The Payout of a Life Insurance Policy into an Unrehabilitated Insolvent's Estate : Malcolm Wentzel v Discovery Life Limited : In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October 2020)
Abstract
One of the consequences of sequestration is the vesting of the
property of an insolvent person in the trustee of the insolvent
estate. However, not all the property of the insolvent person
vests in the trustee as there are some exceptions. Under section
63 of the Long-Term Insurance Act 52 of 1998, life insurance
policy benefits are excluded from forming part of the insolvent
estate and thus do not vest in the trustee and are unavailable for
the payments of the debts of the insolvent. The exclusion of
these benefits diverts property from the insolvent estate and,
consequently, the creditors who could benefit from the property.
This note discusses Malcolm Wentzel v Discovery Life Limited:
In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October
2020) and considers whether a beneficiary of a life insurance
policy payout is required to hand over such payment to the
trustee of his insolvent estate. Further, it highlights the conflicting
provisions between insolvency legislation and insurance
legislation and examines the effects of section 63 on an
insolvent estate where the insolvent was married in community
of property.
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- PER: 2022 Volume 25 [68]