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SA's No 1 Insurance Blog

When it comes to financial planning, we can think of only two types of people who wouldn’t be interested in a Will document: those who have no assets to mention, and those who are happily married and have no dependants at all. However, for the rest of us, a Will document (especially if you have insurance paying out to your Estate) makes perfect sense, as it speaks for us when we no longer can! Strange as it may seem, most people we meet don’t have a Will document in place, so we thought that now would be a good time to chat about what happens when you don’t have that important document in place.

What is intestate succession?

Dying intestate is what happens when you die without having a valid Will document. Now can you imagine the cat fight that would break out amongst family members if you died without a Will document and left a couple of million Rand in cash in your Estate? At some point, the government got tired of these cat fights and decided to regulate this. The Intestate Succession Act decides on how your assets are divided up once you leave this earth.

But first…How does this work if you’re married in Community of Property?

What’s important here is that Community of Property means a joint Estate. A joint Estate means fifty-fifty – you own (or owned) 50% of the joint Estate and your spouse owns the other 50%.

If only you pass away, but your spouse is still alive, your joint Estate will need to first be split in two. Once your half of the Estate has been established, the rules of intestate succession can be applied. Make sense?

Let’s now consider the first scenario that is likely to play itself out if you die Intestate (without a Will):

Scenario 1: The deceased is survived by a spouse, but there are no dependants

This scenario is a simple one, the surviving spouse inherits it all.

The important thing to look out for is the definition of a spouse. Who qualifies as a spouse? Here’s a quick list:

  • Spouses married in or out of Community of Property
  • Marriage according to Muslim rites
  • Persons married under customary law and this includes concubines where the purpose of the concubine is to provide children.
  • Civil unions and same-sex relationships that the Commissioner is satisfied is intended to be permanent (Common law spouses would fall into this category)

Now while it might be a cut and dry financial planning issue if all you leave behind is a spouse…it gets more complex the further we travel down the rabbit hole when it comes to intestate succession!

Scenario 2: Dying intestate and being survived by descendants, but not by a spouse.

In this case, the descendants inherit your Estate per stirpes.

So, what then is a descendant? A descendant is basically your offspring – a child of yours. in other words, bear in mind that this could also be an adopted or illegitimate child.

And the meaning of ‘per stirpes’? We understand that “per stirpes” means “by branch”.

What it means is that each branch of descendants will receive an equal share of your Estate.

Should one of your direct descendants pass away before you (in other words, predecease you) and leave descendants behind – the branch that would have been left to your direct descendant is then split equally between his or her descendants.

Scenario 3: Dying intestate and leaving a spouse and descendants

In this instance, the spouse will inherit R250,000 or a child’s share, whichever is the bigger portion.

Let’s look at an example to better illustrate the scenario:

Jack dies without a Will document. He was married to Jane at the time of his death and has 3 children (Frank, Lucas, and Rachel).  Jack’s Estate is worth R350,000. The first step is working out if Jane’s share will be bigger or smaller than R250,000. To do that we need to divide the Estate by 4 (3 kids and 1 spouse)

R350,000 / 4 = R87,500
Jane is entitled to R250,000 or a portion of the child’s share. In this case, R250,000 is bigger than the R87,500 portion split.
Now the kids get the balance.
R350,000 – R250,000 (which is Jane’s share), leaves R100,000.
We then divide the R100,000 by the 3 kids and they are each entitled to R33,333.

Do you want to chance having the Government decide how your assets are distributed when you pass away?

It’s a much better idea to speak to a financial advisor and to get some professional advice when it comes to Estate planning and Will document drafting.

Click here to find an authorised Old Mutual advisor in your area today.

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