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Absolute control over the acquisition and disposal of your assets is something you enjoy during your lifetime only,” says Yvonne Boden, Estates and Trusts Director at Garlicke & Bousfield Inc. Attorneys. Over the years, judicial and legislative intervention has qualified the long-established principle of freedom of testation, and the provisions of your will are no longer the final word on the distribution of your estate. The Court illustrated this in the Edmund Scarbrow judgment when it held the terms of a will to be invalid because it unfairly discriminated against females and people of the Jewish faith.

Mr Scarbrow’s decision to create a trust in his will to provide bursaries for deserving male students who were of European descent and who were not Jewish was overruled by the Court.

It was held that he could sponsor such students during his lifetime, but on his death this decision became a matter of public concern and his selection was invalid.

Similarly, during your lifetime the decision to contribute towards a pension or provident or other retirement fund governed by the Pension Funds Act does not necessarily give you the right, on your death, to choose the recipients of such funds. The Pension Funds Act provides that on your death, your retirement benefit will be awarded by the Trustees of the Retirement Fund to your dependents, and the identity of those dependents is prescribed by the Act.

The signature of beneficiary nomination forms does not alter the position legally. If you have dependents, the Trustees will award the retirement benefit to such dependents in such proportions as the Trustees deem equitable, despite the fact that your nomination form may specify a different result.

Furthermore, if those dependents are minors, or if the Trustees of the Fund deem this appropriate, they are empowered to pay the retirement benefi t to a trust established on behalf of your dependents. Control over the decisions of the Trustees does not lie with you, the contributing member, and this may influence your selection of beneficiaries or the manner in which your estate should be distributed.

The planning of your estate is a composite exercise which must embrace all these factors – the assets that you do control and those that you do not, and in the case of the latter, an assessment of the likely recipients of such assets. Liquidity demands in your estate are dramatically affected if your cash resources such as insurance policies and retirement funds are paid outside of your estate. The need for an accurate assessment of this cannot be overestimated, particularly when minor children are involved.

(Garlicke & Bousfi eld Inc. prepared this article. For more information, call Director of Estates Yvonne Boden on 031 570 5300.)

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