A Redistribution Agreement is an agreement entered into by and between the heirs (testate or intestate) or legatees, and in some instances the surviving spouse, of a deceased estate in terms whereof they agree to equitably vary the bequest(s) made in the deceased’s Will; or in terms whereof they equitably vary the distribution of the estate in terms of intestate succession, as they see fit.
Although it is not a requirement, the Executor of the estate may also be a party to the agreement, in his/her capacity as Executor. The heirs or legatees cannot enter into a redistribution agreement with persons who are not heirs or legatees or the surviving spouse(s) to the estate. For example, a trust, a company, or a close corporation having no right of inheritance from the estate (for example by will), albeit the heirs being trustees, beneficiaries, directors, or members of such entities, cannot be a party to Redistribution Agreement.
In terms of the provisions of the Deeds Registries Act, 47 of 1937 (“The Act”), the transfer of land and cession of real rights therein must follow the sequence of the successive transactions. However, in terms of section 14(1)(b)(iii) of the Act, a departure from this general rule may be taken by means of a redistribution agreement which may be entered into between the heirs and legatees of a deceased estate, and/or between such heirs and the surviving spouse of the deceased.
There is no prescribed form in which a redistribution agreement must be drawn. It must, however, be reduced to writing and signed by the parties. It is very important to note that where the agreement is signed outside of South Africa, it must comply with the provisions of Rule 63 of the High Court Rules, or with the Hague Convention on Attestation, which provides for the proper authentication of documents executed outside of South Africa.
A Redistribution Agreement can be in respect of the whole or any portion of any of the assets of an estate (movable and immovable). Section 14(1)(b)(iv) of the Act provides that the introduction of movable assets which do not form part of an estate of a deceased person may be introduced into the Redistribution Agreement for the purpose of equalising the division of the estate, in instances where the redistribution of the assets results in an unequal distribution to the heirs. The half-share of a surviving spouse in a joint estate (by virtue of a marriage in community of property) can be brought into a redistribution agreement as an asset for means of the Redistribution Agreement. This will be in instances where the surviving spouse is a party to such Redistribution Agreement.
Although the purpose of a Redistribution Agreement is for the equitable redistribution of assets to the heirs/legatees, it is not required that the resulting distribution must be exactly equal. The unequal distribution must, however, not constitute a covert donation or sale. An examiner will have to test a Redistribution Agreement to determine whether it in fact does not in effect constitute a concealed donation or sale. If the latter is evident, the agreement is then void.
The distribution of the assets pursuant to a Redistribution Agreement must be reflected in the Liquidation and Distribution Account. It is therefore inferred that it must be entered into by and between the parties thereto before the account is rendered to the Master of the High Court.
Author: Tembelani Vabaza