Monthly Archives: June 2014

Should I draft a will?

A4blA mother who has always wanted her daughter to inherit her diamond engagement ring may never get her wish if she dies without leaving a valid written will.

The mother’s estate would then be distributed in terms of the Intestate Succession Act No. 81 of 1987.  

Taking the time to draft a will can leave you with the peace of mind that your assets will be distributed according to your wishes as far as possible.

Your will should reflect exactly how you want your assets to be dealt with after your death and should not be contra bonos mores (against good morals). It should also not amount to “ruling from the grave”.

There are a number of legal requirements that have to be complied with for a will to be valid.  If it does not comply with all of these requirements it could be found to be invalid. Your estate would then also be dealt with in terms of the Intestate Succession Act of 1987. It is therefore of the utmost importance that you obtain the assistance of someone with the necessary specialised skill and knowledge to assist you with the drafting of your will.

A will should also regularly be revised and updated to adapt to your changing circumstances, for example after getting married, and when there is a child on the way. Section 2B of the Wills Act No. 7 of 1953 (as amended by the Law of Succession Act No. 43 of 1992) deals specifically with a change in marital status by way of divorce, and reads as follows:

If any person dies within three months after his marriage was dissolved by a divorce or annulment by a competent court and that person executed a will before the date of such dissolution, that will shall be implemented in the same manner as it would have been implemented if his previous spouse had died before the date of the dissolution concerned, unless it appears from the will that the testator intended to benefit his previous spouse notwithstanding the dissolution of his marriage.”

This can be explained by way of the following example: A and B get divorced and B dies within three months of the date of the divorce. B’s will was executed before they got divorced. Unless B’s will specifically indicated that A must benefit from B’s estate despite the divorce, B’s estate will then be distributed as if A died before they got divorced. A will therefore not inherit from B’s estate in this scenario. However, should B die more than 3 months after the divorce and B’s will, which benefits A, was not changed, then it will be seen as if B intended A to inherit, despite the divorce.

A person who was previously married and who remarries, should ensure that the necessary changes are made to his/her will. If not, this could have profound consequences for the “new” spouse, especially if the will still benefits the spouse from the previous marriage.

When there are minor children in the picture, it is advisable to make adequate provision for their living costs and education in your will. This can be done by creating a testamentary trust of which the minor children can be beneficiaries.

Thinking and talking about one’s passing is not a pleasant subject. Having a valid, clear and unambiguous will can prevent unpleasant family feuds caused by them having to make decisions about the distribution of your estate. It is certainly worth the time and effort to have a valid written will in place.

References:

Drafting of Wills 2013 – LEAD

Intestate Succession Act 81/1987

Wills Act 7/1953

Compiled by Riëtte Nel

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.

Dog bites and the financial risk it poses to owners

A2blHaving received a number of matters that ended up in costly litigation we have decided to point out certain risks to dog owners regarding how liability arises and how to manage such risks and protect oneself against potential liabilities.

When a person is bitten and injured by a dog the injured person can institute action against the owner of the dog to recover his/her damages suffered. Guilt on the part of the owner is not a requirement for liability to attach. If the requirements discussed below are met, the injured person need not prove any guilt on the part of the owner of the dog. Thus, irrespective of whether the owner of the dog was negligent or not, the owner can still be held liable for harm caused by his animal.

What must be proven for a successful claim?

In order to succeed with a claim for damages, the injured person must show that:

  1. The person being sued must have been the owner of the relevant animal at the time of the incident. The mere fact that a person is in control of an animal is not sufficient;
  2. The animal is a domesticated animal, which by implication excludes wild animals;
  3. Injury was caused by the actions of the animal acting contrary to the nature of its kind. The animal must have acted differently to what could be expected of a proper and well-mannered animal of its kind. A dog that bites is deeded by our courts to act contrary to the nature of its kind. Where the animal does not act spontaneously but acts due to incitement or other external factors such as a dog that is being teased etc., the animal does not act contrary to its nature when it reacts aggressively;
  4. He/she had a right to be present at the place where the damage was caused. Where a person enters the property of another without invitation, the person will not be able to succeed with this action because the injured person was unlawfully present on the property. 

Defences available to the owner of the dog

Although guilt on the side of the owner is not a pre-requisite, a number of defences are available to the owner of the animal in the case of a claim for damages. Defences available to the owner include the following:

  1. Guilty conduct on the part of the injured person. For example, where the injured person provoked the animal by hitting, throwing objects at or teasing the animal;
  2. Causing of damage by a guilty third party. For example, where another person provokes the dog or hurts or teases the animal with the result that the injured person is attacked;
  3. Provocation by another animal. For example, where another dog attacks the owner’s dog and the owner’s dog in the attack bites the injured person;
  4. Consent to prejudice. Where the injured person expressly or tacitly through his/her conduct consents to prejudice. For example, where a person is bitten by a dog but was pre-warned against the dog and then indicates that he/she is not afraid of dogs – “the dog won’t bite me” – a court should find that the injured person tacitly consented to the prejudice and would the person not be able to claim damages from the owner.

What damages can be claimed?

Where a dog bites a person, the person usually suffers damage, therefore he/she can claim for a wide range of damages, including for pain and suffering, loss of life enjoyment, disfiguration or disability, medical expenses incurred and to be incurred in future, loss of income, etc. All of these damages are in principle recoverable from the owner of the dog. Even a person who witnesses the attack on another person, may as a result of the emotional trauma suffered (and upon proving it) claim for damages.

It is important for owners of dogs to take note of their potential liability for the actions of their animals. This liability may be extensive and owners are encouraged to be serious about the proper control of their animals and to keep the animals within the confines of their property. 

Short Term Insurance

Most short term householder policies will make provision for liability such as this at a minimal cost to the policyholder. Take the time to discuss this with your broker or insurer. Make sure that adequate insurance is in place. A claim such as this can amount to significant proportions. Your insurer can, however, help you cater for such a risk.

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.

The impact of the new BBBEE codes of good practice on your business

A3blThe compilation and verification of a scorecard for an entity in terms of the Broad-Based Black Economic Empowerment (BBBEE) Act is done according to the Codes of Good Practice (the Codes) issued by the Department of Trade and Industry (the dti). The Codes have been amended and the new Codes were gazetted on Friday 11 October 2013. These changes will have a significant effect on the BBBEE strategy of businesses and careful consideration will have to be given to adjustments in this area.

Major changes to the previous Codes include:

  1. The seven elements on the scorecard are reduced to five elements and the weighting of each element has been adjusted as follows:
    • Ownership (25 points weighting)
    • Management Control (15 points weighting)
    • Skills Development (20 points weighting)
    • Enterprise and Supplier Development (40 points weighting)
    • Socio-Economic Development (5 points weighting)
  2. The total score will now amount to 105 instead of the previous 100.
  3. The elements Ownership, Skills Development and Enterprise and Supplier Development are now categorised as priority elements, which means that certain minimum requirements are set for these elements. Large enterprises are required to comply with all the priority elements, whereas Qualifying Small Enterprises (QSEs) have a choice to comply with Ownership and one of the remaining priority elements.
  4. If the minimum requirements set for priority elements are not met, the actual level obtained will be discounted by one level.
  5. The limits for Exempt Micro-Enterprises (EMEs) have been adjusted to enterprises with an annual turnover of between R0 and R10 million (unless a sector charter applies). EMEs will still be deemed to be level four contributors.
  6. QSE limits have been adjusted to enterprises with an annual turnover of between R10 million and R50 million (unless a sector charter applies).
  7. EMEs and QSEs with black ownership of more than 51% will automatically qualify as level two contributors.
  8. EMEs and QSEs with black ownership of 100% will automatically qualify as level one contributors.
  9. Start-up enterprises will still be measured as EMEs during the first year following the formation of the enterprise.

There will be a twelve-month period from 11 October 2013 to 10 October 2014 during which businesses may choose to have their scorecard compiled and verified under either the old Codes or the new Codes. The purpose of this is to give businesses a chance to align and implement their BBBEE strategy to comply with the new Codes. Sector charters also have to align to the new Codes, but it is unclear whether it will be possible or even required to do this during the twelve-month period.

It is crucial to seek expert advice when adjusting any entity’s BBBEE strategy in order to avoid costly mistakes and ensure maximum benefit for the business, while properly complying with the relevant BBBEE legislation. For instance, enterprises that previously relied on an annual Socio-Economic Development grant in order to obtain a required BBBEE level will have to significantly adjust this amount.

Only qualified verification agents accredited under IRBA or SANAS may conduct independent verifications and issue the applicable certificate.

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.

Capital gains tax and the sale of a property

A1blCapital Gains Tax was introduced on 1 October 2001. Capital Gains Tax is payable on the profit a seller makes when disposing of his property.

What is meant by Capital Gain?

A person’s capital gain on an asset disposed of is the amount by which the proceeds exceed the base cost of that asset.

What is base cost?

The base cost of an asset is what you paid for it, plus the expenditure. The following can be included in calculating the base cost:

  1. The costs of acquiring the property, including the purchase price, transfer costs, transfer duty and professional fees e.g. attorney’s fees and fees paid to a surveyor and auctioneer.
  2. The cost of improvements, alterations and renovations which can be proved by invoices and/or receipts.
  3. The cost of disposing of the property, e.g. advertising costs, cost of obtaining a valuation for capital gains purposes, and estate agents’ commission.

How was base cost of assets held calculated before 1 October 2001?

If the property was acquired before 1 October 2001 you may use one of the following methods to value the property:

  1. 20% x (proceeds less expenditure incurred on or after 1 October 2001).
  2. The market value of the asset as at 1 October 2001, which valuation must have been obtained before 30 September 2004.
  3. Time-apportionment  base cost method. Original cost + (proceeds – original cost) x number of years held before 1 October 2001 divided by the number of years held before 1 October 2001 + number of years held after 1 October 2001). 

How is Capital Gains Tax paid?

Capital Gains Tax is not a separate tax from income tax. Part of a person’s capital gain is included in his taxable income. It is then subject to normal tax. A portion of the total of the taxpayer’s capital gain less capital losses for the year is included in the taxpayer’s taxable income and taxed in terms of normal tax tables.

How is Capital Gain calculated?

If you are an individual, the first R30 000 of your total capital gain will be disregarded. Then 33.3% of the capital gain made on disposal of the property must be included in the taxable income for the year of assessment in which the property is sold. When the property is owned by a company, a close corporation or an ordinary trust, 66.6% of the capital gain must be included in their taxable income.

Primary residence and Capital Gains Tax

As from 1 March 2012 the first R2 million of any capital gain on the sale of a primary residence is exempted from Capital Gains Tax. This exemption only applies where the property is registered in the name of an individual or in the name of a special trust. The property should furthermore not exceed 2 hectares. If the property is used partially for residential and partially for business purposes, an apportionment must be done.

If more than one person holds an interest in a primary residence, the exclusion will be in proportion to the interest held by each party. For example, if you and your spouse have an equal interest in the primary residence, you will each qualify for a primary residence exclusion of R1 million. You will also be entitled to the annual exclusion, currently R30 000.

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.