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  • Writer's picturePCF

Omissions in a Will can create huge family drama - the principle of Collation and how it relates to

For most people who have been fortunate enough to have received a university education, or a first car, an overseas trip or an elaborate wedding, purchased for them by their parents, it is accepted as a gift and you would be utterly shocked if – when your last surviving parent dies – you are then expected to pay back the value of these gifts into the estate before it can be divided amongst the beneficiaries.

However – surprisingly for many to learn – there is a legal principle that exists which, if not specifically excluded from a parents’ Will, can be called into action and requires a laborious “squaring of the books” so that it can be determined how much needs to be paid back into the estate by each sibling.

“It is an unfortunate fact that if any sibling rivalry exists, it is likely to become apparent, and often heightened, after the death of the second dying parent when siblings begin to fight over perceived favouritism being showered on one child,” says David Knott, a fiduciary expert from Private Client Trust, a division of Private Client Holdings, who advises that when the parent’s Will is disclosed and children become aware that they are to share equally with the other sibling, the various gifts and assistance given over the years, maybe of very different value, can cause much unhappiness.

“The daughter may have enjoyed a lavish wedding or the son an expensive Harvard education which the other considers unfair. Surely, the aggrieved sibling whines, these gifts should be taken into account in squaring the books?”

Knott says that unless the parent’s Will specifically excludes the principle of collation, this perceived unfair assistance can lead one sibling to instruct the executor to implement Collation.

“Collation dates back to ancient Roman times when the head of the house would settle funds or assets upon children once they had attained a sufficient maturity to set themselves up in life. As the presumption was that the parent wished his children to ultimately benefit equally, it follows that those children not yet emancipated would be at a disadvantage if the parent’s estate was merely divided equally upon his death - the emancipated children would have received an unfair distribution.”

“It was then decreed that the emancipated child had to “add back” to the distributable estate whatever dowry he might have received, and the inflated estate was then equalized amongst the children,” says Knott. “If the emancipated child chose not to collate, he could not inherit from the estate.”

Time has moved on and it is now acceptable for parents to treat children unequally as their circumstances may differ greatly.

“Very few parents will keep a ledger detailing the gifts given to their children and the value thereof (plus taking inflation into account) and so it is recommended that to avoid a cumbersome squaring of the books and protracted back and forth bickering between siblings, all parents need do is to state in their Will that they wish to exclude collation in the Will and then whatever is found in the parent’s estate will flow without further debate.”

“If a Will excludes collation, it is quite clear that the parents intended the children to receive differing benefits. Gifts made during the lifetime of the parent are not to be included in any distribution in terms of the Will without reference to what might have happened many years before,” concludes Knott.

For more advise on Collation and your Will contact Private Client Trust on (021) 462 2111.



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