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There is often confusion about what assets apply to the wishes made out in a will and whether there is a way for the provisions made in a will to be changed. Let us take a closer look at what is allowed, what assets apply to the will and what powers the executor and other parties may have.
What assets will be distributed according to the testator’s will?
While South Africans enjoy the freedom of testation, certain assets such as non-discretionary assets actually fall outside the wishes stated by the testator in their last will. Non-discretionary assets include all pension, provident, preservation and retirement annuity funds.
The distribution of these funds is instead governed by Section 37C of the Pension Funds Act which ensures that those that were financially dependent on the deceased receive a portion of the funds according to their needs.
These assets do not form part of the deceased estate and therefore even though a provision is specifically made about these assets in the will, it will not dictate how these assets are eventually distributed.
How does this work in reality? While the member is alive, they are asked to indicate who the beneficiaries should be of their fund, and what percentages should be allocated to whom.
When the member does pass away the trustees of the fund will consider who the elected beneficiaries were as a starting point to determine who should receive the benefits. They will further conduct an investigation, which can unfortunately be a manual and dragged-out process and therefore can take up to 12 months.
It is, however, their duty to ensure that the determination is made as quickly as possible. In this investigation they will consider whether the dependents have other sources of income, for how long they would still have required financial support from the deceased and how many dependents there are to name but a few matters.
Other considerations to make when thinking of which assets fall within an estate is how you might be married, if you have policies on your or someone else’s life and whether you are the beneficiary or founder of a trust.
All these matters will have to be considered on a case-by-case basis and will not be discussed in great detail in this article, although it is important to be aware of them when a will is drawn up.
Discretionary investments such as unit trust and money market funds on the other hand will fall within the deceased estate and is therefore subject to the last wishes of the testator. Keep in mind that living annuities are also considered a discretionary investment and are therefore not subject to Section 37C.
Life annuities will usually either expire when the annuitant passes away or, if an additional life was added to the policy, it will continue paying to this additional annuitant.
Can an executor override the wishes of the testator in the will?
The short answer to this question is no, but it does not necessarily mean that wills are always carried out exactly according to what is written. If someone dies in debt their estate will be required to settle this debt before any distributions are made to the beneficiaries. The executor will have to distribute what is left according to legal order of priority and some beneficiaries may end up with less than what the will originally stated.
If a will is vague the executor will also have to use their discretion to determine how to interpret the deceased final wishes. This often happens when there are physical assets such as antiques or property for example.
In such a case the executor will have to work with the beneficiaries to determine how the assets can be distributed in the fairest manner. A deed of variation can also be signed by anyone whose share of the inheritance would be affected by the changes made to the will.
Winding up a will is a complex matter and there will always be issues to consider as the process unfolds. When you have a more complex asset structure, it is advised to work with a professional when drawing up your will to determine how best to wind up your estate, as there may be options available to you that you may not have considered or there may be unfavourable consequences that you would also not have though off when drawing up the will.