CREATION OF A WILL & THE POWER TO CREATE THE FUTURE

To be human is to possess the intrinsic need to protect our loved ones as long as we have the power to do so. The lingering question becomes how to ensure continuance of wealth creation for our loved ones in the event of death. This is where Estate planning through the power of a will comes into play. Estate planning is the process of controlling an individual’s assets during their lifetime and after their death. [1]One of the devices that can be used is a will. The primary piece of legislation governing wills in Malawi is the Deceased Estates (Wills, Inheritance and Protection) Act [2] [DEWIPA]. Section 3 defines a will as a legal declaration by a person of his or her wishes or intentions regarding disposition of his or her property after his or her death. The traditional understanding of a will are mere divisions of who ought to take property.? However, drafting a will presents a remarkable opportunity to secure plans to protect and create wealth long after the death of an individual this article will briefly explore under the lens of the Malawian legal framework.

A will is a versatile tool that can be used for estate planning and management. The basis is derived from section 5 (3) of DEWIPA that provides disposal of property by will may be made to any person and subject to any condition other than a special provision. In Mkumba and Tweya v Nkumba and Nkumba the Court observed that “Drawing up a valid will, particularly in big and / or complex estates, is likely to go a long way in avoiding lengthy and convoluted property inheritance disputes…need for people with substantial property interests to be well informed and methodical in estate planning and management”. Wills are versatile devices that can be molded to suit the needs of the individual.

The first device that can be used to protect and create wealth in a will is a trust.? A trust refers to the accumulation of obligations resting on trustees who administer the estate with benefits accruing to the beneficiaries of the trust.[3] This can be created through a testamentary disposition (will). The owner is presented with a unique opportunity to choose a trust that will best suit their vision. The first variety are fixed trusts is a trust where a beneficiary’s interest is fixed on amount and time allocation. The second variety are discretionary trusts where trustees are under a duty to select among a class of beneficiaries who should receive income or capital of trust property. [4] The third variety is a protective trust which starts out as a fixed trust but becomes discretionary on bankruptcy and attempted alienation by beneficiaries. These are useful for estate planning when the beneficiaries constitute a specific class of persons, are prone to financial extravagance, and to cater for unexpected economic or social circumstances not envisioned at the time the trust is created.[5] Trusts can be created that suit the needs envisioned by the individual.

The second means that can be used in a will for wealth creation is prudent appointments and making provisions for their replacements. The first key appointment are executors. The court in Mthawanji v Chingamba observed executors derive their authority from the will which grants them rights to administer and protect the property. [6] They have a duty to wind up estates and manage them until allocation of benefits is made, compound liabilities, pay for funeral expenses, and estate duty. Executors can either be natural or legal persons as per section 30 (1) of DEWIPA. There are several benefits to having in place executors who are natural persons such as companies. There is a presumed financial assurance of expertise as they specialize in administering estates in a financially prudent manner; impartiality in balancing competing interests of several people with claims to the estate as they do not have a personal relationship with any of the beneficiaries; and stability as corporations are not victim to becoming mental unstable or passing away. [7] This presents a means to have in place impartial, professionally qualified executors. This is may also be supplemented by the appointment of financial asset managers to manage the estate in the will.

The third means a will can be used to create wealth for beneficiaries through the powers that can be granted to executors and trustees. Section 81 of DEWIPA provides the generality of the trustee act applies to executors. Thoughts for consideration would be vesting executors and trustees with powers to insure the property of the will, duty to invest the property on the basis of proper advice and a duty to diversify investments of the estate which are legal duties of trustees under part 2 of the trustee act. [8] This would ensure the will is used to not only protect but create inter-generational wealth for the beneficiaries.

In conclusion, the brief legal options represent a few crucial ways to ensure the creation of a will is not merely a solace parting away of property, but intentional estate planning geared towards wealth creation and protection.? Spencer Sean remarked as follows; “The more informed we are, the more we understand and the better we’re able to protect ourselves, our family, and assets”. This article marks a humble contribution to an increased understanding on the versatile legal possibilities available to protect and create wealth through a will in the Malawian legal framework. It is no understatement that the power of the future lies in the hands of will-maker.

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[1]Gary A. Hachfeld, David B. Bau, & C. Robert Holcomb, Extension Educators, Estate Planning Principles Agriculture Business Management (2013) Estate Planning Series #1? 7/2013

[2] Deceased Estates (Wills, Inheritance and Protection) Act (Cap 10:02)

[3] Re Scott [1948] SASR 193

[4] Metty Pension Trustees Ltd v Evans [1990] I WLR 1587

[5] Ibid

[6] Mthawanji and Another v Chingamba & 2 Others [1992] MWHCCiv 4

[7] Arin Klug, ‘Estate Planning Six Reasons to Appoint a Trust Company as your Executor’ https://epiloguewills.com/blog/six-reasons-to-appoint-a-trust-company-as-your-executor accessed on 26 January 2024

[8] Trustee Act (Cap 5:02)