Fiduciary Glossary

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Assumed

Other persons nominated by the executor to be appointed as co-executor to assist the Executor of the estate.

Annexures

This is an annexure to the will in which a variety of items are specified to be divided among specific heirs.

Beneficiary

A person receiving a benefit.

Bequeath

To award something to someone by means of a Will (to give).

Capital gains tax

This is a new prospective tax on capital gains. It was implemented in October 2001.

Capitalize

The income is reinvested and will be added to the capital.

Co-Trustee

More than one person or institution appointed to administer the assets in a trust (capital and income) for the benefit of the beneficiary until termination of the trust.

Codicil

Addition to an existing will. It must comply with the same laws as applicable to wills.

Creditors

Persons who claim what is due to them.

Declare

Official declaration of your decision.

Direct

Command or order.

Discountable

To realise before the expiry date, with the deduction of a certain amount by way of a discount.

Discretionary Trust

This is a trust created in your will in which the Trustees are empowered to provide in their own discretion for the needs of the heirs concerned.

Estate

All a person's assets and liabilities.

Estate duty

A R3,5 million deduction is allowed for each estate. No estate duty is payable where the nett taxable estate (assets less liabilities and administration expenses and less bequests and other rights, such as a usufruct, to the surviving spouse), is less than R3,5 million. Estate duty is payable at the rate of 20% of the nett taxable amount.

This deduction, or part thereof, is portable between spouses. The estate of the surviving spouse will benefit from a double deduction at the time of the surviving spouse’s death (i.e. 2 times the current R3.5 million), less the amount used by the estate of the predeceased spouse (which can never exceed the R3.5 million amount). 

Estate planning techniques

These are estate plans you implement to reduce estate duty, income tax, VAT, CGT, etc.

Execute

To validate by signing.

Executor

The executor is the person or institution nominated in the will or by interested parties and whom the Master of the High Court will appoint to administer the estate. 

Expert

A person with extensive and proven knowledge and experience of estate planning, wills, trusts and deceased estates as well as all laws and estate planning techniques that are involved.

First dying

The person who dies before another one. It will be either one of the spouses in a marriage/Civil Union.

Guardian

In the absence of a natural guardian, one may be nominated in a will. Such a guardian must first be appointed by the Higher Court (or Children’s Court) before he can act as such. The function of a guardian is to assist the minor in matters in which he is legally incompetent to act. The guardian must be exempt from furnishing security or he/she must provide the Master of the Higher Court with security. The guardian is not necessarily the person in whose care the minor is, but this is usually the case. Normally the trustees of the testamentary trust will administer the assets, while the guardian will administer the property and take care of the person of the minor child/children.

Heir

A person or institution who benefits from a will.

Husband (spouse)

The man with whom a woman is married.

Inheritances

After the bequest of legacies has been detailed, the distribution of ordinary inheritances is set out. The inheritances will come out of the residue (balance) of the estate, after legacies (if any) have been distributed.

Intestate succession act

This is the law that prescribes how your estate will be divided, should you die without leaving a valid will (that is if you die intestate).

Inter Vivos Trust

This is a trust that you register and implement during your lifetime.

Issue by representation per stirpes

'By representation per stirpes' means that where a beneficiary predeceases the testator, his portion will devolve upon his children (the children of the beneficiary). In other words, if some of the children have already died, the predeceased child's inhereitance is divided equally amongst that child's children (including legally adopted children).

Joint will

A single document incorporating the instructions (will) of two or more persons which deals with the disposal of their estates at the death of any one of them.

Legacies

A legacy is a preferential bequest of specific assets before other inheritances (for instance, the residue of the entire estate) can be taken into account. There is also a pre-legacy which is regarded as one having priority over an ordinary legacy. Such bequests are usually stated first of all when inheritances are detailed in the will.

Life-long partner

The man or woman in a civil union.

Liquidate

This refers to the selling of the assets of a company, close corporation or a partnership, the payment of the liabilities and the pay over of the residue to the shareholder, member or partner.

Married in community

The parties are married without a contract (according to the laws of South Africa) and they both own the joint estate (assets and liabilities).

Married out of community of property

The parties are married (according to the laws of South Africa) by an ante nuptial contract. There is no community of property and both parties own their own estate (assets and liabilities).

Master of the High Court

There are Master's offices in Bloemfontein, Cape Town, Kimberley, Umtata, Grahamstown, Durban, Pietermaritzburg, Pretoria, Thohoyandou, Port Elizabeth, Johannesburg, Mmabatho, King William's Town and Polokwane with a Master in charge of each of the offices. The Master is been assisted by deputies, assistants and other personnel. They usually take control over deceased estates, insolvent estates, minor's interests, curators and guardians.

Minor

A person under the age of 18 who has not been emancipated.

Natural guardian

Both biological parents are the natural guardians of a minor child.

Per stirpes

'By representation per stirpes' means that where a beneficiary predeceases the testator, his portion will devolve upon his children (the children of the beneficiary). In other words, if some of the children have already died, the predeceased child's inhereitance is divided equally amongst that child's children (including legally adopted children).

Power of assumption

The power of assumption means that an executor, guardian or curator, nominated in a will, can appoint another person to assist him.

Prodigals

Persons that waste money and cannot handle their own financial affairs beneficially.

Public auction

This refers to the selling of an asset by public auction. The potential buyers bid against each other under the leading of the auctioneer, and usually the highest bid will be accepted. It must comply with several laws and it must be advertised very well.

Public tender

This refers to the selling of an asset by public tender. The public are invited (usually through the press), to provide a written tender on a spesific date. The highest tender will usually be accepted.

Representation

'By representation per stirpes' means that where a beneficiary predeceases the testator, his portion will devolve upon his children (the children of the beneficiary). In other words, if some of the children have already died, the predeceased child's inhereitance is divided equally amongst that child's children (including legally adopted children).

Residue

The portion of the estate remaining which has not been specifically bequeathed. Unless the entire estate is specially bequeathed, a residuary heir must be nominated.

Revocation clause

It is important that the testator, when making a new will, should revoke all previous wills, codicils, or any other document of a testamentary nature that he may previously have made individually or jointly with someone else, if it is his intention that they should be revoked. If he fails to do this, the provisions of such previous documents remain in force, and they will be read together with the new will. If there are contradictory provisions in an old and a new will, the provisions of the latter will apply. If a new will omits reference to assets bequeathed in an older will the stipulation in the old will as it concerns those assets can still be valid. The testator can also of course destroy a previous will, which will then not exist at his death.

If a testator dies within three months from the date of his divorce or annulment of his marriage, his will shall be interpreted as though his former spouse had died before the dissolution of the marriage. However, should the testator have clearly indicated in his will that his former spouse must benefit despite the dissolution of the marriage, his wishes will be carried into effect. (Sec. 2B.)

It is also important that a will is dated.

Security

Where a cash amount or movable property due to a minor or unborn child is subject to a usufruct or fiduciary right, security will be required except when explicitly stipulated otherwise in the will. The law does not lay down any stipulations regarding the nature of the security and the Master normally requires a deed of suretyship or a mortgage bond. It regularly happens that wills do not contain stipulations in this regard and that security is then required but cannot be provided. If the will does not contain stipulations that it is not necessary to provide security, it is normally a mistake. If the legator however feels that security must be provided, it is better to put a testamentary trust into effect.

An executor must always provide security, unless he/she is the parent, spouse or child of the deceased, or the will or a court of law has exempted the executor from providing security.

Single will

A single document incorporating the instructions (will) of one person which deals with the disposal of his/her estate at the death of him/her.

Spouse

The man or woman in a marriage or a partner in a civil union.

Survivor

A person surviving another.

Testamentary writings

A document containing your wishes (similar to that of a will).

Testator

A male person for whom a will is drawn up.

Testatrix

A female person for whom a will is drawn up.

To realize

To sell an asset.

To realize trust assets

To sell an asset of a trust.

Trust assets

The capital and assets of a trust under the administration of trustees.

Trust

A legal entity created to protect the assets or money of another - usually minor heirs. A testamentary trust is created in a person's will, while an inter vivos trust is already created during his lifetime.

Trustee

A person or institution appointed to administer the assets in a trust (capital and income) for the benefit of the beneficiary until termination of the trust.

Unmarried

A person that is currently not married.

Wife (spouse)

The woman to whom a man is married.

Will

A legal document in which is recorded the free and independent wishes of the testator/testatrix in respect of the distribution of the assets in his estate.

Witness

A witness to a will must be at least 14 years of age and must be competent to testify in a court of law. The testator must sign the will in the presence of the two witnesses or acknowledge in their presence that the signature is his. It is not necessary for the witnesses to know that the document that is signed is a will. They merely acknowledge that the signature is that of the testator and that at the time of the signing he was of sound mind and not acting under duress.