This article was taken from Mastermind, the official monthly newsletter of Sanlam Private Investments, a division of Sanlam Ltd. Visit the SPI Website
When does the obligation to pay maintenance to children and former spouses end? This is a vital consideration often overlooked with estate planning and the drafting of Wills.
Lack of proper planning in this regard may have unintended consequences for your loved ones. This article examines the extent to which maintenance obligations are binding on the deceased estate and the planning tools available to ensure your loved ones are well provided for.
The legal position
Maintenance obligations for child support
Parenthood automatically results in the obligation to support a child. This obligation arises on the child’s birth, regardless of whether the child is born in or out of wedlock, and will continue until the child becomes self-supporting. The obligation can be terminated only by the child’s death and not by the parent’s death. As such, the child has a right to claim maintenance from the deceased parent’s estate. Any maintenance order already in place will also be binding on the deceased estate.
Maintenance obligations for spousal support
The situation differs slightly with spousal support and depends, to a large degree, on the wording of the divorce order granted in favour of the relevant spouse. In Kruger v Goss, 2009, (Appeal court) it was determined that an ex-spouse does not have a claim for maintenance against the deceased estate of her ex-husband, except where the divorce order specifically states that the maintenance order is binding on the deceased estate. Such a provision is typically included in the divorce order together with a provision stating that the order will terminate upon death or remarriage of the ex-spouse, whichever occurs first. A current spouse may have a maintenance claim against the deceased estate of her/his spouse if the deceased spouse did not provide for his/her maintenance in the Will or otherwise.
Effect on estate planning
Maintenance orders against the deceased can significantly delay the finalisation of the deceased estate if proper provision has not been made in the Will. The deceased’s assets can be distributed to beneficiaries only once all creditors have been settled. Maintenance orders or claims constitute creditors of the estate and will only be settled in full once the child is self-supporting or the ex-spouse remarries or passes away. Hence, the distribution of assets to your legatees is delayed.
In order to protect your loved ones from the unintended consequences of maintenance claims, a testamentary trust can serve as an effective planning tool. This is done by specifically bequeathing in your Will a lump sum cash amount (actuarially calculated as the present value of the future obligations) to a testamentary trust with your ex-spouse or child as beneficiary. The funds in trust are then used to settle the maintenance obligation. Such a provision ensures that the deceased estate can be finalised and may protect the inheritance of your loved ones against further claims.
The planning tool and technique described above is not exhaustive and is mentioned in general terms. There could be other solutions more suitable to your personal circumstances.
Kindly contact Carien Strauss at cariens@privatewealth.sanlam.co.za for more information about the above.
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