Proper estate planning is necessary

Proper estate planning can spare future generations much unhappiness and legal costs especially where the succession of agricultural property is involved.

Proper estate planning is necessary

Due to the restrictions on the sub-division of agricultural land, farmers often form a trust with a view to ensuring perpetual succession.

The aim of this article is to enable farmers to see the practical implications of certain clauses in the trust deed and to encourage them to make use of a competent professional for the drafting of wills.

Termination of the testamentary trust

“At the expiration of the Trust period as hereinbefore provided the Trustees shall realise the capital, or balance of capital, and divide the amount so realised equally between the said four children of the said John Smith.

In the event of any child dying prior to the termination of the Trust, his or her share shall devolve upon his or her legal descendants per stirpes. If at such time there are no children alive and no legal descendants of such children, then the Trustees shall divide the capital between such persons as may be nominated as the heirs in the will of the Donor, or if the Donor has failed to make a will between the next-of-kin of the said Donor.”

At first glance there is nothing peculiar in this clause.

Practical implications

A practical example of the above clause is that when any of Mr Smith’s children die, their share will devolve to their descendants in equal shares. But what will the position be if one of the donor’s children is unable to bear children and chooses to adopt?

Our courts have in recent cases held that ‘adopted children’ were not to be included in the words used by the Donor (testator). The court was also not prepared to change the wording of the Trust Deed on the grounds of ‘unfair discrimination’

It’s important to note that, in coming to its conclusion, the court attached weight to the fact that the Donor had the professional assistance of an attorney and a notary when executing the Trust Deed and the Amendment thereto.

In light of the statutory provisions then in effect, the Donor might well have been advised of the meaning of such statutory provisions and the need to include adopted children in express terms in the Trust Deed should the Donor so wish.

It’s also important to note that the court attached weight to the fact that the will and Trust Deed was drafted by trained professionals and therefore it could be presumed that the Donor (testator) was informed of the meaning and effect of the words used.

Conclusion

It’s as important as ever to have a will and revise your will on a regular basis. It’s advisable that one also takes into consideration that one’s children may never bear their own children and therefore ensure adopted children are catered for in a trust deed.

The assistance and advice of qualified professionals when executing a will or a Trust Deed is imperative.

Siphokazi Sobazile, Legal Advisor, Old Mutual

Disclaimer

The material is not intended as and does not constitute financial or any other advice. The material does not take into account your personal financial circumstances. For this reason it is recommended that you speak to an accredited broker or financial adviser to consider all your options and draw up a plan to achieve your financial goals.