a question: My life partner of many years passed away last week. We have never succeeded in drawing a will. what is happening now?
Answer: If someone dies in South Africa without a will, the rules of intestate succession come into play, with the deceased’s assets distributed according to a formula. The assets are usually distributed in the following order:
- deceased spouse;
- dead offspring.
- parents, if the deceased died without a spouse or grandchildren;
- Siblings of the deceased in the event of the death of one or both parents.
Your challenge is to recognize yourself as a wife for inheritance purposes. I would recommend that you consult an attorney who specializes in completing estates, so that the necessary evidence that you were a life partner may be gathered.
If you are cohabiting with someone or in a life partnership, I urge you to draw up a cohabitation agreement where you state that you each have a mutual duty to support one another; Or name each other in your wills and state that you are in a long term relationship with a mutual duty of support.
This should be enough for your relationship to be classified as a marriage in an estate community and you have all the benefits of an estate fee and capital gains tax applicable to your estate.
There are significant cash flow benefits if you do.
If one spouse dies leaving all assets to the surviving spouse, any estate fees payable on the assets will be deferred until the death of the second spouse.
For example, if one spouse leaves net assets of R5 million to the surviving spouse, the R1 million estate fee will only have to be paid upon the death of the second spouse. However, if it is not bequeathed to the spouse, one million rand will be paid immediately.
If there was no will and the decedent also had three children, in terms of intestate inheritance, the husband and each of the children would inherit 25% of the estate – that is R1.25 million each. Now assets inherited by children will not qualify for a spouse’s lien, so a 20% estate fee must be paid on their share. Thus, the sum of R750,000 in Estate Fee will be paid immediately.
Capital gains tax
When someone dies, capital gains tax must be paid as if the deceased had sold all of his or her property the previous day. These amounts can be large and play havoc with the surviving family’s cash flow.
If the deceased spouse bequeaths all of his or her assets to the surviving spouse, capital gains tax will only be paid upon the death of the surviving spouse. This can be a huge relief when it comes to cash flow management.
to move on
There are clear advantages to bequeathing assets to a spouse.
If you are cohabiting or in a life partnership, it is important to get the papers in order as quickly as possible. DM
Kenny Mering is an independent financial advisor. Call him on 082856 0348 or at financialwellnesscoach.co.za. Send your questions to [email protected]
This story first appeared in our weekly Daily Maverick 168, available nationwide for R29.