7 reasons to avoid the trap of the free or bargain-basement will (or: How is a professionally drawn will like car insurance?)

 

Car insurance is a grudge purchase. So much so that a leading insurer is offering cash incentives to prospective clients, simply to get them on the phone long enough to sign them up. But if you are a careful, reasonably lucky driver, you may pay premiums year after year and never make a claim.

Along comes Penny Wise Pound Foolish Car Insurance (“Penny Wise”). They guarantee the lowest premiums or a free holiday to Disney World. Naturally, you are on the line to their call centre in minutes – and discover to your great joy that you can save R1000,00 a month in premiums! It’s a no brainer. Each month, you admire the teeny premium on your bank statement, and pity those poor suckers still insured by No Corners Cut Car Insurance (“No Corners”).

And then the worst happens. You are in your first-ever car wreck. Thankfully no one is hurt, but your beloved car is a write-off. To replace it would cost R100 000,00. Penny Wise informs you that your excess is R25 000,00, and that your car was insured for a total value of R50 000,00. It’s time to dust the cobwebs off your bicycle. Or prepare to take on a mountain of debt to replace your fully paid-up car.

So what does car insurance have to do with wills?

Legal fees, like insurance, are a grudge purchase. No one gets a bonus at work and enthuses: “It’s finally time to draft the co-habitation agreement of my dreams!” No one writes on their wedding invitation: “Instead of gifts, please consider a donation to our fund to finally sue that dodgy contractor that left us with an uneven, potholed driveway!”

Legal fees, like insurance, are an area where one can be “penny wise and pound foolish”. Especially in the area of wills. Why see a lawyer to prepare your will when your bank is offering to do it for free? Or you can pick up a fill-in-the-gaps version at PNA?

I visited a prominent bank’s website this morning. The website suggests that legal advice is a “nice to have” when drawing your will – only really necessary when you want to put “lots of special conditions” in your will. The website concedes that a will drafted by a lawyer is unlikely to be open to interpretation and so end up in legal disputes. That’s a pretty big advantage, I would say. If you want to put in “lots of special conditions”, the website concedes that professional advice would be worthwhile, and hyperlinks to a terrifyingly pared-down website that promises you a downloadable will for R350,00 in six easy steps (the first of which is “sign up” and the last of which is “print” – so actually four steps).

As an attorney with 16 years’ experience, I charge R1500,00 for a will. On the face of it, a bank customer who uses the web-based service is saving R1150,00. However, a client who sees me for their will gets a lot more than 4 answers plugged into a template:

  1. There are a wealth of different options available to testators to achieve exactly what they want with their estate. The best option in each case depends on the testator, the size of their estate, the nature of their assets, and even the personalities of their heirs. Is your youngest son terrible with money and in need of a trustee to look after his financial interests? Is your eldest daughter a home owner who would benefit more from a cash bequest than from inheriting a third of your house? Will it mean a lot to Aunt Mildred that she gets Granny’s emerald ring even though you are leaving the rest of your jewellery to your cousins? Come drink a cup of coffee with me and tell me about your family. There is no algorithm for that.
  2. Lawyers are trained to ask “what if” – and to confront head-on the worst case scenarios that most of us like to avoid thinking about. This is where things can go badly wrong. When I consult with a client for a will, I try to look around all the corners, and provide for every eventuality. You cannot assume that life will unfold as you expect it to, and there is tremendous benefit to being led to apply your mind to the unexpected, and covering all the bases.
  3. Once we have selected the options that make the best sense for you and your heirs, I will ensure that your wishes are put to paper in unambiguous terms. Your executor will know exactly what you meant. Your heirs will understand what they are getting. The aim is to enable an easy process to wind up your estate, and not leave confusion and conflict in the wake of your passing.
  4. You don’t have to use your own paper to print my wills. Seriously, I will print it for you (not on R1000 paper, but still.) I will supply a sturdy cover to store the will in. I will help you sign the will in accordance with all legal formalities. You do NOT want to sign a will incorrectly and have it rejected by the Master when your heirs try to wind up your estate. If that happens, your heirs must apply to the High Court to have your will accepted, and your initial saving of R1150,00 from Penny Wise Wills Ltd will fade into insignificance when those fees start rolling in.
  5. Once your will has been signed, our relationship continues. I will register your will online so that it can be easily located when needed. I will store the original will for you, should you so choose. I will make contact with you each year to ask: how has your life changed since we met, and does your will need to change to keep up with it?
  6. In my view, banks do not offer free wills to benefit their customers. They offer free wills to snag lucrative executors’ fees when their customers pass away. Should your estate be deemed small potatoes, the bank will drop it like a hot potato and your heirs will need to get the Master to appoint another executor in their place. Should it be sufficiently large, a bank official who probably never met you will wind up the estate and charge the maximum allowable fee (3,5% of asset value) for doing so. I recommend to my clients that they appoint their major heir as the executor, unless there is good reason not to do so. The heir can then approach an attorney of their choice for assistance in winding up the estate. That may be me. It may be their own attorney. Some clients prefer to appoint me as their executor, as they trust me to treat their heirs with care. We have a relationship, and winding up a client’s estate is generally the last service I can offer them. My fees for winding up an estate are negotiable, and unlikely to be the maximum fee unless the estate is very small in value and the work still considerable.
  7. And the website offering a four-step will for R350,00? Whoever owns it has a great passive income business and may be getting quite rich. I hope they have had a professional draw up their will. Ha.

 

 

The 11 Things an Executor Must Do

The administration of a deceased estate is a cloaked and murky process. As laypeople, we may hand over the task to an attorney or bank, wait a long time, see a sizeable fee deducted for executor’s remuneration, and never quite understand what happened in the intervening period. What do executors actually do, and why do even small estates take months (or even years!) to wind up? In this blog, we cover the 11 step process an executor follows to wind up a deceased estate.

Step 1: Meeting the family

The nominated executor will start off by meeting with the deceased’s loved ones to commence the process of winding up the estate.

Step 2: Reporting the estate

At this early stage, she will take possession of the deceased’s original will (if any) and assist the loved ones in completing the necessary documents to report the estate to the Master of the High Court. There will be an initial assessment of the size of the estate to determine whether a full administration process is needed or whether a truncated procedure can be followed if the estate assets are valued at less than R250 000,00.

Step 3: Obtaining letters of executorship

She will send off the reporting documents to the Master, who will then issue Letters of Executorship in her favour, which empower her to handle the estate and liaise with debtors and creditors.

Step 4: Notice to creditors

She will place a notice in the Government Gazette and a local newspaper, advertising the estate and calling on all creditors to come forward and lodge their claims against the estate, within a 30 day period. The executor will receive and assess all claims received.

Step 5: Open estate cheque account

She will open a cheque account in the name of the estate as soon as there is cash in hand. All cash assets and monies due to the estate will be deposited into this estate.

Step 6: Valuations of assets and liabilities

She will determine what the assets in the estate are valued at, and the amount of the estate’s debts. Assets include immovable property, movable property, cash and investments, and claims in favour of the estate. Liabilities include debts and administration expenses.

Step 7: Draft liquidation and distribution account

This is the core of the administration process. Having gathered the necessary information, the executor will draw up a comprehensive account that sets out all assets and liabilities, their values, any cash surplus or shortfall, how the estate must be distributed in terms of the will or law of intestate succession, estate duty calculations, and handling of fiduciary assets. This account goes to the Master for scrutiny.

Step 8: Respond to Master’s queries

In response, the Master will send a query sheet giving details of documents and information required at different stages of the process.

Step 9: Inspection period

Once the Master’s initial queries have been responded to and he is satisfied with the account, the executor will place a notice in the Government Gazette and a local newspaper, advertising the account as lying for inspection for a period of 21 days. During this period, any interested person may inspect the account and lodge objections to it. Any objections are responded to by the Master.

Step 10: Distribution

Once the account has lain for inspection and any objections have been dealt with, the executor must distribute the estate assets by transferring immovable property, delivering movable property, and/or paying cash inheritances over to the heirs.

Step 11: Discharge of executor

The executor will be paid her remuneration and send the necessary proof to the Master to demonstrate that all assets have been distributed as required, as well as a full set of bank statements and unpaid cheques. She can then apply for a discharge as executor, supported by affidavit. At this stage, her duties have been completed.

The administration of a deceased estate is a process with many stages, all of which take time. A professional executor should keep you informed at all stages of where the process is, and what comes next.

For assistance in winding up a loved one’s estate in a timely, sensitive and cost-effective manner, contact us below or at camilla@roseattorneys.co.za

Divorce and the forgotten will

Divorce inevitably affects one’s estate. If you were married in community of property, your joint estate is divided up. If you were married with accrual, some money or property would have changed hands, or one of you would have waived a claim. Even if you were married out of community, some division exercise would have taken place in the common home to sort out what is yours and what was your spouse’s.

Yet the last thing on your mind when going through a divorce may be your will. It may have been signed years earlier – in happier times – and the chances are that your spouse would have been your primary heir.

The Wills Act acknowledges that it can take some time to get one’s affairs in order after a divorce. Section 2B provides that, if (1) you made a will before your divorce (or annulment) and (2) you die within three months of your divorce (or annulment), then your will will be implemented as if your former spouse died before you. An exception is made where it is clear from the will that the bequest is made regardless of divorce.

Three months after a divorce, however, any outdated will that benefits your former spouse becomes of full force once again. If you die three months and one day after your divorce, and your old will made your former spouse your heir, then they will still inherit.

It is thus important to think about the need to update one’s will whenever there is a major change in status such as a divorce. Births, deaths, marriages and divorces, and major changes in one’s estate, should all trigger a review of your will to ensure that it still reflects your wishes.

Contact us to draw or revise your last will and testament and/or living will: camilla@roseattorneys.co.za / 074 697 2048.

 

Mediation: 3 leading misconceptions

Few clients request mediation of their attorney, and few attorneys advise their clients to consider mediation.

Our clients often approach us when they feel that they have exhausted rational dialogue, and the relationship with the other party has completely broken down. A perceived “soft option” like mediation can be unattractive.

“Hierarchy of needs” psychologist Abraham Maslow famously said “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” We in the legal profession are as guilty of this as anyone. Our first thoughts turn to letters of demand, summonses and interdicts – not open, frank discussions with our client’s opponent about their needs and interests. Having been trained to sift through our clients’ instructions to identify rights and obligations, and what is actionable in law, we pay little enough attention to our own client’s deeper interests, needs and feelings.

As attorneys, we often view the emotional content of what our clients tell us as irrelevant – a hindrance in getting to the facts. After weeks, months or years of effort, we may achieve all that we led our clients to hope for, vindicating their rights and forcing the other party to discharge its duties, with costs. Yet our clients may be left with a sense of hollow victory – their real needs and interests, which we dismissed as irrelevant at the very first consultation, were not addressed.

Many attorneys and clients have had a taste of mediation through the conciliation phase of employment disputes before the CCMA or bargaining councils. We approach the conciliation hearing prepared to persuade the conciliator that we are in the right and should give less, and that the other party is in the wrong and should give more. The conciliator, in turn, with a towering pile of case files to deal with in the course of the day, has little time to uncover the real needs and interests at play. She may instead focus on sussing out the parties’ price – how much or how little money must change hands between the parties to get this matter finalised and out of the system, so that she can move onto the next matter?

While mediation is to be formally provided for within the South African court system as an optional alternative to litigation, misconceptions and mistrust abound. Yet, done well, mediation is a powerful tool for transforming disputes. In this article, we consider three leading misconceptions about mediation that may prevent people from making use of this tool.

Misconception #1: Mediation cannot succeed when the parties’ relationship and/or communication is poor.

A skilled mediator can transform the dynamic between the parties – at least for the duration of a mediation session. She is able to establish trust and rapport with both parties. She may set and gently enforce ground rules which hold the space for each participant to be treated with dignity and respect. She models constructive communication, reframing where necessary to remove the sting of unhelpful criticism and blame which hinder listening. By ensuring that each party is heard, and feels heard, the mediator de-escalates tension and prepares the ground for engagement with the real issues.

Misconception #2: A mediation is like a mini-trial. The mediator listens to both sides and decides who is right. One side wins and the other loses.

A mediation is not the same of an arbitration, or a trial. The mediator does not sit between the parties as a referee and hear evidence, and the mediator does not make binding decisions. The mediator invites the parties to tell their stories, helps them identify the real issues at stake, and facilitates a collaborative process through which the parties may be able to find solutions. Any outcome is only by agreement between the parties. The entire process is voluntary, and the parties retain control over the process.

Misconception #3: Mediation is a form of negotiation. The parties have to compromise, and at best both parties win a little and lose a little.

In negotiations, parties tend to harden their positions and engage in power games to try to get as much as possible while giving as little as possible.

A skilled mediator will assist the parties in looking above and beyond their narrow positions, and seeing the bigger picture. She will help the parties properly understand their own needs and motivations in the dispute, and the other party’s needs and motivations. Rather than inching towards a compromise in the middle ground, the mediation process can transform the parties’ understanding of the dispute, and open avenues for resolution that might otherwise not have been discovered.

A skilled mediator will facilitate a creative problem-solving process, to enable the parties to explore solutions that address both parties’ interests to the greatest extent possible. These interests often go beyond the obvious legal issues, and a more holistic and satisfying solution is possible.

With skill, time and effort, the parties may leave the mediation with an abiding sense of satisfaction, having been heard, having listened, and having taken ownership of the dispute and of its resolution. This takes place with the support and guidance of the mediator, who brings a unique and valuable skill-set to bear on the parties’ process.

Rose Attorneys offers mediation services, with a special focus on divorce mediation.

In any divorce proceedings, a dialogue facilitated by a mediator can bring matters to a quicker and more peaceful resolution than proceeding at once to issuing summons and exchanging proposals via attorneys and court documents.

Especially where a divorcing couple must co-parent in future, a mediation process can be invaluable. While litigating tends to harden positions and further damage the parties’ relationship, mediation offers the possibility of reducing tensions, and building new foundations for a constructive future co-parenting relationship.

If you are interested in more information about divorce mediation, contact Camilla Rose at camilla@roseattorneys.co.za or 074 697 2048.

 

“Hoping for the best, prepared for the worst, and unsurprised by anything in between”: the case for signing a living will today

What is a living will?

The living will (also known as an advance healthcare directive) is a document which sets out your wishes for medical care, and directs your medical caregivers in the event that you become permanently incapacitated, with no reasonable prospect of recovery, and unable to make your own decisions.

It is generally used to record a wish to refuse medical treatment that keeps one alive by artificial means, when one faces a hopeless prognosis and is either suffering great distress or left incapable of rational existence.

The living will can direct that any medication (including powerful painkillers) that eases suffering, should be provided, even if such medication hastens one’s death. In short, the living will aims to prevent the fruitless prolonging of death, once medical treatment can no longer meaningfully extend life.

How is a living will made?

A living will should be in writing, and one can be made by any adult of full mental capacity. It is wise to sign the living will similarly to a last will and testament – dated and signed before two independent witnesses aged over 16 years, who also sign the document, each signatory signing in the presence of each other signatory. The witnesses should ideally exclude your next of kin, your doctor, and your heirs in terms of your will, so that there is no possible conflict of interest.

Should a living will form part of your last will and testament?

The living will has an entirely separate function to a last will and testament, and should stand as a separate document in its own right. Families will generally consult a last will only after a death, by which time the medical directives are no longer useful. Living wills can be registered free of charge, along with your last will, with the online SA Registry of Wills and Testaments (www.sarwt.org) , for ease of location when needed.

Is a general power of attorney a better option?

A living will must be distinguished from a general power of attorney (POA). While a POA enables you to appoint another person to exercise your legal rights on your behalf and in your stead, it is only valid for so long as you are yourself mentally capable. Once your mental capacity is compromised, the power of attorney becomes void. A living will prepared before you need it, is a simple, cost-effective route to convey your medical wishes when you are no longer able to communicate. A living will signed while you are of full mental capacity, remains valid even if you lose mental capacity thereafter.

Must my doctors respect my living will?

There is not yet a specific law in South Africa which renders living wills legally binding, but in practice they are to be respected.

The South African Medical Association (SAMA) has issued guidelines for the handling of living wills by South African doctors. SAMA advises its members to respect and uphold a living will as embodying the patient’s expressed wishes, unless there is evidence to the contrary. It counsels patients to ensure that their family members and treating doctors are aware of the existence of their living will and where it can be located, or preferably to lodge copies with their family and doctors. If the living will document is not immediately available, the doctor may treat the patient and should not withhold treatment pending discovery of the document. Treatment can be halted once a document refusing such treatment has been found. Doctors who have moral objections to withholding treatment, should volunteer a referral to another doctor, as the patient has the right to refuse treatment.

What about my loved ones?

When a patient is incapacitated and unable to give directions as to medical treatment, their doctors will look to their next of kin for consent to a specific course of treatment. A living will relieves loved ones of some of the emotional and psychological burden of making end-of-life decisions on behalf of their incapacitated family member. Such direction is particularly useful where there may be disagreement as to the best course of action, sowing conflict among loved ones and leading to guilt and recriminations.

If you would like to draw and sign a living will, contact us at camilla@roseattorneys.co.za or 074 697 2048.

 

Requirements for a valid will

Is there more to preparing a will than recording your wishes in writing, signing the document and keeping it somewhere safe for future reference?

Yes, in South Africa wills must comply with certain strict formalities, or they may not be valid.

After a death, the deceased’s family members will hand over the deceased’s will to the Master of the High Court, in order for it to be implemented. The Master is entitled, at his/her discretion, to refuse to accept any such document until a court has pronounced upon its validity as a will. If the formalities haven’t all been complied with, the court will order the Master to accept the will if it is satisfied that the document was prepared by the deceased with the intention that it would serve as his or her will.

Taking the document before a court to resolve the question of its validity is a very expensive and time-consuming process, however – and one best avoided at virtually all costs! It is common for a High Court matter to costs hundreds of thousands of rands, and to take a number of years to reach the doors of the court.

The purpose of imposing strict formalities is to reduce fraud where wills are concerned, through for example someone impersonating a testator (the person making the will) or misrepresenting to a person what exactly they are signing.

What follows are the basic requirements to be met to ensure the validity of a will:

1. The testator must be at least sixteen years of age, and must be mentally capable of appreciating the nature and effect of his/her act in making the will. If the testator is intoxicated or extremely unwell at the time, to the point that s/he lacks sufficient understanding of what s/he is doing, then the will is not valid.

2. The will must be signed by both the testator and the two competent witnesses. A competent witness is a person aged at least fourteen years, and also having sufficient mental capacity.

3. The testator can sign through making a mark (such as an X or a thumb print) but this must be certified by a commissioner of oaths, who states that s/he is satisfied that the testator is who s/he purports to be and that the will is in fact his/her will. Witnesses cannot sign by making a mark.

4. The signatures at the end of the will must appear sufficiently close to the final substantive words of the will. If too large a gap is left, then the signatures and will may be invalid. Even a gap of 17cm has resulted in a will being deemed invalid.

5. The testator and witnesses must sign in each other’s presence and at more or less the same time.

6. If the will is more than one page long, then each page other than the final page must also be signed by the testator. It is not essential for the witnesses to also sign each other page, but it is wise that they should do so anyway. 

While the formalities are few and simple, small omissions can have significant consequences. It is wise to sign your will in the presence of someone with the necessary knowledge of the formalities, to ensure that seemingly minor oversights do not cause major problems down the line.

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Race-based charitable bequests

The Supreme Court of Appeal recently handed down judgment in a matter concerning a deceased woman’s wish to set up bursaries to be available to white students only (amongst other criteria).

The other criteria specified the universities at which the students should be studying, their field of study, and the level at which they should be studying. The bursaries would help them further their studies overseas, on condition that they returned to South Africa to put their new skills into practice.

The trustees tasked with putting the deceased’s wishes into effect, approached the universities which the deceased had identified. They all indicated that they could not accept any bursary unless it was open to students of all races. The trustees then approached first the High Court and later the Supreme Court of Appeal, asking the courts to remove the race criterion from the deceased’s bequest, on the basis that it was discriminatory and therefore against public policy.

Both courts refused to remove the race criterion.

The High Court suggested (without making a finding) that the deceased’s intention was not necessarily unfairly discriminatory, as it appeared to be directed at limiting the “brain drain” in the identified field of expertise. The court found that it could only vary the provision in the deceased’s will if it had consequences which she had not foreseen – that is, if the discriminatory nature of the bequest meant that it could not be carried out and her will thus failed to dispose of her estate. The evidence in the specific case was clear that the deceased had foreseen that her wishes might not be given effect to, and she had indicated certain charities which should in that event receive the funds that would have been used for the bursaries. There was no need to tinker with the deceased’s will as it could still be put into effect, albeit on an alternative basis. If the universities would not accept the bursaries, then the charities would benefit in their place.

In upholding the High Court’s ruling, the Supreme Court of Appeal pointed out that this case differed from another similar case decided in the intervening period, in which the racial criterion had indeed been removed by the court. In the other case, there had been no alternative to cater for the possibility that the racial bequest would not be carried out. In order to avoid a situation whereby the deceased’s wishes were completely frustrated, in the other case the racial criterion had been removed. In this case, on the other hand, the deceased had set up an alternative which she had clearly intended to follow in the event that her racial bequest failed. The court found that it was possible in this case to give effect to the deceased’s intentions without amending her will, and so this was what should be done. The deceased had, in general, the freedom to frame her will and dispose of her assets as she wished. It was not for the trustees or the court to decide that it would be preferable to amend her will to make the bursaries acceptable to the universities, instead of simply applying the alternative provision she had put in place.

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