Understanding Failed Legacies and Estate Distribution in South African Succession Law

Introduction

This article explains the different types of legacies, what happens to the leftover assets in an estate, and the legal outcomes when legacies fail.

Intestate succession

If there is no will the estate is distributed according to the rules of intestate succession.

The terms heir and beneficiary refer to different roles in inheritance, and understanding their distinction is important:

• Heir: An heir is someone who is entitled by law to inherit from a deceased person if that person dies without a will (intestate). Heirs are typically close relatives, such as spouses, children, or parents, and their entitlement is governed by the rules of intestate succession. Heirs may inherit the deceased’s estate automatically under these rules.
• Beneficiary: A beneficiary is someone who is specifically named in a will to receive certain assets or property. Beneficiaries are chosen by the testator (the person making the will) and may or may not be relatives. Unlike heirs, a beneficiary’s rights come from the will, not from legal entitlement.

In short, heirs inherit by law when there is no will, while beneficiaries inherit based on what is stated in a will.

Testate succession

The person who writes a will is called a testator. They leave their estate to people they choose, called beneficiaries. This can be done in two main ways:

·         The testator can leave the remaining part of their estate (the residue—being the value of all assets in the estate minus the expenses incurred in winding up the estate) in percentages to beneficiaries.

·         The testator can also leave specific items or amounts of money to certain beneficiaries, and whatever is left (the residue) to other named beneficiaries.

Legacies

A "legacy" is a gift left to someone in a will and can be general or specific.

Specific Legacy

• A specific legacy is when a particular item or asset is clearly named in the will.
• Example: A person leaves a specific painting or car to a named individual.
• For the legacy to work, the asset must still exist when the person dies.

General Legacy

• A general legacy is not tied to a specific item but rather a sum of money or a general type of property.
• Example: A person leaves R50,000 to a beneficiary from their estate.
• Unlike a specific legacy, the money or property can come from any part of the estate that has enough value.

The Residue of the Estate

After distribution of all specific and general legacies, the remaining assets are called the residue of the estate. The residue includes anything that hasn’t been specifically mentioned in the will or used to pay off debts.

• Example: If an estate includes a house, a car, and R100,000, and specific legacies are made for the car and R50,000, the residue will be the house and the remaining R50,000.

Distribution of the Residue

• A will usually names one or more beneficiaries to inherit the residue of the estate.
• If there are several beneficiaries, the residue is split according to the terms of the will.
• If no heirs are named for the residue, the estate follows the intestate succession laws, which determine how the assets are shared among family members.

What Happens When a Legacy Fails?

A failed legacy occurs when a bequest cannot be carried out. When this happens, the asset intended for the legacy is reallocated to the residuary estate. Understanding why legacies fail and what happens afterward is important to ensure the estate is distributed smoothly.

Reasons for a Failed Legacy

• Non-Existence of the Item: The item may no longer exist at the time of death, for example, if it was sold or destroyed.
• Death of the Beneficiary: If the named beneficiary dies before the person who wrote the will, the legacy fails unless a replacement beneficiary is named.
• Disqualification: A beneficiary might be disqualified from receiving a legacy, for example, if they caused the death of the testator.
• Impossibility or Illegality: If the conditions tied to a legacy are impossible to meet or illegal, the legacy cannot be fulfilled.

Legal Consequences of a Failed Legacy

• When a legacy fails, the asset becomes part of the residuary estate. It is then distributed according to the rules laid out in the will for the residue.
• If the will does not specify how to handle the residue, the estate is distributed according to intestate succession laws, which follow a set order of family members.

Handling Failed Legacies

There are important things to consider when a legacy fails, especially regarding how the estate is distributed.

No Substitute Beneficiary

• If no alternate or substitute beneficiary is named in the will, the failed legacy is absorbed into the residuary estate.
• Example: A person leaves a car to a nephew, but if the car is sold before the person dies and no replacement is named, the value of the car is added to the residue. This benefits the heirs who inherit the residue.

Conclusion

In South African law, legacies are an important part of how estates are distributed according to the wishes of the deceased. However, if a legacy fails because the asset no longer exists or the beneficiary has died, the asset doesn’t just disappear. Instead, it becomes part of the residuary estate, ensuring that the overall value of the estate is preserved and distributed fairly.

Understanding these concepts is crucial for proper estate planning. It helps ensure that even if a legacy fails, the testator’s wishes are still respected, and their assets are fairly shared among their heirs.