27th September 2016

14 Sep 2016

SUGGESTED LETTER TO EXCLUDE PRIOR INTRODUCTIONS FROM SOLE MANDATES

Dear Seller

Thank you very much for giving us your open/sole mandate (delete appropriately) to find a purchaser for your property. We shall do the very best we can to see that your property is sold as soon as possible and at the best possible price.

(use the below paragraph for open mandates)

In the interim and for the record I confirm that if we introduce a willing and able purchaser to you or your property and if you sell your property to such a purchaser at any time after the introduction, commission will be payable to us at our standard commission rate which is calculated at …… percent of the purchase price plus VAT on the results. If any of this requires clarification you are more than welcome to ask us for it.

(use the below paragraph for sole mandates)

In the interim and for the record I enclose herewith for your attention a copy of the sole mandate agreement which you entered into with us.

Before closing I wish to raise with you a very important matter. In this regard and as we all anticipate we will be introducing prospective purchasers to your property from time to time. We all hope that one of them will choose to purchase your property. In the ideal world one of the purchasers so introduced will make an offer to purchase your property immediately after being introduced to it by us. This is however not always the way things work and purchasers sometimes take time to reach the conclusion that a property which we introduced to them is the one that they want to buy. We can of course not predict how long it might take such a purchaser to make that decision. It could be days, weeks or even months. Our concern is that you might at some stage between now and then decide to give a sole mandate to another estate agency. If you do so and if after that, one of the prospective purchasers we introduced to your property in the period before the sole mandate decides to make an offer to you, you will not be able to accept that offer (even though the price might be right) without exposing yourself to the payment of double commission! In this regard we would obviously expect commission as we were the agent who introduced a willing and able purchaser and the estate agency holding your sole mandate would also expect commission as the property would be sold during the period of their mandate.

To ensure that the situation described in the preceding paragraph does not happen to you we give you this simple advice. If you at any time after the date of this correspondence you decide to give a sole mandate to another estate agency, please ensure that before you do so, you obtain an agreement in writing from that agency that will serve to permit you to sell your property to a purchaser already introduced to your property by us, without having to pay the other agency any commission and to therefore only oblige you to pay commission to us. If you do not do so, the results could be very frustrating for us all, as you could find yourself prevented from accepting an offer which you otherwise would wish to accept and thereby losing out on the chance to sell your property! Please don’t forget this advice!

31 Aug 2016

DIRECTORS AND PERSONAL LIABILITY: THE LITTLE-KNOWN SECTION WAITING IN AMBUSH

Since the “new” 2008 Companies Act came into effect in 2011, directors and other company officers have had to shoulder a raft of additional responsibilities and risks, amongst them a significantly increased risk of personal liability.

Consider for example the little-known section 218(2) which waits in ambush for the unwary in the “Miscellaneous Matters” section at the tail-end of the Act, and which reads: “Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention”.

That’s wide wording –

Anyone who has a duty to comply with the Act – not just directors – is in the firing line
They can be sued for any loss caused by any contravention
They risk personal liability to anyone who has suffered a loss – the company itself, shareholders, employees, creditors, suppliers, customers, etc.

And the section has indeed been used several times to successfully attack directors.

Two directors go down R1.5m

A good example is a recent High Court case involving a liquidated company which failed to pay R1.5m in levies and provident fund contributions/salary deductions to a Bargaining Council. The two directors were ordered to pay the claims personally having, held the Court, acted in a grossly negligent manner, recklessly and with an intention to defraud not only the Council but also employees.

That of course was a serious contravention of the Act but the wording of the section suggests that even minor or technical contraventions will lead to liability – be warned accordingly!

27 Jul 2016

COMPANIES: HOW PRIVATE ARE SHAREHOLDERS’ DETAILS?

“Privacy, like other rights, is not absolute. As a person moves into communal relations and activities such as business and social interaction, the scope of personal space shrinks”

(Extract from judgment below)

All companies – big and small, public and private – must keep registers of their shareholders and directors. And, as the SCA (Supreme Court of Appeal) made clear recently, even “private” companies’ registers aren’t private at all.

An investigative journalist digs for detail

A financial journalist, investigating a controversial investment scheme, was tasked with investigating the shareholding structures of three companies.

The companies refused him access to their securities registers and he approached the High Court for assistance.

The companies asked the Court to exercise a discretion to refuse such access, and in hearing an appeal around this issue, the SCA has clarified the public’s rights as follows:-

The public at large (including the media) have an unqualified right to inspect or copy those registers on payment of a statutory fee.
The motive of the person seeking access is totally irrelevant; nor does he/she have to show that the request is “reasonable”.
It is not necessary to comply with the requirements of PAIA (the Promotion of Access to Information Act) although of course PAIA can be a useful tool to force access to company documents other than these registers.
It is a criminal offence for a company to refuse such access or to “otherwise impede, interfere with, or attempt to frustrate, the reasonable exercise by any person” of these rights.

So what shareholder information is public and what is confidential?

A shareholder is only required to provide –

His/her name,
His/her business, residential or postal address, and
“An identifying number that is unique to that person”.

The shareholder can also voluntarily provide an e-mail address.

Confidentiality can be claimed – by either the company or the shareholder – for the e-mail address (if supplied) and for the identity number. Names and addresses are public, full stop.

27 Jul 2016

METER WARS: A CONSUMER STRIKES BACK

“You can’t fight city hall”

(old idiom decrying the futility of trying to fight a bureaucracy)

You challenge the accuracy of a services account from your local municipality, thus: “Your meter must be wrong, no way was my consumption that high”. The reply: “We’ve tested the meter and it works fine. Pay up or face disconnection”.

Off to court you go. Can you “fight city hall” and who has to prove what?

There’s good news here for consumers in a recent High Court decision dealing with just such a situation.

The R4.5m water claim and the disconnection

A municipality installed a new water meter at commercial premises
When read for the first time 18 months later, it showed a spike of 13 times the historic average consumption measured by the old meter
Alarmed, the consumer requested that the meter be tested. The municipality duly removed it, tested it, reported that it functioned correctly, and then (for an undisclosed reason) disposed of it.
A third meter was installed. Although the consumer’s business had by then grown substantially, water consumption was shown at three times less than the quantities measured by the previous meter.
The consumer had paid the water account according to its own calculations. Nevertheless disconnection of supply followed, and then the municipality refused to issue a clearance certificate when the property was sold. In all the consumer was forced to make two payments totalling R16.5m, which it did under protest and with reservation of rights
Sued by the municipality for just under R4,5m, the consumer defended the action and counterclaimed for R9.5m (the amount it claimed to have overpaid).

Who must prove what?

Finding in favour of the consumer, the Court held that, once the consumer had raised a bona fide (“in good faith”) dispute, the onus was clearly on the municipality to prove that the meter had measured the water supply correctly and accurately.

That, held the Court, it had failed to do – its expert evidence concerning the testing was found to be unsatisfactory and insufficient.

The end result is that the municipality has to repay the consumer R8m – a substantial victory.

Consumers – a critical factor

Note that a critical factor here was that when the consumer made the two disputed payments to the municipality it did so under protest, without waiver or abandonment of any rights and without admission of liability that the amount was due. Without those provisions, the onus would probably have been on the other foot, i.e. on the consumer to prove that the readings were not accurate. That’s often going to be a near-impossibility when only the municipality has the legal right to test its meters and when it has control of all consumption data. So pay nothing on a contested account without legal advice.

Municipalities – what you must prove

Make sure you can prove that meter tests comply fully with all prescribed requirements. And (this of course should go without saying) don’t dispose of any contentious meters until litigation has been well and truly put to bed!

05 Jul 2016

Protect your online privacy with Privacy Badger

Every time you surf the Internet, your activities are tracked by a host of commercial operations and governments. The depth of information they accumulate on you is staggering and will at the very least expose you to marketing and advertising targeted to your online behaviour patterns.

If that concerns you, consider installing Privacy Badger, which is currently only available for Chrome and Firefox, from the EFF (no, not that one – the non-profit “Electronic Frontier Foundation”) from their website at https://www.eff.org/privacybadger.

Privacy Badger blocks spying ads and invisible trackers, it learns as it goes along and you can tweak how it handles particular sites.

Note: If one of your apps or extensions stops working or starts behaving strangely, you may need to change the Privacy Badger controls or even temporarily disable it.

05 Jul 2016

STARTING A BUSINESS? THE PARTNERSHIP OPTION

“Alone we can do so little; together we can do so much” (Helen Keller)

In our last article in the series “Choosing the right legal entity for your business” we looked at the sole proprietorship option. Let’s move on to the partnership option, where a group of business owners replaces the sole owner/trader.

Firstly, what exactly is a partnership?

We talk loosely about our “partners” in various contexts, but it is important to understand how the law views the concept in a strictly business situation. In broad terms a partnership is an association of between 2 to 20 people/companies/trusts who agree to pool resources (such as money, property, services, skills etc – whatever is agreed upon) and to operate a jointly-owned business, trade or profession for profit. Partnership assets are jointly owned by the partners and profits are split between them as agreed.

A quick note on the different types of partnership

In this article we talk only about the most common form of partnership – the “ordinary” partnership. In specific circumstances you may also want to consider an “anonymous” partnership (where one or more of the partners are “sleeping partners”) or an en commandite or “limited” partnership. They differ from “ordinary” partnerships in several important respects so take specific legal advice if you are thinking of using them.

We’ll look at the “universal partnership” concept in a future article (it’s normally relevant in cases of cohabitation by unmarried couples).

6 advantages of partnerships…

It’s relatively easy to set up and operate a partnership in the sense that there’s no need for formal registration as there is with a company or trust. Just be sure to have a comprehensive written partnership agreement in place. Although this is not a legal requirement, and although it adds an element of cost and delay, our law reports are full of bitter and costly partnership disputes resulting from the uncertainties that will always attend a verbal or poorly-drafted agreement. Good intentions and a handshake mean nothing when friction arises.
You have no statutory audit requirements and your administrative burden is low compared to, for example, running a company.
You are taxed at personal rates, which can sometimes (not always – see below) be to your advantage.
A partner often gives you access to another source of funding and/or assets for the business.
Most partners also bring new skills to the business.
It’s not nearly as lonely as being a sole trader – you have partners to share both the workload and the stresses and strains of management and decision-making. Just make sure you also share a common vision for the business, or friction is inevitable.

….. and 6 disadvantages

Loss of control – you now have only part control and ownership of the business, and decisions can take longer than if you were on your own.
Any partner can bind the partnership contractually so it is essential that you find partners whom you can trust implicitly to act both honestly and wisely in relation to the partnership and its business.
As a partnership isn’t a separate legal entity, you are personally liable for all the debts and obligations of the partnership business. If the partnership can’t pay its debts, creditors can and will sue you for them. And if the partnership is sequestrated, your personal estate will simultaneously also be sequestrated unless you provide security for all partnership debts. As with sole proprietorship, sleepless nights await you if any important assets (like your house) are in your name.
1. When any partner dies, leaves the partnership or goes insolvent, or when a new partner joins, the partnership automatically ends. Once again you are then personally liable for any shortfalls in the partnership’s ability to pay its debts.
2. If you end up paying more than your pro-rata share of any partnership shortfalls, your claim against the other partners (or their estates) will be worthless unless they have enough net assets to pay you.
3. Tax and estate planning – as with sole proprietorship, being taxed at your personal income tax rate may be a plus in some cases, but in others you will benefit far more from a tax-efficient structure incorporating one or more corporate entities or trusts as well.

What about “Joint Ventures”?

Before you agree on a joint venture (“JV”) with another individual or business, be careful. Although a JV normally applies only to a single transaction, it could well amount to a partnership, no matter what title or description you give it. And as we saw above, partnerships have many pitfalls for the unwary – rather put your JV into a separate entity or have your lawyer draw up a JV agreement giving you some form of liability protection.

Watch out incidentally for “inadvertent” partnerships – as a partnership can be formed verbally or even tacitly (implied from conduct), you could find yourself establishing a partnership by mistake! Another reason to have everything recorded in a full contract.

Remember to take full professional advice on the legal and tax implications of using each type of entity before choosing.

This is the third article in our series “Choosing the right legal entity for your business”. Next time we’ll look in more depth at the private company option.

01 Jul 2016

Guide to Estates / Wills / Trusts

1. Your will
Everyone should have a will. Even if your assets are few in number or low in value it makes things very much easier for those left behind who have to look after your affairs.

2. What is a will?
A will is document in which the person making it (the testator) disposes of his/her assets after his/her death.

3. Who may draw my will?
You may draw your will yourself or you may ask someone to draw it for you. Please remember though that a will is a legal document. Several institutions offer to draw your will at a low charge. Always be aware however that they are not practicing attorneys. In the same you would consult a doctor for medical treatment, so too you should consult an attorney for legal assistance.

4. What is an executor?
An executor is a person appointed by you to administer your estate and dispose of your assets after you have passed away. You may appoint anyone you like. Our advice is that you appoint a close family member such as a wife or son/daughter or your family attorney. The reason for this is that your estate will then be dealt with on a personal basis by persons who are involved and know your views. Institutions tend to deal with matters at head office in an impersonal manner.

5. May I change my will?
You certainly may. In fact we advise you to take a look at your will on a regular basis – say once a year – to make sure it is the way you want it. Circumstances may change within your family or work environment and your will should be adapted accordingly. You may change your will either by drawing a new will or by drawing a codicil, which is an addendum to your existing will.

6. Who may administer my estate?
The executor appointed in your will is required by law to administer your estate in terms of the estate act, which sets out the administration procedure. Your wife/husband or son/daughter will probably not have the necessary knowledge or expertise to carry out these duties. This is
where our estates department will assist you. We have the necessary specialized skills and experience to carry out the administration duties promptly and efficiently. We do this on a personal basis making sure that your executor is consulted and kept posted at each stage of the proceedings.

7. What happens if i die without leaving a will?
There is a common misconception that if you die without leaving a will your assets will go to the state. This is very rarely so. The intestacy act makes provision as to who inherits your assets on intestacy. I.e. Dying without a will. It is usually the surviving spouse and children who inherit under these circumstances. However if there is no will there may be delays in appointing an executor and your cash assets will be frozen pending the appointment.

Also, your assets may then devolve on persons you may not have wanted to inherit. In addition the cash inheritance of any minor child will be paid into the guardians fund at the masters office whereas you may have wished such inheritance to be invested by your executor for the best return.

8. What is estate planning?
Estate planning involves the preparation of a plan during your lifetime to deal with your assets when you are no longer there. The purpose of estate planning is to ensure that the process of administration proceeds without unnecessary problems, and, more importantly, to leave your dependants properly cared for. Everyone therefore should undertake at least some elementary estate planning. Estate planning can be relatively simple involving only taking out life assurance and making a will. However your estate planning may need to be more comprehensive, possibly including the establishment of trusts during your lifetime which will enable you to peg values and thus ensure tax savings.

9. Trusts
As mentioned above one may need to establish a trust during one’s lifetime (an inter vivos trust) and transfer certain assets to it. A trust is a separate legal entity and there are usually three separate role-players in the trust, namely:

The founder – yourself
The trustees – usually yourself and other family members,
The beneficiaries – those who are to benefit from the trust.

A trust may also be created in your will. This is known as a testamentary trust or mortis causa trust. To ensure good planning you may wish to leave certain assets in the hands of trustees to administer for certain purposes and certain periods. This quite commonly occurs where you leave minor children and do not wish their cash inheritance to be paid over to the guardians fund referred to above.

Andrew Murray
Director: Conveyancing/Estates/Notary

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