Law Of Succession - ERF 222 PDF

ERF 222 : LAW OF SUCCESSION CHAPTER TEN : SUBSTITUTION, USUFRUCT AND ACCRUAL Substitution : When a testator appoints a beneficiary to inherit and another to take their place if needed. 1. Direct Substitution : Beneficiaries are appointed as alternatives, either...

ERF 222 : LAW OF SUCCESSION CHAPTER TEN : SUBSTITUTION, USUFRUCT AND ACCRUAL Substitution : When a testator appoints a beneficiary to inherit and another to take their place if needed. 1. Direct Substitution : Beneficiaries are appointed as alternatives, either expressly by the testator or by implication automatically ex lege. 2. Fideicommissary Substitution : Beneficiaries are appointed successively. 3. Conditional Substitution : Express conditional substitution is also clearly stated by the testator and implied conditional substitution refers to circumstances when a beneficiary dies without descendants (si sine liberis decesserit). 4. Fideicommissum Residui Conferment of Power : Conferment of power of appointment refers to the testator granting authority to a fiduciary, and other provisions are outlined in Sections 2C(1) and 2C(2) of the Wills Act. Direct Substitution Direct substitution occurs when a testator nominates an alternative beneficiary to inherit if the primary beneficiary does not take the benefit. 1. The appointed beneficiary has predeceased the testator. 2. The beneficiary is disqualified from benefiting. 3. The beneficiary has repudiated the benefit. 4. The benefit cannot be taken due to the non-fulfillment of a condition. Testators utilise direct substitution to prevent the benefit from devolving under intestate succession rules, to keep certain assets from becoming part of the estate’s residue, and to exclude the right of accrual. Express Direct Substitution Express direct substitution allows for an alternative beneficiary in a will, wherein, the wording of substitution clauses must reflect the testator’s intentions clearly to avoid ambiguity Ambiguity : Arises when it’s unclear if the testator intended direct substitution or fideicommissary substitution, particularly if contingent on the beneficiary’s death. Implied Direct Substitution (Section 2C of the Wills Act) Section 2C(1) : If a major descendant, who is not a minor nor mentally, renounces their benefit from a will, the benefit goes to the surviving spouse. Section 2C(2) : The descendants of a descendant who would have inherited if they had not predeceased, been disqualified, or renounced their benefit to inherit, will receive the benefit unless the will states otherwise. Section 2C(1) applies only to major descendants entitled to benefits alongside the surviving spouse who renounce their benefits, and does not apply to collaterals, and Section 2C(2) covers all descendants, including class bequests and descendants who may represent or substitute for a predeceased or disqualified beneficiary, and applies to collaterals. Moosa v Minister of Justice : The Constitutional Court clarified that “surviving spouse” includes spouses from both monogamous and polygamous Muslim marriages in Moosa v Minister of Justice and the court highlighted discrimination against surviving spouses in polygamous Muslim marriages under section 2C(1) compared to civil marriages. Section 2C(1) is seen as unfairly discriminating against those in Islamic marriages and denying them legal protection. Fideicommissary Substitution Fideicommissum : When a testator directs a series of beneficiaries to inherit an estate or specific assets sequentially. The first beneficiary is the fiduciary, while the subsequent beneficiaries are fideicommissaries, whereby the fiduciary must transfer the property to the fideicommissary upon a specified condition or event. 1. The testator must intend to create a fideicommissary condition. 2. There must be a clear indication of the fiduciary, the fideicommissary, and the assets involved. 3. The fideicommissary condition must be valid. A typical clause creating a fideicommissum involves multiple beneficiaries inheriting one after another. The process involves at least three parties: the testator, fiduciary, and fideicommissary. 1. Fideicommissum simplex : One fideicommissary 2. Fideicommissum multiplex : Multiple fideicommisary In cases with multiple fideicommissaries, each becomes the owner subject to the obligation to pass the property to the next. Raubenheimer v Raubeheimer : The intention to create a fideicommissum must be explicitly clear to avoid ambiguity and the court emphasised that terms like "usufruct" do not necessarily determine the nature of the interest intended. King v De Jager : Discrimination in a will based on gender can render clauses invalid under public policy and constitutional law, as the Constitution prohibits unfair discrimination in property disposition, ensuring the invalidity of discriminatory clauses. Fideicommissum Types Conditional Fideicommissum : It involves the transfer of property to a beneficiary based on the fulfilment of a specific condition. Inferred Fideicommissum (Fideicommisum in Diem) in Rockman v Padayachee : The court ruled that Neela Pillay was a fiduciary heir, meaning she couldn’t dispose of the property against the terms of the first will. The court stated that no specific wording is needed for a fideicommissum, as long as the intention is clear in the will. Neela Pillay’s acceptance of benefits from the first will was seen as implied adiation, supporting the existence of a fideicommissum. Special Power of Appointment : A testator can grant a fiduciary the power to appoint the fideicommissary. Fideicommissum Residui : This occurs when property is left to a fiduciary with the remainder passing to another person after the fiduciary’s death. Alienation : The fiduciary can alienate part of the property, but certain conditions apply regarding the remainder for the fideicommissary. Implied Fideicommissum : An implied fideicommissum can arise when the will’s language indicates the testator’s intent, even if not explicitly stated. Si Sine Liberis Decesserit Clause : Property is left to a beneficiary, with stipulations for distribution if the beneficiary dies without children. Du Plessis v Strauss : A conditional fideicommissum suggests the testator implicitly appointed the beneficiaries. The presumption of tacit fideicommissum applies if the beneficiaries are the testator’s descendants, provided there are no contrary indications in the will. Statutory Restrictions on the Fideicommissum Section 6 of the Immovable Property (Removal or Modification of Restrictions) Act : The duration of a fideicommissum on immovable property is limited to two successive fideicommissaries. Section 7 of the Immovable Property (Removal or Modification of Restrictions) Act : The Act has a retroactive effect, applying to fideicommissa on immovable property created before the Act came into operation, under which, the second fideicommissary (if alive) will hold the property as a full unconditional owner and is not required to pass it on to a third fideicommissary. The second fideicommissary may disregard the terms of the will concerning the third fideicommissary and the Act only applies to fideicommissa over immovable property; fideicommissa over movable property remain effective for as long as the testator desires. Legal Position of the Parties to a Fideicommissum Fiduciary 1. Becomes owner of the property upon delivery or registration. 2. Ownership is subject to a resolutive condition, which may terminate rights if the condition is met or the term arrives; if the fideicommissary predeceases the fiduciary, the fiduciary gains full ownership. 3. Ownership is limited; the fiduciary must transfer property to the fideicommissary once the condition or term is fulfilled. 4. Cannot alienate or encumber the property without cooperation of all major fideicommissaries or High Court consent; can alienate fiduciary interest. 5. Must maintain the property’s essential qualities and is liable for damages but can claim compensation for useful improvements. Fideicommissary 1. Right to receive fideicommissary property upon fulfilment of the condition. 2. The Fideicommissary does not need to be alive at the testator’s death but must be alive or conceived by the transfer time. 3. If the fideicommissary dies before the condition is fulfilled, the fideicommissum may fall away, and the fiduciary may acquire full ownership unless stated otherwise in the will. 4. Generally holds a personal right after the testator’s death, with the right being actual and existing but not vested and can take steps to protect their interest as an interested party. Presumption against Fideicommissum The distinction between direct and fideicommissary substitution is crucial when interpreting a will, as a Fideicommissum limits the ownership of the fiduciary and all fideicommissaries except the final one. Common law generally opposes fideicommissa due to the burdens they impose on beneficiaries, but the presumption against fideicommissa arises only when there’s doubt about the testator’s intention regarding direct versus fideicommissary substitution. The presumption does not apply when determining whether the testator intended a fideicommissum or a usufruct, as both can impose similar burdens, however, in cases of reasonable doubt about the testator’s intent regarding substitution types, there is a presumption in favour of direct substitution. Van Zyl v Van Zyl : Clarified that fideicommissary substitutions should be honoured when the will’s wording explicitly supports it. Usufruct and Accrual Usufruct : A legal arrangement where ownership of property is given to one person (dominus) while another person (usufructuary) has the right to use, enjoy, and take the fruits from the property. 1. Duration : Usufruct typically lasts for the lifetime of the usufructuary. 2. Property Return : The usufructuary must return the property to the dominus while preserving its substantial quality. 3. Vested Ownership Rights : The dominus obtains a vested right (dies cedit) upon the testator’s death but cannot use or enjoy the property until a future event (like the usufructuary’s death) occurs. 4. Dominus’ Death : If the dominus dies before the usufructuary, ownership passes to the dominus’s beneficiaries but remains subject to the usufruct. 5. Vested Rights of Usufructuary : Usufructuary’s rights (dies cedit and dies venit) arise at the testator’s death but end when the usufructuary dies. Both usufruct and fideicommissum involve a right to use property, but usufruct does not confer ownership, while fideicommissum does. The fiduciary in a fideicommissum holds a real right that transfers to the fideicommissary at a certain time.  a. Usufructuary : Not the owner, has limited real rights, cannot become the owner. b. Fiduciary : Owner of the asset, can become the full owner, ownership may pass to beneficiaries if the fiduciary dies. Common Law Accrual : The right of co-heirs or co-legatees to inherit a share from a beneficiary who cannot or does not wish to inherit. Circumstances of Accrual 1. Predeceased co-heir or co-legatee 2. Disqualified to inherit 3. Repudiation of the benefit 4. Unfulfilled suspensive conditions Accrual only applies if there is no substitution provision by the testator or under section 2C(2) of the Wills Act.