By Sanette Viljoen from SV Legal
In today’s day and age, insolvency is a big reality. Therefore, one must always provide for such a situation in one’s will. What good is it if an insolvent heir gets a share of your hard-earned money, but his or her creditors claim it all? How should a will be drawn up to ensure that an heir’s inheritance does not become part of his or her estate if they should be insolvent?
The answer to this concern is the inclusion of an insolvency clause in one’s will. This clause stipulates that if an heir should be insolvent at the time of my death, and insolvency trust must be established.
This insolvency trust has trustees who will manage the heir’s inheritance portion, until the capital is paid out to him or her, after the rehabilitation of this heir.
It is very important to include this clause in all wills. If there is no such clause, that inheritance will fall directly into the insolvent heir’s estate and it will be divided between his or her creditors. The heir is therefore not going to get a cent of, or even enjoy anything of the inheritance.
Therefore, make sure your will contains the right clauses to protect your heirs’ interests.