In South Africa, a minor (a child under the age of 18) cannot inherit in their own right. Most of our clients do not know that an inheritance left to a minor child will not be paid to them, or even to their legal Guardian.
Section 43(2)(a) of the Administration of Estates Act 66 of 1965 provides that money to which a minor beneficiary is entitled may not be paid to the minor’s guardian. The inheritance will be reduced to cash and must be paid over to the Guardian’s Fund (administered by the Master of the High Court).
The appointed Guardian must apply to the Guardian’s Fund for money to maintain and care for the child. There is a cap on the annual amount that the Guardian may apply for, the fund has very low-interest rates and there are other burdensome administrative processes involved.
One of the most effective ways to prevent a cash inheritance due to a minor child from being paid to and administrated by the Guardian’s Fund is by creating a Testamentary Trust in a Will. The inheritance will be left to a Testamentary Trust (to be created after the death of the Testator). The Testator will appoint trustees in his Will who will administer the minor’s inheritance on their behalf until they reached a specified age (any age over 18).
Since you are creating a Trust (through your Will) it completely changes the way a standard/typical Will looks. Your Will essentially becomes the Trust Deed for when you are no longer here and it’s extremely important that you deal with all aspects relating to a Trust within your Will.
Most Wills are generally basic to draft but as soon as there are minors are involved, I advise my clients to book a consultation to discuss properly.
