In today's day and age, insolvency has become a harsh reality for many.  As such, it is advisable to make the necessary provisions for this eventuality in one's Last Will and Testament.  No testator/testatrix would want their hard earned money and assets to be claimed by the creditors of an heir or legatee's insolvent estate.

A testator/testatrix should rather draft their Will in such a way that the inheritance be excluded from the heir's insolvent estate.  The question is, is this permitted or at all possible?

The only way to deal with this type of scenario is to ensure that an insolvency clause is included in one's Will.  This may sound quite strait forward, but it's not.  The testator/testatrix must ensure that the clause dealing with insolvency is drafted in a technically correct manner and makes provision for a gift over.

In Mars: The Law of Insolvency in South Africa, (Ninth Edition, page 188), the author states: "A testator cannot prevent an inheritance from forming part of the insolvent estate of his heir by a provision in the Will that the bequest remain unenforceable during the period of sequestration.  This can only be achieved by the testator if he has created a gift over.  For example, the testator may include a provision in his Will stating that if the heir is an unrehabilitated insolvent at the time of the testator's death, the bequest must accrue to another person, or the testator must allow the executors of the estate discretion to divert the inheritance to another person.  In such cases the insolvent heir's trustee will have no rights regarding that inheritance."

In summary, the inheritance bequeathed to an heir can only be protected from his creditors, (should he be declared insolvent prior to receiving his inheritance), if the testator gives clear direction in his Will that in such instances, the heir will forfeit their inheritance  in favour of a different  person or class of persons.

If the testator has not made provision for such an event (an heir being liquidated/sequestrated), the heir's only alternative would be to repudiate the inheritance before the vesting of the inheritance takes place.  This, however could result in an heir or residue heir/s, receiving specific assets or money, which the testator did not necessarily intend for them to inherit.

Therefore, to ensure that one's wishes and intentions are looked after and carried out during the administration of one's estate, it is very important to have this type of insolvency clause included in one's Will.

Do not postpone, revise your Will today!