The will from hell – why professional advice is essential

Think carefully before making your will. It could create impossible situations for (some of) those you want to benefit.

Here are two real-life case studies to illustrate the challenges that can arise:

Case study 1: The unhappy widow

A man, let’s call him John, wanted to ensure that his spouse would have a place to stay after his death. His will bequeathed his whole estate to a trust with his two daughters as the only trustees and beneficiaries, subject to a lifelong right to his spouse to inhabit the house where they lived.  Sounds good so far.

Nothing else was bequeathed to the spouse and after John’s death the widow was not happy. She instituted a claim against John’s deceased estate under the Maintenance of Surviving Spouses Act for more than R6 million. This act aims to protect surviving spouses against disinheritance by the deceased spouse in circumstances where the survivor has insufficient means of support. However, she did not supply any substantiating information about how she arrived at this amount.

The two daughters were the executors of the deceased estate, although they had the good sense to appoint a knowledgeable agent to do the day-to-day administration of the estate. The two daughters, in their capacities as trustees of the trust inheriting the residue of the estate, instituted a claim of R4 million against the estate because of an alleged loan extended by the trust to their father to purchase the house over which the widow inherited the lifelong right to inhabit.  If both these claims had to be paid, the estate would be insolvent.

The widow, who was not the mother of the two daughters, approached the high court for an order to remove the two daughters as executors. She argued that they have a conflict of interest. The court was not pleased that such a case, which could have been resolved if all parties acted reasonably, eventually made its way into court. The court ordered the removal of the two daughters as executors as they were fatally conflicted by having to consider two competing claims which would influence how much they would benefit from their father’s estate.

Case study 2: the guesthouse dispute

Another man, let’s call him Peter, owned a property on which a guesthouse was situated. His life partner, Kate, managed the guesthouse and his will provided that, in return, she could stay on the property after his death without having to pay rent while continuing to manage the guesthouse.

The property was bequeathed in equal portions to Kate and Peter’s son, James. The net income (profit) of the guesthouse was to be divided equally between Kate and James. However, if James elected to stay in one of the other buildings on the property, he would forfeit his right to half of the profit of the guesthouse. The rest of the estate was also bequeathed in equal parts to Kate and James.

This sounds like a neat solution to look after both Kate and James. In his will Peter also nominated Kate and his previous tax consultant, Anne, as executors of his deceased estate.

During their administration of the estate after Peter’s death, Kate and Anne took a different view to James on several points regarding the interpretation of Peter’s will. They also refused to supply James with information about their administration of the estate and the income generated by the guesthouse because, they argued, the guesthouse was not an asset in the estate. They said Peter clearly intended Kate to have all say over the guesthouse and that James only inherited half the property and not the guesthouse.

James approached the court to have them removed as executors because of Kate’s conflict of interest and Anne’s lack of impartiality, and for a proper interpretation of the will.

The court agreed with James that he was a co-owner of the property, was entitled to half the profit of the guesthouse and would only lose the latter if he moved into one of the buildings on the property. The court also removed the executors for conflict of interest and lack of impartiality.

Executor conflicts

These two cases, both before the high court in less than four years of each other, illustrate some very important points:

• The risk of a conflict of interest becomes very real if you make a close relative, spouse or life partner the executor in your estate, except if the surviving spouse inherits everything.
  
  
• Get professional advice whenever a second spouse or partner, as well as children from a previous relationship, are involved.
  
  
• Get professional help to draft your will to avoid disputes about interpretation.
  
  
• The executor in a deceased estate and a trustee in a trust are placed in a position of trust and are subject to a duty to act in an impartial way in the best interests of the estate or trust and all who may benefit from it.