The impact of a broadened spousal concept on succession legislation, administration of deceased estates and related tax matters

Abstract

This study gauges the impact of the broadened spousal concept (as ordered in inter alia Bwanya v The Master of the High Court 2022 3 SA 250 (CC) (hereafter the Bwanya judgment)) on succession legislation, administration of estates and related tax matters. Specific emphasis is placed on the Maintenance of Surviving Spouse Act 27 of 1990 (hereafter the MOSSA), the Administration of Estates Act 66 of 1965 (hereafter the AEA), the Wills Act 7 of 1953, the Income Tax Act 58 of 1962 (hereafter the ITA), the Estate Duty Act 45 of 1955 (hereafter the EDA) and the Transfer Duty Act 40 of 1949 (hereafter the TDA). The Constitutional Court’s argument in the Bwanya judgment may also apply to the AEA as it may amount to unfair, unjustifiable discrimination not to afford the same rights currently awarded to surviving spouses to surviving life partners who have undertaken reciprocal duties of support. These rights refer to the appointment (under certain circumstances) of the surviving spouse as executor, the exemption of a surviving spouse to provide security, and a section 38 take-over by a surviving spouse. The AEA, the ISA and the MOSSA are used in conjunction with one another in the administration of deceased estates. It would be illogical for the Master to recognise a surviving permanent life partner as a “spouse” in the winding up of a deceased estate in terms of the ISA and MOSSA but not recognise that same partner as a spouse in terms of the AEA. Regarding the Wills Act and, more specifically, with reference to the statutory disqualification of an ex-spouse in terms of section 2B the legislature would have to provide guidance as to when a life partnership would be regarded as terminated and from what date the three-month period stipulated in section 2B will commence. Although some of the provisions of the Wills Act limit a spouse’s capability to inherit, it would be flawed to argue that permanent life partners should only enjoy the advantages provided to surviving spouses in terms of the Wills Act and not also the limitations. The broader spousal concept has been incorporated in various tax laws since 2001 when the definition of “spouse” was amended to include permanent life partners in terms of section 5(j) of the Taxation Laws Amendment Act 5 of 2001. There is, however, a requirement under the EDA and TDA that the Commissioner of the South African Revenue Services must be satisfied that the relationship was indeed intended to be permanent. Permanent life partners who have undertaken reciprocal duties of support would most likely be able to convince the Commissioner of their intention, as the factors that the Commissioner should consider are similar to the requirements to establish a reciprocal duty of support. However, if partners did not undertake reciprocal duties of support, it may be argued that they will also not be regarded as spouses for the purposes of the various tax laws as the Constitution of the Republic of South Africa, 1996 cannot impose obligations on partners where those partners themselves did not undertake such obligations (Satchwell v the President of the Republic of South Africa 2002 6 SA 1 (CC) para 24).