Women financial planning tips
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.”