CASE STUDY ONE

THABO AND NANDIPHA

Thabo $(31)$ and Nandipha $(28)$ Mhlana are young professionals who have recently relocated to Cape Town. They resided in Gqeberha before the relocation, and decided to make the move when Thabo was offered a new employment opportunity at the end of $2023.$

Your clients got married fairly recently. After lobola negotiations were concluded, Thabo paid the agreed price in the form of livestock to Nandipha's family. Their traditional wedding ceremony and celebrations took place on the $3$rd and $4$th of December $2021.$ Currently, this marriage has not been registered with the Department of Home Affairs. They do however have a Lobola letter and their social media accounts have thousands of pictures taken on the day.

Both Thabo and Nandipha are concerned about the fact that the marriage has never been registered with Department of Home Affairs. They have consulted a lawyer in the past month. On his advice, he is currently drafting an ante$-$nuptial contract. Their intention is to get married in terms of the Marriage Act as soon as possible, and to include the accrual system with their respective starting values into their marital regime.

Nandipha's sister contracted COVID$-19$ and passed away in September $2021,$ leaving a daughter, Khwezi. Nandipha's mother, Babalwa, was appointed as legal guardian over Khwezi, but the family decided it would be in Khwezi's best interest to reside with Nandipha. Nandipha has been primary caregiver to Khwezi, who has just turned four years of age. Thabo has taken on the role of father to Khwezi, and they are a close$-$knit, happy family. Nandipha is currently four months pregnant, and Khwezi is very excited to welcome the new addition to the family.

Both Thabo and Nandipha are first$-$generation graduates, and assist their families financially. Thabo pays an amount of R$6,000$ to his father monthly, and Nandipha R$4,000$ per month to her mother. These funds are used to support their extended families.

Thabo is a quantity surveyor and works for a multi$-$national company in Cape Town. His remuneration package is currently $R1,875,000$ per annum of which $80\%$ is his pensionable salary. His employer offers pension fund benefits and group risk insurance as benefits. Medical scheme benefits are not included. Thabo has never belonged to a medical scheme. Nandipha has been a member of a medical scheme for the past three years.

EBFD$411-$ ASSIGNMENT $2024$

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Transfer costs$*$ of flat: $R10,000$

Funeral costs and last expenses: R$50000$

Transfer costs include all bond, transfer, petties, FICA and other

The executor is registered for VAT and charges prescribed fees.

Round off all rand amounts to the nearest rand $($no decimals$)$

Round off percentages to four decimals.

In the event where you are of the opinion that there is not enough information available, ensure that you indicate that you are making an assumption together with a valid reason for making such assumption.

QUESTION ONE

$30$

$1\mathrm{.}1$ Explain to Thabo and Nandipha what the current legal status of their marriage is$.$ Also discuss the options available to your clients should they want to ensure they are married out of community of property, with inclusion of the accrual system.

$1\mathrm{.}2$ During the course of the meeting with your clients, it becomes clear that they have never drafted wills. Indicate to Thabo how his estate will devolve, should he pass away today. Consider the distribution of all assets listed in the facts of the case study and possible beneficiaries in your answer. No calculations are necessary.

$1\mathrm{.}3$ For the purposes of this answer, assume Thabo drafted a valid will in which he bequeathed his entire estate to Nandipha. Calculate the estate duty payable in Thabo's estate should he pass away today. Show all calculations and motivate all assumptions.

$1\mathrm{.}4$ In order to ensure Thabo's family is taken care of should he pass away, you have recommended taking out life insurance specifically for that purpose. Thabo will nominate a family member as beneficiary to receive the proceeds of the policy. Calculate the amount that Thabo will have to be insured for should he want to provide an inflation$-$increasing income to his family for $50$ years after his passing. Include the effect of any applicable taxes and costs payable at Thabo's passing in ensuring that the life cover amount will be sufficient.

$1\mathrm{.}5$ Thabo is unsure of where the proceeds of policy $1$ will be paid to on his demise. His wish is that these funds should be protected for Khwezi to ensure funding for schooling and studies. Explain to Thabo what will happen to the proceeds of his policy should he pass away, and how to ensure that his wishes at death are honoured.

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Nandipha is a qualified and registered dietician. She was employed by a private hospital group in Gqeberha, but resigned when t