01 September 2022
When will drafting one naturally looks at the wishes of the testator and who are the intended beneficiaries. However all too often practitioners fail to mention to the testator about dealing with the circumstance of a beneficiary who pre-deceases the testator. This is an important point because if a beneficiary pre-deceases the testator the benefit will lapse and the benefit will fall into the residue. This may not be what the testator wants. Moreover, instead of lapsing the benefit may fall according to the provisions of section 98 of the Succession Act. Section 98 of SA 65 will be dealt with in next weeks blog, but again that might be at odds with the testator’s wishes. We will briefly look at the situation of lapse in this blog.
S. 91 of SA 65 deals with lapse and is the provision in the Succession Act, which states that if a beneficiary pre-deceases the gift will lapse and fall into the residue. The section contains an important proviso at the start which states “Unless a contrary intention appears from the will . . . .”. So the section envisages that it is possible to draft around lapse in one’s will. It is often the case that clients will not have addressed their minds to the question of lapse but when it is brought to their attention will have strong views about what should happen to benefits in the cases of a pre-deceased beneficiary.
In the case of children pre-deceasing a parent, the options open to a parent is that the benefit passes to the beneficiaries’ spouse, to other siblings, to grandchildren of the testator or in some other manner. All of these options should be presented to the testator to obtain full instructions. Drafting provisions to cater for such circumstances is often called drafting a “gift over” clause.
In the case of single testators with no children, then the range of substituted beneficiaries on lapse are of a different nature and may be nieces/nephews or other friends and relations depending on the circumtances.
The question of dealing with lapse is particularly important in the context of the residue. As mentioned above, if a legacy lapses, it falls into the residue. As mentioned last week, if the residue lapses, the residue or the relevant portion of the residue falls into intestacy. In last weeks blog, we noted that a residuary benefit doesn’t lapse if it is left jointly between the residuary beneficiaries, it is only where the residue is left as tenants in common where the issue of partial intestacy arises. However, partial intestacy can be avoided with proper drafting. Therefore any drafting to avoid or cater for lapse (or put another way – your gift over clause) should also encompass the residue just as much as any other benefit under the will.
Hope this helps and if you have any probate, will drafting or tax queries, please don’t hesitate to contact me at email@example.com