Topic 7: Devises and Legacies

Question 0

What are the types of legacies and devises?

Answer 0

1. Specific legacy or devise
2. General legacies
3. Pecuniary legacies
4. Demonstrative legacies
5. Residuiary legacies and devises

Question 1

What is the difference between a devise and a legacy?

Answer 1

Devise: A gift of REAL property
Legacy: A gift of PERSONAL property.

Question 2

What is a specific legacy or devise?

Answer 2

This is where the will refers to a particular or identifiable item for example “my house’ or ‘my shares’.

What if an asset is not in existence or the testator does not own it at time of death? Ademption occurs.

Question 3

What are general legacies?

Answer 3

These do not refer to any particular items e.g. 1000 shares to X, or ‘our car’. IT could be any car.
These rarely subject to ademption because they are general dispositions

If at time of death, testator does not own property of that nature, executor must acquire property of that nature.
It will be ademption when the item cannot be purchased or is not existence.

Question 4

What are pecuniary legacies?

Answer 4

They are a gift of money, which will be of general disposition e.g. I give 1k to X

Question 5

What are demonstrative legacies?

Answer 5

This points to a particular asset and says the legacy is to be satisfied FROM THAT asset e.g. 1k out of XYZ bank account.
If this asset does not exist, executor still obliged to pay the beneficiaries that amount.

Question 6

What is residuary legacies and devise?

Answer 6

• These are property which is not specifically bequeathed or devised in a will.
• Usually statements saying “I give rest of residue to all my children in equal shares”.
• It is property that is left over after paying devises, legacies and debts.
• If it is invalid disposition, it is dealt with under the intestacy rules

Question 7

What is a provision to reduce the incidences of residuary dispositions failing?

Answer 7

s33O Succession Act - real property is deemed to include ‘personal property’ unless contrary intention stated. This is because presumption is lay persons don’t know the difference.

Question 8

Is a beneficiary entitled to intermediate income?

Answer 8

• Where the asset is a specific devise of legacy, the intermediate income will go to the beneficiary who receives that specific devise or legacy
• Where the asset is part of residue, the intermediate income becomes part of residue - Re Rooke
• Where asset is general legacy, and no reference to a particular asset which testator owned, can’t identify income that attaches tot that asset.

However note s52(1)(e) Succession act for interest upon general legacy.

Question 9

What is intermediate income?

Answer 9

In the period between the testator’s death and the time which administration is completed, dividends may be paid on shares or interest on money in the bank. This is called ‘intermediate income’.

Question 10

How is interest to be paid on a general legacy?

Answer 10

s52(1)(e) where it is a GENERAL LEGACY only, the executor has a duty to pay interest on the general legacy to the receiver of it on:

1. s52(1)(e)(i) - from anniversary of Testator’s death = 12 months after
2. s52(1)(e)(ii) - if the legacy is payable at a future date, from that date until payment of the legacy to the beneficiary.

Question 11

How much interest must be paid on a general legacy under s52(1)(e)?

Answer 11

s52(1)(e) - a rate of 8%

Question 12

Where the disposition are contingent upon the happening of some event i.e. in the future, does the beneficiary still receive the intermediate income on the asset?

Answer 12

s33H Succession Act - it includes intermediate income. Same rules apply in s33O from beginning of date when they have to pay intermediate income.

Question 13

What are the four things that can cause a failure of legacy or devise?

Answer 13

1. Ademption
2. Lapse
3. Intestate
4. Family Provisions

Question 14

What is ademption?

Answer 14

Ademption is when the asset referred to in the disposition:

1. Does not exist at the time of death; or
2. Is no longer owned by the testator at the time of death.

Question 15

What is a second method to reduce situations of ademption?

Answer 15

s33E Succession Act - the will, general dispositions will be read as if executed upon testator’s death unless there is contrary intention (s33E(2)).
That is what they have at the time.
For example if the will says “my car” to x, then it although the testator may have a different car at the time of making the will, the car that the testator has at the time of the death will be substituted.
However if the language indicates “my motor Car GT XX
, then it is that car that must be given. Where that specific asset no longer asset exists, then the disposition will be adeemed.

Question 16

What is an example of s33E - will read at time of death?

Answer 16

Will of Smith

Question 17

What are the facts in Will of Smith?

Answer 17

• The disposition in the testator’s will referred to his house and land on a particular street.
• At the time of making the will, he owned NO 44 on that street.
• At the time of his death, he owned No 46 on that street.
• 1916 case, so s33E doesn’t apply but can be used for interpretation

Court held:
1. Will is read at the date of his death, so the language “my house and land on the particular street” is capable of referring to either No 44 or No 46.

Question 18

How does a legacy or devise fail by lapse?

Answer 18

Lapse occurs where the intended beneficiary does not survive the testator.

Question 19

What is the relevant section in the Succession Act regarding lapse?

Answer 19

s33B - where the beneficiary dies within 30 days of the death of the testator, he is deemed to have died immediately before the testator, unless the will states to the contrary (2) “If X x survives me 15 days”.

Question 20

Does it amount to contrary intention where the testator simply says that the “beneficiary shall survive me”?

Answer 20

S33B(3) - this is not sufficient to amount to a contrary intention.

Question 21

How does the Succession Act reduce lapse?

Answer 21

S33P - where the residue is in fractional parts (goes to multiple beneficiaries), the part(s) that fails, goes to the part(s) that survive in equal shares (so goes to surviving beneficiaries).

Question 22

How do you calculate what the surviving beneficiaries get under s33P?

Answer 22

If A=1/10, B=3/10 and C=6/10. C dies, his part goes to the surviving beneficiaries
First add up their proportions of survivors: 1/10 + 3/10 = 4/10
Then add the total to the proportions:
A= 1/10 + 1/4
B= 3/10 + 3/4
Then multiply the share of the failed part:
A = 1/10 + 1/4 x 6/10
B = 3/10 + 3/4 x 6/10

Question 23

What happens if the beneficiary under a will, who dies 30 days before the testator, leaves behind issue?

Answer 23

Then s33N applies.

Question 24

When does s33N apply?

Answer 24

1. s3N(1)(a) - where the disposition of the testator is to an issue either by name of class (known as original beneficiary); and
2. s33N(1)(d) - the original beneficiary does not survive the testator for 30 days.

Question 25

What is the effect of s33N?

Answer 25

s33(N)(2) - the ISSUE of the ORIGINAL beneficiary who survives the testator for 30 days, takes the original beneficiary’s share in place of that original beneficiary as if the original beneficiary died intestate WITHOUT A SPOUSE.

Question 26

If s33N(2) applies, where do we go next?

Answer 26

To Schedule 2 Part 2 - intestacy rules without a spouse.

Question 27

What section deals with when a person dies intestate?

Answer 27

s35 Succession Act.
(1) persons entitled to take interest in residuary estate of an intestate; and
(1) interests in the estate which that person is entitled to take
They are both determined by Schedule 2 according to the circumstances.

Question 28

What are the two parts of Schedule 2?

Answer 28

Part 1 - where the intestate IS survived by a spouse

Part 2 - where the intestate IS NOT survived by a spouse.

Question 29

Which part of Schedule 2 do we refer to if s33N applies?

Answer 29

Schedule 2, Part 2, “where intestate is survived by issue” directs to s36A

Question 30

What is the relevance of s36A?

Answer 30

This is to determine how the estate of the intestate original beneficiary is distributed.

(1) - Survive now just means survive, doesn’t mean 30 days any more
(2) - APplies when the issue survives the original beneficiary
(3) - if 1 child, they take the whole
(4) - if more than two child, all of whom survived, they take in equal shares
(5) - if two or more, some survived and some didn’t WHO DIDN’T LEAVE ISSUE, the surviving takes in equal shares
(6) - (5) depends on the child not leaving any issue
(7) where the deceased child leaves issues, they take the child’s share equally by representation (this means divide it further, not add up then divide between all the party).

Question 31

What is the purpose of the family provisions under the Succession Act?

Answer 31

It is an important qualification to the freedom of a person to deal with their estate as they see fit.
The will prevails to the extent that there are people out there who could reasonably expect to have been provided for by the testator’s will but were either not provided for or inadequately done so.

The family law provisions serve as a way to get a provision made for them upon application to the court.

Question 32

What is the provision in the Succession Act that relates to family issues?

Answer 32

s41 Succesion Act

Question 33

When does s41 Succession Act apply?

Answer 33

Where the claimant is:

1. A spouse;
2. Child; or
3. Dependent.

Question 34

What does spouse, child or dependent include under s41 Succession Act?

Answer 34

1. Spouse includes de facto
2. Child includes step child - s40 SA
3. Dependent includes: - s40 SA
   - Parent of deceased person
   - Parent of surviving child under the age of 18 years of that deceased person; or
   - A person under age of 18 years

Question 35

What can a court do if the person falls within 1 of 3 categories in s41 Succession Act?

Answer 35

The court may in it’s discretion:

• Consider whether adequate provision has been made for the claimant in the circumstances; and
• Order such provisions out of the estate that they think fit.

Question 36

What are the facts of Re Cobb?

Answer 36

• The applicant may well have been in a de facto relationship, but at time of applicaiton, ‘spouse’ didn’t include person who was in a de facto relationship with them, so they couldn’t bring themselves within the definition of spouse.
• Instead the claimant argued she was a dependent because they had shared expenses and therefore more expensive to now maintain household.

Court held:
- They accepted the argument and made provision for her.

Question 37

What is the time limit to bring an application under the Family provisions?

Answer 37

s41(8) - the claimant has 9 months from the death of the deceased to bring an application.
This is so that the trust estate does not remain lying around because it does not benefit anybody.

Question 38

Why was s40 enacted regarding the definition of Dependent?

Answer 38

Because of Re Cobb

Question 39

What are the two forms of inadequacy of provision?

Answer 39

1. Adequacy provisions based on need: where the party is arguing they should get more than other parties
2. Moral claims: Arguing that a just and wise testator would have made provision for them. These usually arise where there are large estates.

Question 40

What are the discretionary factors the judge will look at when considering to grant provision?

Answer 40

1. Size of the estate - if it is small, less likely because other costs have to be paid such as costs of litigation
2. How much provision should be granted
3. Whether the person has done something to diminish the value of the estate in some way - if not good chance they will get something
4. What a just and wise testator would have thought when creating the will such as size of estate and who might expect provision
5. Whether the claimant has made any contributions to the pool.

Question 41

Can a person bring a claim under the family provisions in the SA after 9 months?

Answer 41

s41(8) SA: The Supreme Court has a discretion to hear applications made after 9 months, but must have good reason.