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Redistribution agreements - II

2 July 2015

6. Parties to a redistributed agreement
In terms of section 14(1)(b)(iii) of the Act, a redistribution agreement can be entered into in between heirs and legatees, including ascertained and competent fideicommissary heirs and legatees. The executor need not be a party to a redistribution agreement (see RCR 34 of 2005).

To enter into a redistribution agreement, the heirs and legatees must have vested rights, and not merely a spes (see Leach v Champion Estates Ltd 1956 (3) SA 674 (O)). This is not true with regard to the rights of fideicommissary heirs, as section 14(1)(b)(iii) specifically provides that they may be a party to such agreement.

6.1 Surviving spouse as a party
To be competent to enter into a redistribution agreement, the surviving spouse must also be an heir or legatee in the estate of the deceased or a joint estate must be involved (see Chief Registrars Circular No 10 of 1969).

6.2 Unascertained heirs
A redistribution agreement where unascertained heirs are involved (for example unborn children) is not valid (see ex parte Grant 1952 (4) SA 95 N).

6.3 Fideicommissary heirs
Fideicommissarii who are ascertained and competent are heirs who are capable of entering into a redistribution agreement with the fiduciarius in the estate of the creator of the fideicommissum.

Fideicommissarii are also heirs or legatees in the estate of the fiduciarius and may also enter into a redistribution agreement on the death of such fiduciarius. Section 14(1)(b)(iii) was, by virtue of the Amendment Act on the Deeds Registries Act 14 of 1993, amended to specifically provide for this instance.

6.4 Insolvent heirs
In terms of section 20(1)(a) of the Insolvency Act No 24 of 1936, read in conjunction with Wasserman v Sackstein NO 1980 (2) SA 536 (O) the assets of an insolvent heir or legatee vest in this curator. Thus, if such curator obtains the necessary authorization from either the Master or the creditors of such insolvent heir or legatee, he/she may possibly enter into a redistribution agreement.

6.5 Heirs under curatorship
In the case of an heir or legatee being placed under curatorship, such appointed curator can enter into the redistribution agreement on behalf of such heir or legatee provided such curator has been authorized to do so by the Master or the Court (see section 72(1)) read in conjunction with section 76(2)(a) and section 80 of the Administration of Estates Act 66 of 1965).

6.6 Trustees of trusts as party to a redistribution agreement
If a trust is an heir in an estate and is empowered to alienate assets of the trust, such duly appointed trustee(s) may be parties to a redistribution agreement.

A trustee can be a party to a redistribution agreement, provided the assets in the estate have been formally handed over to the trustee and the title deeds endorsed in terms of section 40 (RCR 3 of 1954 as confirmed by RCR 1 of 1969 and RCR 47 of 2008).

6.7 Minor heirs or legatees
Minors under the age of seven have no contractual capacity and the redistribution agreement will have to be entered into on their behalf by their parent(s) or guardian.

Minors between the ages of seven and 18 can enter into the redistribution agreement, provided they are assisted by their parent(s) or guardian. Alternatively the parent(s) or guardian can enter into the agreement on their behalf.

If, however, immovable property of a minor is being distributed in the agreement, both parents must enter into the agreement on behalf of such minor or assist the minor concerned (see section 18 of the Childrens Act 38 of 2005).

Section 80 of the Administration of Estates Act 66 of 1965 is not applicable in the instance where a minor is a party to a redistribution agreement and immovable property belonging to such minor forms the subject of the distribution (see RCR 30 of 2010).

6.8 The executor in the estate of a deceased heir
If the heir died subsequent to the vesting of the inheritance, the executor in his estate may enter into a redistribution agreement with the other heirs, provided:

  1. The agreement amounts to a division i.e. the heirs must each obtain a defined portion in lieu of a share in the immovable property inherited.
  2. Regulation 52 has been complied with relating to the consent of the heirs in the estate of the deceased heir and the consent of the Master, in terms of section 94 of the Administration of Estates Act 66 of 1965, in respect of such heirs if any of them are minors, is lodged.

6.9 Heirs who are married in community of property
A spouse of a marriage in community of property can be a party to a redistribution agreement, provided the consent of the other spouse is afforded (see section 15(2)(a) of Act 88 of 1984). This assistance will naturally be unnecessary if the inheritance in question is excluded from the community of property, by virtue of a testamentary provision or otherwise.

6.10 Heirs whose marriage is governed by the laws of another country
Where an heir whose marriage is governed by the laws of another country is a party to the redistribution agreement, the assistance of the other spouse will be required unless, the community of property has been excluded (see in this regard RCR 22 of 2002 which places a duty on an examiner to examine a redistribution agreement).

6.11 Usufructuary or holder of a personal servitude
Where the holder of a personal servitude is an heir such holder can also be a party to the agreement (see RCR 2 of 2006).

7. Creation of reciprocal obligations between heirs inter se in a redistribution agreement
Heirs cannot create reciprocal rights and obligations inter se in a redistribution agreement in respect of the creation of restraints on alienation cf. De Wet v De Wet and Others 1951 (4) S.A.L.R. 212 (RCR 3 of 1952). In the same vein, lease agreements and other real rights will not be capable of being created, excluding a personal servitude of usufruct, usus or habitatio (see RCR 23 of 2002).

In the latter instance the personal servitude may be created in the power of attorney in accordance with section 67 of the Act (see RCR 4 of 2004 read with Ex parte Jooste 1968 (4) SA 437 (O)).

8. Payment of transfer duty
Section 14(2) of the Act provides that on transfer or cession analogical to section 14(1)(b)(iii), transfer duty must be paid which would have been payable had the immovable property or right been transferred or ceded to each person who would successively been entitled thereto.

Section 9(1)(e) of the Transfer Duty Act No 40 of 1949 provides for an exemption from the payment of transfer duty on property of the deceased which was acquired in terms of a redistribution of assets in the estate of a deceased. This exemption will, naturally, also find application when the spouse of a joint estate introduces his or her common law half share into a redistribution agreement (see the discussion supra referring to the assets in the estate of a deceased).

Where movable property (including money) is introduced from outside of the estate to provide for an equitable distribution, it will be exempt from the payment of transfer duty (see Lubbe v Commissioner of Inland Revenue 1962 (2) SA 503 (O)).

In terms of CRC 10 of 2014 a transfer duty receipt or exemption certificate will only be required for the transfer by the testator to the eventual heirs entitled to the property in terms of the redistribution agreement.

9. Agreement entered into after liquidation and distribution account accepted
Redistribution presupposes a variation of the liquidation and distribution account and therefore any transfer in terms of the re distribution must be reflected in the liquidation and distribution account, otherwise successive transfers contemplated by Section 14 must be given effect to (RCR 2 of 1952).

Allen West
Property Law Specialist
MacRobert Incorporated

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