Particularly good articles appeared recently by FISA practitioners covering aspects such as the effect of taxation in the event of death and the consequences of different marital regimes. One such article by my co-member of FISA, Johan Brand that appeared in the Landbouweekblad of 27 August 2020 about the choices that we have before getting married is worthy of mentioning.
I would like to refer specifically to his opening remarks. We should undertake an estate analysis for each partner, audit trusts and companies to consider the wishes of the parties as regards the legacies that they will leave. I like to refer to such analysis as doing a due diligence. My other co-member of FISA, Nico van Gijsen will probably call it an estate planning risk analysis.
Jan covered the issues around being married without a contract, in other words being married in community of property. This point reminded me of another challenge. It is called the Subdivision of Agricultural Land Act 70 of 1970.
In terms of the 1970 Act Section 3 of the Subdivision of Agricultural Land Act (Act 70 of 1970) stipulates that agricultural land shall not be subdivided nor that any undivided share in agricultural land shall vest in any person, if such part is not already held by any person.
If you did not follow Jan’s advice and entered an antenuptial contract when you got married, then this represents a serious challenge especially if more than one of your children are also farming on the farm. Your children will not be able to inherit the farm.
This challenge comprises several variables. For instance, do you buy a new farm in your personal name or in the name of a company or trust. Your company shares can be split between your spouse and children. Whilst we have seen many questions about the feasibility of a trust, in this instance it can solve the problem.
What if the farm is already in your name and to get it into the company or trust requires selling it? The value at which you can sell is a key driver of any taxes. Perhaps the prevailing agricultural conditions are such that the value will be less than normal Perhaps that value will be outside the threshold for being liable for deeming interest on you loan to the company or trust? What will the transfer cost? All these variables, amongst others need to be considered.
What about your will, how does massing work and how do you create a sensible usufruct to protect your dear wife?
Therefore, I appreciate Jan’s opening remarks in his article. That is what FISA registered members do. That is what the FISA Code of Conduct require from us.
So, before you wait at the end of the isle starry-eyed for the most beautiful girl slowly approaching you should engage the services of a FISA registered estate planning practitioner.
PS: And if you are a farmer, get a contract and steer clear from being married in community of property.
Nico Botha FPSA®CEO of Stellenbosch Trustees and Trust Corporation (Pty) Ltd
(proud descendant of Syfrets Trust Ltd)