October is just around the corner. According to a poem by CF Louis Leipoldt, this is the most beautiful month of the year. And rightfully so, as October is the month in which we can fully appreciate nature in all her splendour, displaying a kaleidoscope of colourful flowers for us to feast our eyes on.
INSTRUCTIONS TO CORRECTLY SIGN A WILL
Please take note of the following:
When submitting a request for a Will to be drafted, the Wills drafter will add the ‘Signing Your Will - Instructions’ to the e-mail. If your client will not be signing the Will in your presence, please add these signing instructions to the e-mail that you send to your client. This will prevent the incorrect witnessing of the Will, and ensure that a correctly signed and valid Will is placed in safekeeping sooner.
Dementia is not a disease but rather a general term that refers to the impaired intellectual ability to remember, think, or make decisions. This, in turn, interferes with everyday activities. Dementia is a condition that is so far neither preventable nor curable.
Alzheimer’s disease, named after Dr Alois Alzheimer, who first described this brain-affecting condition in 1906, is the most common type of dementia. An ageing worldwide population carries a high risk of dementia: it is estimated that 35.6 million people or 0,5% of the global population are affected and it accounts for 50% to 80% of dementia cases. Alzheimer’s is a progressive disease of which the symptoms are initially mild but become more severe over time. When this mental illness becomes very serious, a person may not be able to look after their own affairs any longer.
In cases where a person becomes mentally disabled, a trust can be used to avoid the need to place a person under curatorship. When establishing a trust, a person can select his/her own board of trustees who can then look after their financial affairs. Notably, this step should be taken when the person is still lucid and able to contract before severe onslaught of a mental disease. When a trust is created for the benefit of a person who cannot take care of their own affairs owing to disability, such as mental illness, the trust will qualify as a special trust in terms of the Income Tax Act, which makes provision for such a trust. Persons with a disability that will qualify for a special trust, which is established during the life of the person are defined in Section 6B of the Income Tax Act. This includes a moderate to severe limitation of any person’s ability to function or perform daily activities because of a physical, sensory, communication, intellectual, or mental impairment that has lasted, or has a prognosis of more than one year. Alzheimer’s disease and senile dementia falls within the scope of this definition. The disability must be diagnosed by a duly registered medical practitioner.
In 2018, a lady in the early stages of dementia, but still lucid and with the capacity to contract, created a discretionary trust with the purpose to provide for the care and maintenance of herself when she was no longer able to do so. She distributed part of her estate to this special trust for her care and maintenance. The trust was created with herself as the primary beneficiary as well as with other beneficiaries listed as secondary beneficiaries. The trust founder was to benefit alone from the trust until her passing. Even though there were other beneficiaries, it did not affect the trust’s status as a special trust, because their discretionary right would only come into operation upon the death of the applicant.
By establishing this trust while still lucid, it serves not only as a vehicle to look after the applicant during her lifetime, but also serves for estate planning purposes as a special trust that continues seamlessly for the benefit of the remaining beneficiaries, without the need to terminate the trust and create a new one for those beneficiaries. Two classes of beneficiaries are thus established; only the disabled person has rights in the special trust until they pass away.
On 28 June 2018, the South African Revenue Service (SARS) issued a Binding Private Ruling (BPR 306) in favour of the applicant, in which SARS provided an Advance Tax Ruling (ATR) on a transaction that is still to be concluded in the future. The purpose of this system and the BPR is to promote clarity, consistency, and certainty regarding the interpretation or application of one of the tax acts administered by SARS, such as the Income Tax Act. In the ruling, SARS declared that the move of the applicant’s assets to the trust was not a donation, as contemplated in Sections 54 and 55 of the Income Tax Act.
A BPR is a private ruling and thus may not be cited in any proceedings before SARS or the courts, other than a proceeding involving the specific taxpayer applicant. It does, however, provide more clarity on how SARS is likely to interpret any particular provision of a tax act. A BPR is based on a specific set of facts that may influence the outcome of SARS’s view, therefore, the specific facts present on the BPR provided must be considered if one wishes to be guided by its application.
When a trust is created during a person’s lifetime, and that person becomes afflicted by mental illness, financial affairs would continue as before with nominated trustees who are trusted by the founder to care for them should they need special care. A special trust is not a viable solution for persons already suffering from mental incapacity but may be useful as a remedy in anticipation of incapacity. Therefore, it would be wise to establish a special trust before a person becomes mentally disabled, at an early stage while the person is still lucid and have the capacity to contract. The appointment of trustees in such a trust should also be carefully considered when contemplating such circumstances.
Source: Consider a trust as planning tool in case of dementia, written by Phia van der Spuy, IOL.
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SUDOKU WILL
When it comes to Wills, there are specific requirements that must be met for a Will to be valid. The most important requirement would be that the Will was duly signed.
This aspect was emphasized by the case of Fernande Aube’s Sudoku puzzle book Will. She was terminally ill and passed away in 2007. Eight weeks before her passing, Aube wrote a new Will in a Sudoku puzzle book. Her sister and a nurse at the nursing home where Aube resided swore that it was the last Will of the deceased.
According to this Will, her $100 000 estate was to be split up in equal parts and distributed to her three children.
The Quebec Court of Appeal ruled that a lower court judge was wrong to accept a handwritten note in a Sudoku puzzle book as a valid Will for a terminally ill woman. Aube never signed this note and the Court of Appeal ruled that a previous, formal signed Will was to be accepted as her last valid Will and testament. According to this Will, signed in 1991, the son was to receive $65 000, and the remainder of the estate was to be divided between the two daughters.
Though the province’s National Assembly has relaxed the rules to allow handwritten Wills to be accepted, the court determined that a signature is mandatory.
