Newsletter 31 (Feb 2019)
With the year well on its way, we would like to give you the first update on the progress in the EFBOE competition. As at the end of January 2019, the frontrunners are:
CAREL LOCK from Cape Town with 25,2 points
PAUL LOUW from Port Elizabeth with 20,8 points
RUAN BOTHA from Cape Town with 19,6 points
There are still nine months left in which to keep your nose to the grindstone and to strive to be the winner of the coveted R10,000 prize money in November.
Often the struggler has given up
When he might have captured the victor’s cup;
And he learned too late when the night came down,
How close he was to the golden crown.
This is a phrase from Edgar A. Guest’s poem, DON’T QUIT. Be motivated to persist on the road to success and to not give up when things get tough. That is life, with its ups and downs, its highs and lows. With a positive attitude and outlook on life, the rewards always stay within reach and with persistent determination, they are achievable.
PITFALLS WHEN DRAFTING A WILL
Read more about this in the next edition.
IS A DIY-WILL SUFFICIENT
Drafting a Will can bring out the best intention in people, as it gives them a chance to share with loved ones what they have accumulated and what they eventually will no longer need. For example: leaving prime agricultural farmland to children.
Or it can also bring out the worst in those who want to manipulate the behaviour of their heirs. For example: leaving a sum of money on condition that the heir complies to certain stipulations, for instance not wearing make-up, not using a cell phone or be drug-free for a specific period after the benefactor passes away.
Regardless of the motivation, there are plenty of pitfalls when drafting a Will: what is said, how it is said and whether the instructions in the Will are feasible.
For that reason, a DIY-Will is potentially dangerous and should be avoided.
If a Will is invalid, it could have painful, unintended consequences. It may not be able to achieve what was intended and beneficiaries could end up in long and expensive court cases, as they battle over the interpretation of the words or actions. When money is involved, some beneficiaries or potential beneficiaries will look for any loophole to exploit.
It is possible that a DIY-Will, whether it is self-drafted or the template type available online or from stationery stores, can meet all the requirements of a valid Will, but knowledge of what constitutes a Will is not enough. The drafter also needs to be well versed in the effect of common law, as well as laws on the statute book and the implications of the proposed Will on assets, liabilities and cash flow in an estate. Over the years, laws have become more stringent and it is no longer that easy to just compile a slapdash document in the hope that it will serve its purpose.
For instance, in the example mentioned above of leaving prime agricultural land to children, the farm owner would need to know that agricultural land cannot be sub-divided without the permission of the Minister of Agriculture. In the second example, the conditions are toothless as it would be difficult to enforce. The beneficiary will most likely still inherit, anyway. But there are ways to add workable conditions to a Will.
Unwary drafters of Wills may think that if the estate is small, the division is straight forward and the language used is simple, that there will be no problems. Unfortunately, the unknowns stay unknown and are a minefield for the person who does not understand all the laws simultaneously at play.
Template type Wills may work in many circumstances, but with a template Will there is more of a chance of the testators and witnesses failing to comply with the legal formalities in executing the Will. They also may not address specific circumstances. It could be argued that it could work nine out of ten times, but it is the tenth where an expert was needed, which presents the problems.
If someone is brave enough to draft their own Will, speaking to a professional first will most likely make them reconsider. Terms like “thoroughbred” and “bullet-proof” have been used when speaking of Wills, as it is one of the most important documents one will sign in their lifetime. With the knowledge required to draft a proper Will, it pays to consult a professional to assist.
Some of the common mistakes made in the drafting of a Will are:
Not sticking to the law
Not revoking previous Wills
Non-nomination of an executor
Not providing for the security of the estate assets
Not considering debts linked to assets
Not providing for children/minor heirs or heirs with special needs properly
Inserting stipulations that cannot be met or monitored
Inserting clauses that are against public policy
Not reviewing a Will regularly
Not revising the succession clauses
Lack of estate planning, estate duty and the residue
In the next edition, we will elaborate more on the common mistakes listed above.
THE “EASY RIDER” STORY
Divorce is a traumatic affair. It is wise to update estate planning documents during a divorce process. In the case of Dennis Hopper, the Easy Rider star, it proved to be quite the clever thing to do. He did not have such an easy ride during the last few months of his life.
In 2010 he passed away from cancer at the age of 73, in the middle of a messy divorce-war with his fifth wife, Victoria Duffy-Hopper, who was six years younger than his youngest daughter. The battle was more about
his estate than anything else and the case turned into an even bigger battle after his death.
Even though Dennis died before the battle was concluded, he had already taken steps to safeguard his heirs and disinherit Victoria. He had changed his life insurance policy by removing Victoria as beneficiary and made sure she was no beneficiary in his Will or trust. In terms of the prenuptial agreement, she would have received a quarter of his estate if they were still living together and married at the time of his death. Probably the reason why she refused to move out during the proceedings.
The estate planning documents left her virtually nothing. Two years of litigation followed, where she tried to claim from the estate. In the end she received 17% (about $40 million) of the estate, which formed part of the 40% share in the trust that was already left for Victoria’s young daughter with Dennis.
While the fight started ugly, it quieted down quickly and most of Dennis Hopper’s heirs received what he wanted them to, because he had the foresight to proactively update his estate planning documents during the divorce proceedings, instead of waiting for them to be over. He made sure that 60% of his estate still passed to his adult children, yet his minor daughter with Victoria was protected too. This serves as a great lesson for everyone to remember to update estate planning documents when important life events happen or are about to happen, such as divorce, marriage and new children being born. Had he not taken these steps, all the heirs would have paid a much steeper price.
Until next time!
The “Let’s Talk EFBOE” Team