Wills and Estate Planning

Electronic Signatures in Property and Other Transactions

By | Contract, Property, Wills and Estate Planning

“To sign a document means to authenticate that which stands for or is intended to represent the name of the person who is to authenticate” (quoted in the case below)

We all know that verbal agreements, although fully binding for most types of transaction, are a recipe for uncertainty and dispute. It’s not just a question of trust – even if no one is deliberately dishonest about what was agreed, innocent misunderstandings are common. We have a natural tendency to hear what we want to hear and to remember what we want to remember, and a properly-drawn written agreement avoids that.

So even when a written and signed document isn’t required it is always wise to insist on one. Note that the parties themselves can require a document to be in writing and signed. Or it could be required by law – the most common examples of the latter are property sale agreements, wills, suretyship agreements, ante-nuptial contracts, and credit agreements (there are other less common examples – take professional advice in doubt).

But that’s not always easy to achieve, and the COVID-19 lockdown in particular has highlighted the challenges of getting everyone together for an old-fashioned original “paper and ink” signing session. Even when social distancing is no longer required and ceases to be the norm in society, the convenience and benefits of being able to sign documents remotely (whether you and the other party/ies are in different houses, cities, countries or even different continents) are obvious.

Firstly, when is a digital agreement “in writing”; and can property sales and wills be electronic?

Fortunately our law, in the form of the ECTA (Electronic Communications and Transactions Act) recognises the general validity of digital documents. A “document or information” is “in writing” if it is –

  • “In the form of a data message; and
  • Accessible in a manner usable for subsequent reference.” 

As a result, perfectly valid and enforceable agreements are now often entered into online, by email, WhatsApp and the like. 

Note that there are some specific exceptions where a physical (“wet ink on paper”) as opposed to an electronic format is still required – most commonly property sale agreements, “long” (10 or more years) leases and wills (there are others – take advice in doubt).

Secondly, is “signature” always required?

Formal “signature” isn’t always essential as the ECTA provides that if the parties to an electronic transaction don’t specifically require an electronic signature, “an expression of intent or other statement is not without legal force and effect merely on the grounds that –

  • It is in the form of a data message; or
  • It is not evidenced by an electronic signature but is evidenced by other means from which such person’s intent or other statement can be inferred.”

Thirdly, how can you sign a document electronically?

Where “signature” is required, the ECTA recognises the concept of “electronic signatures” (defined as “data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”. They are valid except in cases where either a law (like the laws relating to property sales etc mentioned above) or the parties themselves require actual physical signatures.

An electronic signature can take many forms. Where it is required by the parties but they haven’t agreed on a particular type of electronic signature to be used, it is valid if –

  • “A method is used to identify the person and to indicate the person’s approval of the information communicated; and 
  • Having regard to all the relevant circumstances at the time the method was used, the method was as reliable as was appropriate for the purposes for which the information was communicated.”

That definition will often be wide enough to include names on email messages, scanned images of physical signatures and the like. But remember the parties can specify what formats are and aren’t allowed, plus our courts may well look at all the circumstances of a case and decide for example that an actual manuscript signature is required even when transmitted electronically (see for example the “R804k” judgment discussed below).

“Advanced” electronic signatures

This is a concept of authentication designed to make an electronic signature more reliable and it is used when a law requires signature for specified documents or transactions but doesn’t require another particular type of signature.  

For example the Deeds Registries Act requires documents like the Power of Attorney to Transfer Property to be signed, and that can be done either physically or electronically – but if electronically the electronic signature must be an advanced one. The Credit Agreements Act provides other good examples. 

Even when not specifically required, a big advantage of advanced electronic signatures is that they are presumed to be valid. That means anyone attacking one would have to prove its invalidity and not the other way round.

Security and fraud; with an R804k example

Cyber criminals are as always waiting to pounce so all the normal warnings in regard to electronic communication apply here, with the added need to ensure that electronic documents cannot be altered after completion/signature. 

A recent example of “forged electronic signatures” is an online fraud that went horribly wrong for a firm of financial advisers who were sued for R804,000 when their client’s Gmail account was hacked by fraudsters – 

  • Using the investor’s authentic email credentials, the fraudsters sent three emails to the financial advisers instructing them to transfer a total of R804,000 to the fraudster’s accounts. Two of the emails ended with the words: ‘Regards, Nick’ while the third ended with ‘Thanks, Nick’.
  • The financial advisers made the transfers and the investor sued them on the grounds that they had paid out contrary to the written mandate he had given them which stipulated that ‘All instructions must be sent by fax to [011 *** ****} or by email to [***@***] with client’s signature.’
  • The financial advisors argued that they had complied with the mandate in that the email endings “Regards, Nick” and “Thanks, Nick” were valid electronic signatures in terms of ECTA.
  • The SCA (Supreme Court of Appeal) however upheld the High Court’s ruling that the financial advisors were liable. They had not complied with the mandate which “requires a ‘signature’ which in every day and commercial context serves an authentication and verification purpose … The word ‘electronic’ is conspicuously absent from the mandate …  The court below cannot be faulted for concluding that what was required was a signature in the ordinary course, namely in manuscript form, even if transmitted electronically, for purposes of authentication and verification.”

Play it safe – have your lawyer draw and manage your agreements for you to minimise this sort of risk, and ask also about using an external service provider for secure, authenticated and verifiable electronic document signing and storage. If you do come to blows with the other party down the line, the integrity and evidential value of your electronic documents and signatures could be make-or-break.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

In Times of Great Change, Make Sure Your Will is Updated!

By | Wills and Estate Planning

“Death always comes without knocking” (Margaret Atwood)

Particularly in these times of pandemic, deadly infections and uncertainty, no one can ever say with any confidence that we will still be alive tomorrow, or next month, or next year.

Now more than ever having a valid and updated will in place is no luxury to be attended to “when I have the time” or “when I am older”. 

The risk is that without a proper will (your “Final Will and Testament”) you die “intestate”, in which event the law and not you decides which of your heirs gets what from your estate. You have forfeited your right to ensure that your loved ones are properly looked after when you are gone. You have lost your right to decide how your assets will be distributed on your death. And you have no say in who will wind up your estate as Executor. Executing a valid will is the only way to avoid all that.

Then – just as importantly – once you have your will done and dusted, avoid the very common mistake of forgetting to update it regularly. 

Nine events to trigger an update review

Don’t leave your loved ones struggling with an outdated will. Firstly diarise frequent review dates. Then keep in mind the many changes in circumstances that will require interim review –

  1. Times of great change in your health risk profile: The current COVID-19 pandemic exposes us all to the threat of a sudden and radical change in our health status, and that (or indeed any new diagnosis or other actual change to your risk profile) calls for an immediate review of your will. Now more than ever it has to be fully up to date.
  2. Marriage: Have I or any of my heirs married, re-married, changed marital regime (in or out of community of property, with our without accrual), entered into or left a life partnership or the like? Does my will tie in with my marital regime and ante-nuptial contract if any? 
  3. Divorce: Have there been any divorces? This is vital because so many couples leave everything to their spouses. And if for example that applies to you and you divorce, you have only a three month window period within which to change your will. For three months your ex-spouse is effectively disinherited; but if you don’t change your will within that window period your ex-spouse inherits everything.
  4. Birth or adoption: Have there been any births or adoptions, do you have new children or grandchildren? This is particularly important if your will specifically names all heirs without a catch-all phrase that will include new children/grandchildren.
  5. Death: Has anyone died and if so must any specific bequests or anything else change?
  6. Other changes in personal circumstances: Have any of your heirs undergone a relevant change in circumstances, perhaps become more financially vulnerable for whatever reason (serious illness or motor vehicle accident causing disability, loss of bread-winner for example)?
  7. Changes in assets, liabilities, financial and business structures etc: Have you sold any assets named in your will, or acquired assets that you would like to bequeath specially to a particular heir or that necessitate a re-allocation of bequests? Perhaps existing assets have changed dramatically in value? What about new liabilities, such as perhaps a new bond over a property which will reduce its value to a particular beneficiary?   

    Have you formed or deregistered any trusts or asset-holding structures? Have you started or acquired or sold a business to be earmarked for a particular beneficiary? Do you have any new assets overseas that may call for a separate foreign will?

  8. Executor, Trustees, Guardians: Is there any need to review your appointments of Executors, Trustees, Guardians? 
  9. Changes in the law: Have there been any changes in relevant laws, either through legislation or new court decisions? Tax laws in particular can change unexpectedly and affect the continued suitability of your estate planning.
How to update your will

If you plan major changes to your will, consider making an entirely new one but if the changes are minor a codicil may suffice. In both cases you need to comply with important legal requirements so professional advice is critical here!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Your Will: What You Can and Can’t Do

By | Wills and Estate Planning

“Where there’s a will, I want to be in it” (Anon)

Your will (“Last Will and Testament”) is quite possibly the most important document you will ever sign. Without a properly-executed will you put your loved ones at risk of financial and emotional hardship, you forfeit your right to nominate who administers your deceased estate, and most importantly you forfeit your right to choose who inherits what from you.

But just how wide is your right to choose? Can you leave anything to anyone? Is your freedom to decide limited in any way? Must your executor blindly carry out your last wishes?

Your fundamental right to “freedom of testation”…

For centuries our common (i.e. unwritten) law has recognised “freedom of testation” as a basic principle, subject only to being balanced against a restricted list of specific limitations. 

Moreover our courts have confirmed that this freedom is supported by our Constitution. To quote the Supreme Court of Appeal (SCA): “The right to dignity allows the living, and the dying, the peace of mind of knowing that their last wishes would be respected after they have passed away.”

…and the limits

Even as far back as Roman times there were limits to freedom of testation, and these have grown over time to incorporate the following general principles against which your will’s validity can be tested –

  • You cannot have anything in your will that is illegal, immoral, or “against public policy”, or impossible to fulfil, or so vague as to be unenforceable.
  • Legal obligations for maintenance of dependants and of your “surviving spouse” (where he/she qualifies) will generally take preference over bequests.
  • How you were married could well be relevant. Thus if you were married out of community of property with the accrual system, your surviving spouse may have a claim against your estate for half of the combined increase in the value of your separate estates during the marriage (specific rules apply).
  • Courts also have a variety of other statutory powers such as the power to alter trust provisions and to remove or modify restrictions on immovable property.
  • Pension and retirement fund benefits may not be paid out to your nominee – the fund’s administrators must first identify any dependants with possible claims on them.
  • Constitutionality: Your bequests also stand to be tested against our Constitution. Thus in 2010 the SCA removed a discriminatory clause in an educational fund bequest open only to “European girls born of British South African or Dutch South African parents”, commenting that “In the public sphere there can be no question that racially discriminatory testamentary dispositions will not pass constitutional muster” (emphasis added). Similarly in 2006 the High Court struck down provisions in a will limiting a bursary fund to white non-Jewish males.

    On the other hand, the SCA in a 2018 judgment upheld a private trust’s provisions benefitting only the deceased’s biological descendants to the exclusion of two adopted grandchildren. “There is much to be said for public trusts being judged more strictly than private trusts”, said the Court, noting that the public nature of the bequests in the earlier judgments was “a determining factor in the weighing up process in those specific cases.” Note that the particular facts of that case also played a part in the Court’s decision, so adopted children and grandchildren might well succeed in different circumstances.

    Clearly, there will always be a balancing act in play here because, as we saw above, freedom of testation is itself regarded as a constitutional right. 

Critical: A well-drawn and valid will 

The last thing your grieving loved ones will need is a long and bitter court battle over whether your will is valid – or over any areas of uncertainty or dispute.

Bear in mind that of necessity the list above is only a brief summary of the legal principles involved – there are many “ifs and buts”, grey areas (such as the balancing act referred to above in regard to the question of constitutionality), and considerations beyond the scope of this article. 

That’s why there can be no substitute here for legal advice specific to your circumstances. Have your attorney draw your will for you (or check it if you already have a will). It must be properly drawn, it must correctly and clearly reflect your wishes, it must be validly executed – and it must pass muster when tested as above!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Your Website of the Month: Left Money in a South African Will But Living Overseas?

By | Website of the Month, Wills and Estate Planning

What happens if you want to access a South African bequest overseas?

BizNews gives you a step-by-step breakdown of how to go about it, depending on whether you are –

  • Non-resident, 
  • Financially emigrated, or
  • A South African resident temporarily abroad.

Read also the section on taxation. 

Bear in mind that of necessity an article like this can only give you an overview of some general principles, and that getting anything wrong could cost you dearly. Professional advice on your specific circumstances is a no-brainer here!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Your Last Will: The Dire Consequences of Neglecting Formalities

By | Wills and Estate Planning

“It is not intended for the Court to make a will for the deceased based on what his intentions may have been” (Quoted in the judgment below)

As a general rule our law holds us to our agreements and statements, whether we express them verbally, electronically or in written form. 

But there are exceptions – some things just have to be in writing and signed before the law will recognise them. One of those exceptions is quite possibly the most important document you will ever sign – your “Last Will and Testament”. Ultimately it’s your final gift to your loved ones – a gift that ensures they are properly provided for when (not “if”) you die. 

Don’t neglect this or procrastinate – without a will you have forfeited your right to choose who inherits your assets and who is appointed as executor. And it’s equally vital to validly update or replace your will after a significant “life event” (marriage, birth, death, divorce etc) – we’ll consider below the sad case of an accountant who intended to change his will but just never got around to it. 

But first, what must you do for your will to be valid?

The formalities

To be valid, a South African will must comply with a list of formalities. There are several of them and they require strict compliance, so getting specific legal help is a no-brainer here. But in general terms your will should be in writing and signed by you in the presence of two “competent” witnesses.

The question arises whether in this age of electronic contracts and signatures an “electronic will” (perhaps in an email, a video, a Social Media post or the like) might suffice. In short, the answer is almost certainly no, it won’t. The Master of the High Court (who accepts your will as valid or not) needs to see a piece of paper and physical signatures. And the same applies to any subsequent amendments to your will.

An escape route

There is however a possible escape route – our Wills Act provides that a Court may order the Master to accept an otherwise invalid will when satisfied that it was intended by the deceased to be his/her last will. That’s a great tool which has often enabled our courts to avoid situations of “injustice through formality”, but there is still absolutely no safe substitute for a properly-executed will.

As this recent High Court judgment illustrates all too clearly…

The accountant who emailed his “Final will” to his fiancée 
  • In 2006, a “very meticulous” accountant drew up a written will, properly drawn and formalised. In it he left everything to his then wife, from whom he was divorced in 2011.
  • In 2014 he became engaged to another woman with whom he had been in a “romantic relationship”.
  • On 4 January 2016 he emailed his new fiancée, under the subject line “Final will”, recording in part that “This serves as my final will and testament … If I die, all my assets and investments go to [my fiancée] … “My life policies must all go to [my fiancée]”.
  • Subsequent emails made it clear that both the accountant and his fiancée were aware that there could potentially be disputes regarding the validity of the emailed “will”, and accordingly an “Action” list that the fiancée then sent to the accountant included an action item “Will”. In the end however he never got around to actually making and signing a written will.
  • When the accountant died on 14 September 2016, the Master appointed as executor the bank nominated in his 2006 will.   
  • The fiancée approached the High Court for an order recognising the 2016 email as the true will, alternatively revoking the part of his 2006 will leaving the estate to his ex-wife. Unsurprisingly, the ex-wife opposed this application.
  • Firstly, the Court accepted on the facts that the accountant had indeed drafted the email, but it then turned to the second leg of its enquiry – “Whether the deceased intended the disputed Will to be his Last Will and Testament”.
  • Commenting that “it is not intended for the Court to make a will for the deceased based on what his intentions may have been”, the Court found that it was “improbable that he would have intended the disputed Will to be his Last Will and Testament”, and that – this is the critical part – his email was “nothing more than an email in which he was assuring the applicant that he will make her a beneficiary of his estate”.
  • The end result – the accountant clearly intended to leave his estate to his fiancée. But he never got around to drawing up a formal written will to that effect, so the 2006 will stands, the ex-wife takes all and the fiancée leaves with nothing.
The bottom line – “intention” is not enough!

Whatever you intend should become of your worldly goods, and no matter how you may have recorded your wishes, the only safe way to ensure that they are honoured is to execute a valid written will. 

This is a vital document and there are dire consequences to not getting it 100% right so ask your lawyer for help!  

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews