Mar 25, 2022 | Article
Recent case again emphasises the importance of a will.
By Amanda Visser 15 Mar 2022 00:04
Image: Shutterstock
Life partners, whether in a same-sex or opposite sex relationship, will in future be treated as a “spouse”, allowing them to inherit or claim maintenance from their deceased partner’s estate under the Intestate Succession and the Maintenance of Surviving Spouses Acts.
This follows a recent judgment in the Constitutional Court ruling that both acts were unconstitutional and had to be amended by Parliament within 18 months of the ruling.
Louis van Vuren, CEO of the Fiduciary Institute of Southern Africa (Fisa), says the case was initially decided in the Western Cape High Court when Jane Bwanya sought an order to have certain provisions of the two acts declared unconstitutional.
Bwanya was in a relationship with Anthony Ruch and they were planning to get married. However, Ruch died unexpectedly and without a valid will in place.
In broad terms, in terms of the Intestate Succession Act (ISA) the benefits in the estate go to the spouse or children, or the parents of the deceased when there is no spouse or children.
In the 2006 case, Gory v Kolver, Mr Gory was the survivor in a same-sex relationship and successfully applied to the Constitutional Court to be regarded as a “spouse”. At the time partners in a same-sex relationship could not formalise their relationship in any way; it was only after the promulgation of the Civil Union Act that this became possible.
The court found that Section 1 of the Intestate Succession Act was unconstitutional as it discriminated based on marital status, and Gory was able to inherit from his partner’s estate.
“This led to an anomaly in our law where the law allowed partners in a same-sex relationship to inherit from each other in the absence of a will, but partners in an opposite sex relationship could not,” says Van Vuren.
In an earlier decision in 2005 the Constitutional Court found in the Volks v Robinson matter that a claim under the Maintenance of Surviving Spouses Act (MSSA) was not available to a partner in an opposite sex relationship who did not tie the knot. The surviving partner could not be considered a “spouse” under the MSSA, as this legislation defined a “spouse” as a spouse in a marriage.
The gist of the judgment was that people in a cohabitation relationship made a choice not to get married, even if they could, and therefore had to live with the consequences.
In the Bwanya matter the Western Cape High Court ordered in her favour that the ISA was unconstitutional because it discriminated unfairly on the basis of marital status, but rejected her claim under the MSSA because the court had to follow the Volks judgment handed down by a higher court.
The Bwanya matter went to the Constitutional Court to have the order of unconstitutionality of the ISA certified. Bwanya was also granted leave to appeal to the court to consider the decision that she does not have a claim under the MSSA.
“That is when the fun started,” says Van Vuren.
Six judges held that the court was not bound by the Volks v Robinson decision since the facts of the matter before them differed from the earlier case. The court said there were more than three million South Africans in life partnerships and by not extending the right to inherit from each other under intestate law amounts to unfair discrimination on marital status.
The court said the argument that parties who do not get married choose not to do so does not take cognisance of the vulnerable position of especially women in relationships.
It ordered that both the ISA and MSSA were unconstitutional and should be read to include “a partner in a life partnership complying with the reciprocal duties of care, maintenance and support”.
In two dissenting judgments four judges, including former chief justice Mogoeng Mogoeng, argued that the majority did not advance sound reasons why the decision in Volks was “demonstrably wrong”. They felt the court remained bound by the prior judgment.
Van Vuren says it is important for an executor in a deceased estate to take note of the majority judgment in the Bwanya matter should they encounter similar circumstances.
“The only logical thing to do is to either wait until Parliament has amended the acts or accept that the claim against the estate is valid. If you do not, then the survivor in such a relationship will simply take the matter to court again.”
It is unclear why the effect of the order was postponed for 18 months, remarks Van Vuren. It should not be difficult to amend the acts, since there is already a very broad definition of spouse in both the Income Tax Act and the Estate Duty Act.
He warns against the perception that it is not necessary to have a proper will on the back of the Bwanya case. There are several practical reasons why it remains necessary. One is that the ISA provides for the spouse and descendants to benefit from the estate. If the estate is worth R1.6 million but most of it is tied up in a property it may have to be sold to be divided equally between the spouse and children, especially if the spouse is not the natural parent of the children.
Another reason is that all estates above R250 000 require the appointment of an executor. In the absence of a will this could cause unnecessary delays.
“Our advice is to find someone who knows what they are doing to draft your will,” says Van Vuren. “The cost could be extreme if you do not.”
Brought to you by the Fiduciary Institute of Southern Africa (Fisa).
Feb 21, 2022 | Article
Source: FNB Securities
The JSE edged further down on Thursday, inline with its global peers, as sentiment in the market turned on fears that geopolitical tensions in Eastern Europe could result in war.
Feb 21, 2022 | Article
Often trustees rely on the majority decision in trust instruments to make decisions. This is often done to deliberately exclude one or more trustees from decision making. The Courts have, however, in many cases, confirmed the ‘Joint Action Rule’, whereby trustees are required to act jointly in dealing with trust assets.
It is a fundamental rule of trust law that, in the absence of contrary provisions in the trust instrument, the trustees must act jointly if the trust’s estate is to be bound by their acts, and a unanimous vote will be required in matters of substance. The rule derives itself from the nature of the trustees’ joint ownership of the trust assets in ownership trusts. Since co-owners must act jointly, trustees must also act jointly (Coetzee v Peet Smith Trust case of 2003 and Nieuwoudt v Vrystaat Mielies case of 2004).
Co-trustees are required to act jointly concerning trust administration at all times. When dealing with third parties, even if the trust instrument stipulates that a decision can be made by the majority of trustees, all trustees are required to be involved in the decision and have to sign each resolution (Land and Agricultural Bank of South Africa v Parker case of 2005).
The following was held in the Parker case – “It is a fundamental rule of trust law, which this Court recently restated in Nieuwoudt and Another NNO v Vrystaat Mielies (Edms) Bpk, that in the absence of contrary provision in the trust deed the trustees must act jointly if the trust estate is to be bound by their acts.
The rule derives from the nature of the trustees’ joint ownership of the trust property. Since co-owners must act jointly, trustees must also act jointly. Professor Tony Honoré’s authoritative historical exposition has shown that the joint action requirement was already being enforced as early as 1848. It has thus formed the basis of trust law in this country for well over a century and half.”
It is not the majority vote but the resolution (signed by all trustees) that binds a trust. A trust operates on resolutions and not on votes. Bearing in mind that a trust operates using resolutions (Steyn v Blockpave case of 2011), all trustees must be notified of a decision to be considered by the trustees. The Court emphasised that a trust functions through its appointed trustees and that its lack of legal personality requires that all trustees act together for and on behalf of the trust.
As long as the trust instrument allows for it, decisions of trustees can be made by majority decision, as long as the necessary quorum (all trustees) was present at the meeting and all trustees were invited to and given an opportunity to participate in the meeting.
The judge held in the van der Merwe NO and Others v Hydraberg Hydraulics CC and Others, van der Merwe NO and Others v Bosman and Others case of 2010 that the terms of the trust instrument that provide for the trustees to make decisions by a majority vote at a quorate meeting do not provide an exception to the rule that all the trustees must act jointly – they merely provide that a majority decision will bind the minority or absent trustees. The minority is, however, obliged to act jointly with the other trustees in executing the resolution adopted by the majority.
Even if a trust instrument allows for the majority of trustees to form a quorum for a trustees’ meeting – or allows for the majority decision of trustees – such majority may perfectly take a valid internal decision by acting together on the internal front. It will not, however, be a valid resolution that externally binds a trust unless it is signed by all trustees, including absent trustees in whose absence it was taken, as well as disagreeing trustees.
In the le Grange v the Louis and Andre le Grange Family Trust case of 2017, the judge excellently summarised the obligation of acting jointly, as follows: “Acting jointly means that the trustees must participate in the decisions taken on behalf of the trust. Participation usually involves meetings or consultations amongst trustees, negotiating or mediating contested decisions and ultimately in the absence of consensus or resolution contested issues are determined by a vote.
Trustees may participate in a vote in three ways: vote for or against a motion or abstain from voting altogether. All three forms of participation in the decision-making are self-conscious and deliberative actions. Participation is elicited after proper notice to the trustees.
A trustee who has no knowledge of decisions taken or to be taken on behalf of a trust and consequently does not vote in any decision, cannot be said to have participated in decision-making on behalf of that trust. Consequently, even if the majority of trustees arrive at a decision but without the participation of all the trustees, unless the trust deed authorises otherwise, the ensuing decision albeit a decision of the majority is not a decision on behalf of the trust.”
Trustees have to present a united front, irrespective of internal disagreement, in the form of a duly signed resolution by all the trustees. The judge also confirmed that the minority trustees must subject themselves to the democratic vote of the majority and co-sign the resolution taken by the majority trustees.
Trustees should therefore be mindful to deliberately exclude certain trustees from trust decisions, as those decisions may be rendered invalid.
~ Written by Phia van der Spuy ~
Feb 7, 2022 | Article
Deputy Justice Minister John Jeffery has seen for himself the poor service the public and law practitioners have to put up with after making a surprise visit to the Master’s Office in Pretoria on Friday, reports Legalbrief. The inspection follows a previously unannounced visit to the Cape Town Master’s Office.
A report in The Citizen notes several legal and insolvency practitioners have expressed concerns about shocking service delivery and massive backlogs at Master’s Offices around the country. The department said service delivery was initially negatively affected by Covid-19 and then further exacerbated by a ransomware cyber-attack last year. Jeffery – who was joined by deputy chairperson of the Legal Practice Council, Advocate Kennedy Tsatsawane – found that while several improvements had supposedly been made, the public were still faced with poor service delivery. ‘Although the queues were shorter than in Cape Town, queue management and the directing of members of the public to the correct sections could be improved,’ read a statement from the Justice Department.
There were also complaints of staff shortages, equipment taking too long to be repaired and an insufficient number of printers. As with the Cape Town Master’s Office, there were complaints of e-mails and phones going unanswered. IT issues remain a challenge, says the report. According to the statement, Jeffery ‘is in ongoing discussions with both the Chief Master and the DG of the Justice Department to find solutions’. Meanwhile, the Deputy Minister plans to continue making unannounced visits throughout the country.
Source: LegalBrief
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