Changes in Trust administration at the Master’s Office Part two: Amendment and Deregistration of Trusts

Recently we published an article about the changes in the way the Master’s Office deals with Trust Administration in terms of a Circular issued in March 2017.  Some of the other important implications of the amended procedures are:

Amendment of Trusts:

  • The Master will in future ensure that amendments comply with the prescribed provisions regarding amendments, and will not amend any protected provisions of a Trust Deed.
  • Inter Vivos Trusts can be amended without the consent of the Beneficiaries with vested rights, if the Trust Deed expressly permits the amendment thereof by the Trustees, and as long as the amendment falls within the conditions for amendment as set out in the Trust deed. If the amendment clause does not refer to Beneficiaries, the consent of all the Beneficiaries with vested rights should still be obtained.
  • Testamentary Trusts cannot be amended by the Trustees and Beneficiaries of the Trust, although Beneficiaries may renounce their rights.

Deregistration of Trusts:

Reasons for the termination, as well as proof that the Trust has no further assets or liabilities to be submitted to the Master.

Special Trusts:

The administration of Special Trusts and Trusts created for the receipt of Road Accident Fund Compensation, are contained in the Master’s Circular.

Should you wish to discuss what the impact of the changes would be in respect of a specific Trust Deed, or need assistance with any Trust related administration, you are most welcome to contact our Trust Administration Department today.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Changes in trust administration at the Master’s Office Part one: Trustees

The Master of the High Court recently published a Circular which changes the way in which Trust Administration is handled by the Master’s Office.  Some of the most important implications of the changed procedures are:

Independent Trustees:

  • Updated requirements and amended forms to be completed by Independent Trustees
  • The Master must, when a Trust is registered for the first time, and is a “family business unit”, consider appointing an Independent Trustee

Appointment of Trustees:

  • Identity of Trustees are to be confirmed with certified copies of Identity Documents
  • New rules prescribed for the way in which a corporate Trustee is replaced
  • Confirmation that the Master may refuse the appointment of a Trustee only under certain circumstances
  • In case of a change in Trustees, the Letters of Authority are to be returned to the Master
  • Before dealing with Trust Assets, Trustees need to be authorized to act as Trustees in terms of a Letter of Authority issued by the Master

Resignation of Trustees:

  • If the Trust Deed makes provision for the resignation of a Trustee, those procedures are to be followed
  • If no provision is made for resignation, notice should be given to the Master and Beneficiaries with vested rights in terms of Sec 21 of the Trust Property Control Act, 1988.

Should you need assistance with any Trust related administration, or would like to discuss what the impact of the changes would be in respect of a specific Trust Deed, please contact our Trust Administration Department today.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Changes in trust administration at the master’s office Part two: amendment and deregistration of trust

Recently we published an article about the changes in the way the Master’s Office deals with Trust Administration in terms of a Circular issued in March 2017.  Some of the other important implications of the amended procedures are:

Amendment of Trusts:

  • The Master will in future ensure that amendments comply with the prescribed provisions regarding amendments, and will not amend any protected provisions of a Trust Deed.
  • Inter Vivos Trusts can be amended without the consent of the Beneficiaries with vested rights, if the Trust Deed expressly permits the amendment thereof by the Trustees, and as long as the amendment falls within the conditions for amendment as set out in the Trust deed. If the amendment clause does not refer to Beneficiaries, the consent of all the Beneficiaries with vested rights should still be obtained.
  • Testamentary Trusts cannot be amended by the Trustees and Beneficiaries of the Trust, although Beneficiaries may renounce their rights.

Deregistration of Trusts:
Reasons for the termination, as well as proof that the Trust has no further assets or liabilities to be submitted to the Master.

Special Trusts:

The administration of Special Trusts and Trusts created for the receipt of Road Accident Fund Compensation, are contained in the Master’s Circular.

Should you wish to discuss what the impact of the changes would be in respect of a specific Trust Deed, or need assistance with any Trust related administration, you are most welcome to contact our Trust Administration Department today.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

5 Reasons to do Estate Planning TODAY

Drawing up a Will and doing Estate Planning may sound like hard work, but here are some reasons why you should do this TODAY:

  1. It means that you are providing for your loved ones:

In addition to looking after your health and the health of your family, you also should be planning for their financial wellbeing after your death.  None of us wants to think about dying, but to neglect planning for it can be disastrous for your family.

  1. No estate is too small for planning:

Even if you think that you do not own much, you need to plan for somebody to be appointed as Executor of your Estate.  You have to make provision for a Guardian if you have minor children, and plan how inheritances of minors should be managed after your death.

  1. With proper advice, the process is not complicated:

You may think that Estate Planning is complicated and difficult.  Now is the time to discuss with our experts the questions you have.  They can explain the process, and advise on which documents you need to have drawn up.

  1. Estate Planning need not be time-consuming:

Once you have discussed the basics with one of our experts and taken the important decisions, most of the planning process can be done via email or the telephone.  We will then finalize the documents for your signature, and assist you with the formalities.

  1. Spending money now will save money later:

Yes, it will cost money to have an attorney draw up your Will and Estate Plan, but having a properly drawn up Will, which has been executed (signed) correctly, ensures that there will be no complications after your death.  If your Estate Plan is updated regularly to take into account any changes in legislation, you also ensure that no unnecessary taxes are paid after your death.

Should you want to draw up a Will, or update your Will, or simply check that your Estate Plan still meets your needs, you are most welcome to contact our Trust and Estate Planning Department today.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

 

Managing the administration of a deceased relative’s estate

The Administration of Estates Act, 1965, determines what must happen with an estate after a person’s death, to ensure that the process is properly managed. This is particularly important if it is a large estate, the assets are varied and there are potential family disputes.

Finding the Will

The first thing to do is to find the Will. If the Will cannot be found among the papers of the deceased, places to call include the deceased’s life insurance company, bank or attorney.

Who is the executor?

An executor is the person appointed to handle the process of settling the estate. The executor will either be nominated in the Will or nominated by the beneficiaries, if there is no nomination in the Will or no Will can be found. The executor is appointed by the Master of the High Court after, inter alia, taking such nominations into consideration. The Master will ultimately decide who will be the executor. If the chosen executor is unfamiliar with the legal procedure, he or she can approach an attorney for help. Once the executor has been determined, the Master will issue a “Letter of Executorship”, which gives the authority to administer the estate.

What must the executor do?

The executor’s responsibilities include:

  • arranging for valuation of the assets of the estate.
  • contacting and dealing with all the beneficiaries.
  • arranging provisional payments for the family’s immediate needs.
  • opening a bank account for the estate and depositing the estates money in it.
  • paying all the necessary estate duties.

The executor needs the Letter of Executorship to carry out these duties.

Eventually, the executor will prepare a liquidation and distribution account, setting out all assets, and debts, and how the assets will be distributed to beneficiaries.  This account must be delivered to the Master, who will check that the executor’s actions reflect the ill of the deceased and that all legal requirements have been fulfilled.

Important things to keep in mind

Whenever any person dies inside or outside the Republic of South Africa leaving any property or a Will, then the death of such a person must be reported to the Master of the High Court by completing a prescribed Death Notice form.

References

The Department of Justice and Constitutional Development: “Reporting the estate of the deceased”. Accessed from: http://www.justice.gov.za/services/report-estate.html/ on 11/05/2016.

Administration of Estates Act 66 of 1965. Accessed from: http://www.justice.gov.za/ on 11/05/2016.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Interest free loans to trust – not so free anymore?

By Sisteen Geyser

If a Trust owes you money on loan account and the loan is interest free, or the interest rate charged on the loan is below the official rate of interest (currently 8%), you will be liable for donations tax on the deemed interest on the loan from 1 March 2017.

The new tax legislation was imposed to reduce the use of trusts in estate planning which traditionally has the effect of reducing estate duty and donations tax.

Sec 7C of the Income Tax Act is applicable to all interest free or low interest loans (affected loans), including loans in existence, made to a trust directly or indirectly by a natural person, or company that is a connected person in relation to that natural person, and means the interest foregone will be treated as an ongoing and annual donation made to the trust.

Typically, this will be applicable where a person sold an asset to a trust on loan account at a rate lower than the official rate, and/or where the trustees of a trust made a distribution to trust beneficiaries and the beneficiaries loaned the money back to the trust.

There are a few exceptions to this rule:

  • A loan made to a Trust that was used to buy a residence that is used by the lender or the lender’s spouse as a primary residence.
  • Loans to Special Trusts that are created solely for the benefit of minors with disabilities.
  • A loan by a trust beneficiary to a trust that qualifies as a bewind trust, i.e. a trust that holds and administers assets, the ownership of which vests in that beneficiary, for and on behalf that beneficiary.
  • Loans to Public Benefit Organisations Trusts.
  • Depending on the exact terms of the Trust Deed, some loan accounts in respect of distributions to beneficiaries may also not be subject to the deemed donation tax.

The common practice of reducing the lender’s taxable assets by cancelling or waiving the loan to the trust has also been affected by the legislation, which now provides that no deduction, loss, allowance or capital loss may be claimed in respect of interest free loans or low interest loans made to trusts.

However, the annual Donations Tax exemption of R 100 000 will still apply to the deemed donation in terms of Sec 7C, so that donations tax will not be payable if the deemed interest on the loan is less than R 100 000 per year.

Should you have such an affected loan account with a trust, we urge you to contact our Trust and Estate Planning Department. We can check the trust deed and the way in which existing loan accounts came about; and advise on how distributions to the beneficiaries should in future be made, in order to reduce the adverse effects of this new legislation.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Standard acknowledgements of debt and the National Credit Act (NCA)

The new NCA does not only regulate installment sale agreements and lease agreements in respect of movables as was done by its predecessor, the repealed Credit Agreements Act 75 of 1980. The NCA also applies to a much wider variety of credit agreements and has no monetary cap. Instead of instituting legal action a creditor often gets a debtor to sign an acknowledgement of debt to facilitate repayment. This document could contain a provision for instalments and interest and fees. The question arises whether this agreement in confirmation of an existing obligation constitutes a credit agreement for purposes of the NCA.The purpose of this Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers.

“Credit”, when used as a noun, is defined in the Act as a deferral of payment of money owed to a person or a promise to defer such payment; or a promise to advance or pay money to or at the direction of another person.

“Agreement” includes an arrangement or understanding between or among two or more parties which purports to establish a relationship in law between those parties.

The parties to a credit agreement governed by the NCA are referred to as the “consumer” and the “credit provider” and these definitions should be considered. An acknowledgement of debt normally refers to a historical event of cause and does not constitute a credit guarantee or any of the named credit transactions such as a pawn agreement, discount agreement, incidental credit agreement, instalment agreement, lease, secured loan or mortgage agreement or credit facility. However, the fact that it contains a deferral of payment and requires the payment of interest, fees and other charges, will cause it to fall within the ambit of the catch-all term “credit transaction” provided for in Section 8(4)(f) of the Act.

Section 2(1) provides that the Act must be interpreted in a manner that gives effect to the purposes set out in Section 3. The question really is whether the legislature intended the rearrangement or the repayment terms of an existing debt, for instance where money has already been advanced to a consumer a considerable period of time ago or where damages were suffered as a result of a delict or breach of contract, to constitute a credit agreement or transaction for purposes of the NCA. Due to the elements of deferral and the charging of interest, fees and other charges in a standard acknowledgement of debt, and in the absence of any express or implicit indication to the contrary, it seems an inescapable conclusion that the agreement could be defined as a credit agreement within the meaning of the NCA. The relevance of this is that it might be that the credit provider would be required to register as such with the National Credit Regulator, affordability assessment would have to be done prior to conclusion, the consumer could become overindebted and apply for debt review, and so many onerous requirements will be applicable.

It is submitted that where the cause of action in relation to which the acknowledgement of debt was entered into is based on a contract or agreement which constitutes a credit agreement, the insertion of a no-novation clause into an acknowledgement of debt will not serve to exclude the agreement subsequently concluded, from the ambit of the NCA. However, where the debt initially arose as a result of a delict, the insertion of a no-novation clause might have the effect of preserving the original cause of action, namely the delict, and thus cause the matter to fall outside the scope of the NCA.

One thing to be kept in mind is that a “consumer”, in respect of a credit agreement to which the NCA applies, means

the party to whom goods or services are sold under a discount transaction, incidental credit agreement or instalment agreement;

  •  the party to whom money is paid, or credit granted, under a pawn transaction;
  •  the party to whom credit is granted under a credit facility;
  •  the mortgagor under a mortgage agreement;
  •  the borrower under a secured loan;
  •  the lessee under a lease;
  •  the guarantor under a credit guarantee; or
  •  the party to whom or at whose direction money is advanced or credit granted under any other credit agreement.
  • This definition might provide the answer as the acknowledgement of debt might, as a different cause of action, not qualify the consumer under the above definition. So, too, is the underlying cause of action to the acknowledgement of debt, and it deserves no debate that signing an acknowledgement of debt is not something to go about without due consideration.

Should a court be convinced that the written acknowledgement of debt is subject to the NCA the court could be required to make a ruling in terms of Section 130(4)(b) of the NCA, which states:

In any proceedings contemplated in this section, if the court determines that – … the credit provider has not complied with the relevant provisions of this Act, as contemplated in subsection (3)(a), or has approached the court in circumstances contemplated in subsection (3)(c) the court must – adjourn the matter before it; and make an appropriate order setting out the steps the credit provider must complete before the matter may be resumed.

In Adams v SA Motor Industry Employers Association 1981 (3) SA 1189 (A) at 1198 – 1199, the court held that there is a presumption against novation and that, where novation was not intended, it was possible for two obligations to co-exist. These obligations would be interdependent, and the creditor does not have a free election to enforce the original obligation. An acknowledgment of debt, sometimes referred to as an IOU, is evidence of a debt which is due, but differs from a promissory note as it does not contain an express promise to pay. However, where the acknowledgment of debt is coupled with an undertaking to pay, it will give rise to an obligation in terms of that undertaking.

The case of Rodel Financial Service (Pty) Ltd v Naidoo and Another 2013 (3) Sa 151 (Kzp), and its annotations is recommended for reading and getting a better understanding of the applicable principles.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Dealing with marriage and estate planning

It is important to understand the legal implications of the marital property regime, especially when drafting a Last Will and Testament and also when entering into a marriage, as the regime chosen by the estate planner is going to affect his/her assets.The most important forms of marriage are: marriage in community of property, marriage out of community of property (without accrual), and marriage out of community of property (with accrual).

Marriage in community of property

1. There is no prior contractual arrangement, apart from getting married;
2. Spouses do not have two distinct estates;
3. There is a joint estate, with each spouse having a 50% share in each and every asset in the estate (no matter in whose name it is registered);
4. Applies to assets acquired before the marriage and during the marriage;
5. Should one spouse incur debts in his own name it will automatically bind his/her spouse, who will also become liable for the debt;
6. If a sequestration takes place (in the case of insolvency), the joint estate is sequestrated.

Marriage out of community of property without the accrual system

1. An antenuptial contract (ANC) is drawn up by an attorney (who is registered as a notary), before the marriage;
2. Where there is no contract, the marriage is automatically in community of property;
3. The values of each spouse’s estate on going into the marriage are stipulated in the contract;
4. A marriage by ANC means that all property owned by spouses before the date of the marriage will remain the sole property of each spouse;
5. Each spouse controls his/her own estate exclusively without interference from the other spouse, although each has a duty to contribute to the household expenses according to his/her means;
6. To allow for assets acquired by spouses during the marriage to remain the sole property of each spouse, the accrual system must be specifically excluded in the ANC.

Marriage out of community of property with the accrual system

1. The accrual system automatically applies unless expressly excluded in the antenuptial contract;
2. The accrual system addresses the question of the growth of each spouse’s estate after the date of marriage.

Estate planning

Donations between spouses are exempt from donations tax and estate duty.

Marriage in community of property

1. In the event of the death of one spouse, the surviving spouse will have a claim for 50% of the value of the combined estate, thus reducing the actual value of the estate by 50%. The estate is divided after all the debts have been settled in a deceased estate (not including burial costs and estate duty, as these are the sole obligations of the deceased and not the joint estate).
2. When drafting a Last Will and Testament, spouses married in community of property need to be aware that it is only half of any asset that he or she is able to bequeath.
3. Upon the death of one spouse, all banking accounts are frozen (even if they are in the name of one of the spouses), which could affect liquidity.
4. Donations or bequests to someone married in community of property can be made to exclude the community of property; in other words, if the donor stipulates that the donation must not fall into the joint estate, then the donee can build up a separate estate. However, returns on such separate assets will go back to the joint estate.

Marriage out of community of property without the accrual system

Each estate planner (spouse) retains possession of assets owned prior to the marriage.

Marriage out of community of property with the accrual system

A donation from one spouse to the other spouse is excluded from the calculation of each spouse’s accrual; in other words, the recipient does not include it in his growth and the donor’s accrual is automatically reduced by the donation amount.

Divorce

In the event of divorce, the marriage will be dissolved by court decree, which will address such aspects as child maintenance, access, guardianship and custody, spousal maintenance, the division of assets, division of pension interests and so on.

Cohabitation and definition of “spouse”

Cohabitation is defined as a stable, monogamous relationship where a couple who do not wish to or cannot get married, live together as spouses. The Taxation Laws Amendment Act has extended the definition of “spouses” to include “a same sex or heterosexual union which the Commissioner is satisfied is intended to be permanent”.

Many pieces of legislation, including the Pension Funds Amendment Act and the Taxation Laws Amendment Act, now define spouse to include a partner in a cohabitative relationship, the effects of which are that cohabitees will benefit from the Section 4(q) estate duty deduction in the Estate Duty Act, and the donations tax exemptions of the Income Tax Act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Implications of estate duty

Estate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

  1. Insurance policies
  • Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.
  • The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.
  • If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.
  • Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.

      2. Donations at date of death

Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.

      3. Claims in terms of the Matrimonial Property Act (accrual claim)

An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.

     4. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions

Some of the most important allowable deductions are:

  1. The cost of funeral, tombstone and deathbed expenses.
  2. Debts due at date of death to persons who have their ordinary residence in South Africa.
  3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.
  4. Foreign assets and rights:
  • The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.
  • However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.
  • Debts and liabilities due to non-residents:

5. Debts and liabilities due to non-residents are deductible but only to the                      extent that such debts exceed the value of the deceased’s assets situated                outside South Africa which have not been included in the dutiable estate.

  1. Bequests to certain public benefit organisations:
  • Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes
  1. Property accruing to a surviving spouse [Section 4(q)]:
  • This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.
  • Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).
  • Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.
  • Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

The Living Will

Most people are familiar with a will or testament and understand the importance of having this legal declaration drafted, by which the testator nominates an executor to manage his or her estate and provide for the distribution of his or her property to beneficiaries when he or she dies.

But how many people have considered drafting a living will?

A living will does not deal with assets, heirs and beneficiaries, but with the philosophy of death and dying, and should be considered carefully and drafted by a professional.

A living will is a legal document expressing a person’s wishes regarding life-prolonging medical treatment when that person can no longer voice his or her wishes. It is also referred to as an advance medical directive.

A typical clause in a living will would read as follows:

If the time comes when I can no longer take part in decisions for my own future, let this declaration stand as my directive.

If I suffer from physical illness or impairment expected to cause me severe distress, rendering me incapable of rational existence, from which there is no reasonable prospect of recovery, I withhold my consent to be kept alive by artificial means and do not give my consent to any form of tube-feeding when I am dying; and I request that I receive whatever quantity of drugs and intravenous fluids as may be required to keep me comfortable and free from pain even if the moment of death is hastened. I withhold my consent to any attempt at resuscitation, should my heart and breathing stop and my prognosis is hopeless.

The living will tells the doctor and family that the patient does not consent to being kept alive artificially. It speaks for the patient at a time when the patient may be unable to communicate.

South African law and most religions accepts the validity of the living will, but none of the main religions accept euthanasia.

Euthanasia is against the law. Sean Davison, the respected UWC professor who helped his 85-year-old terminally ill mother, Patricia Ferguson, die in New Zealand by preparing a lethal dose of morphine, was arrested in New Zealand in September 2010 on an attempted murder charge.

It is important to have a properly drafted, legal living will to avoid far reaching and traumatic consequences for the loved ones that stay behind.

Many lawyers who practice in the area of estate planning include a living will and a health care power of attorney in their package of estate planning documents.

The advantages of a living will

  1. The directives respect the patient’s human rights, and in particular his or her right to reject medical treatment.
  2. It encourages full discussion about end-of-life decisions.
  3. It also means that the medical staff and caregivers are aware of the patient’s wishes, and knowing what the patient wants means that doctors are more likely to give appropriate treatment.
  4. It will avoid the situation where the patient’s family and friends have to take the difficult decisions.

Disadvantages of a living will

  1. Drafting this document can be very depressing.
  2. The person may still be healthy and not in a position to actually imagine that he or she could ever be in the position where they would voluntarily give up living.
  3. When the time comes to act on the living will the patient might have changed his or her mind and it is then often difficult to amend the document.

Important points to consider

  1. The living will should not be incorporated or attached to the last will and testament, which is only acted upon after death.
  2. A living will does not become effective unless the patient becomes incapacitated; until then the patient will be able to choose appropriate treatment.
  3. A certificate by the patient’s doctor and another independent doctor certifying that the patient is either suffering from a terminal illness or permanently unconscious, is required before the living will becomes effective. In the case of a heart attack, the living will does not take effect. A living will is only executed when ultimate recovery is hopeless.
  4. You have to notify your doctor and family of your living will and preferably have copies of the document available for the doctor, hospital and family.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)