Moneyweb’s Inge Lamprecht spoke to Ronel Williams, FISA Chairperson, to write the following article.
Financial planning tips for women
JOHANNESBURG – South Africans often don’t see the need to draft a will, especially when they are relatively young or don’t have a significant asset base.
It is estimated that at least half of the estates reported at the Master’s Office each year are of people who died intestate (without a will).
In celebration of Women’s Month, the Fiduciary Institute of Southern Africa (Fisa) discusses some financial planning considerations women should take note of.
You need your own will and have to understand the implications of your partner’s estate planning
Chairperson Ronel Williams, says in practice, Fisa often finds that where a woman does not have a lot of assets, or leads a busy life, proper estate planning is neglected.
This could have far-reaching consequences.
Where estate planning is done, it is important to not only consider current circumstances, but to plan for the future, should the situation change, she says.
One example is in cases where a woman’s husband passes away, leaves the bulk of the estate to her and she dies shortly thereafter.
“So then suddenly she does end up with having quite a sizeable estate and her will actually doesn’t reflect the position for her changed financial circumstances.”
She could for example have provided in her will that her estate devolves on her children. If they are still minors (under 18 years) and inherit small amounts, this does not necessarily pose a problem. If, however, her estate is sizeable, the children’s inheritances have to be paid to the Guardian’s Fund unless her will provides for a trust.
While the law allows parties to have a joint will, Fisa usually advises against it, Williams says, mainly for practical reasons. There have been isolated instances where the surviving spouse dies and the Master’s Office battles to trace the original will that also applies to the surviving spouse.
Men and women living together are not automatically treated as ‘married’ under the law in case of intestacy
The Intestate Succession Act applies to every South African who dies without a will and stipulates that the estate should be divided according to a specific formula. If the person was involved in a relationship other than marriage, the type of relationship will determine whether the partner will be allowed to inherit.
Williams says in terms of the Act partners need to be regarded as a “spouse” in order to inherit in the case of intestacy, but the term is not defined in the Act. As a result, other legislation and court cases have to be consulted for an explanation.
Historically, a marriage entered into in terms of the Marriage Act was the only recognised spousal relationship, but with the introduction of the Constitution, the legal system acknowledged that people in other types of relationships were entitled to protection.
Williams says as a start, legislation was passed in the form of the Customary Law of Succession Act and parties to traditional marriages under black customary law are now regarded as spouses when dealing with an intestate estate.
Court cases have also extended the definition of a spouse in this context to include monogamous Muslim and Hindu marriages and polygamous Muslim marriages.
In terms of a Constitutional court ruling, same-sex partners are also regarded as spouses for purposes of intestate succession.
While men and women who live together without getting married often assume that the law treats them as married, this is not necessarily the case.
“Partners in such relationships do not automatically qualify for spousal benefits.”
In terms of a Constitutional court ruling, such partners cannot be regarded as spouses for purposes of intestate succession.
Because the Marriage Act regards marriage as a union between one man and one woman, and same sex couples do not fit the criteria, they were previously not regarded as spouses (before the introduction of the Civil Union Act).
Williams says the Civil Union Act, that came into effect on November 30 2006, allows parties to enter into a civil union, which gives them the same rights as a married couple in terms of the Marriage Act. The Civil Union Act applies to homosexual and heterosexual couples.
“If a same sex couple or heterosexual couple enter into a civil union under the Civil Union Act, they are regarded as married for purposes of the law and they will then also be regarded as a spouse,” she says.
Williams says the current position – the result of a court ruling – is that where a same sex couple live together but have not entered into a civil union in terms of the Civil Union Act, they can inherit from each other when one of the parties dies without a will.
At the time of the court case, the Civil Union Act was not in operation yet, and the court argued that because the parties were not allowed to enter into any type of union to formalise their relationship, they were entitled to protection.
“So it was purely because they didn’t have the option to marry, that the court felt our laws had to protect them.”
But since the Civil Union Act is now in force, should same sex parties still be regarded as spouses if they have the option to enter into a civil union, but choose not to do so?
Williams says because this was a Constitutional Court ruling, the ruling stands.
“So at the moment, if you have same sex parties who did not enter into a civil union and one party dies without having made a will, this court ruling will actually apply and it means they will be regarded as spouses and they will still be protected.”
This is a contentious position, as heterosexual parties who live together but do not enter into a civil union cannot inherit if one party passes away without a will. Since these parties had the option to get married but chose not to do so, the legal position is that they do not need protection.
The introduction of the Civil Union Act puts heterosexual and homosexual groups on equal footing, but because of the Constitutional Court judgment the groups are treated differently for purposes of intestate succession.
“It is one of those matters where we are all waiting for some Constitutional challenge but it just hasn’t happened yet.”
Williams says it is important for heterosexual partners to know the fact that they are living together does not give them protection under the laws of intestate succession.
“Unless they enter into a civil union or get married, they cannot inherit from each other when the other one dies without a will.”
Williams says it is therefore crucial for a woman in such a relationship to ensure she and her partner draft wills to protect one another.