Deceased Estates

When a loved one passes away, it is a difficult time for those left behind, and having to attend to the winding up of the deceased’s estate can be overwhelming to the family of the deceased, especially if they are not familiar with the process involved in the administration thereof.

Administering a deceased’s estate can be a complex and tedious process, which can take between 8 months and several years to finalise, and which can lead to great frustration to all parties concerned.

Therefore, it is important to ensure that a Will is in place and that an experienced Executor is appointed, who is familiar with the process and who can ease the family’s burden by administrating the estate in an efficient and responsible manner.

Below a general guide to the Administration of deceased estates process:

The process involved in the administration of the estate of the deceased is prescribed by the Administration of Estates Act of 1965.

The type of appointment and reporting documentation required, are determined by the value of the estate.

Where the value of the estate is less than R250 00.00, a Master’s Representative is appointed and Letters of Authority is issued, in terms of Section 18(3) of the Administration of Estates Act of 1965, which allows the representative to administer the estate without attending to the full process in terms of the Act.

Where an estate is valued at more than R250 000, Letters of Executorship is issued and an Executor is appointed, who is obliged to follow the full process as stipulated in the Administration of Estates Act of 1965.

There is a comprehensive process to winding up an estate.

  • After the person’s passing it is the duty of the nominated person to consult with the family of the deceased, to gather all the relevant information, and to complete and forward the documentation to the Master of the High Court, in order to obtain the Letters of Executorship. Powers of Attorney cease at death and only after the Letters of Executorship is issued, may the Executor take control of all the deceased’s assets and proceed with the administration process. The Letters of Executorship is usually issued within 15 –21 working days, after the documentation has been lodged with the Master’s office, unless there are delays at their offices.
  • Upon receipt of the Letter of Executorship the Executor is authorised to open an estate late bank account and, in terms of section 29 of the Act, to place advertisements in a local newspaper as well as the Government Gazette, informing all debtors and creditors of the deceased’s passing and granting them the opportunity to submit their claims against and in favour of the estate, within a period of 30 days from date of publication.
  • During such time the Executor informs all the financial institutions of the deceased’s passing, instructs them to close all the deceased’s personal accounts, to transfer all amounts to the Estate late bank account and to forward the relevant Certificates of balance. If the deceased was a Trustee of an Intervivos Trust, the Executor must obtain the relevant Letters of Authority, in order to amend the Trust accordingly.
  • The Executor must acquire valuations for all the movable and immovable assets registered in the name of the deceased and furthermore notify the South African Revenue Services of the deceased’s death.
  • After the expiration of the 30-day period and once all the claims and relevant information have been received, the Executor will compile the Liquidation and Distribution account, consisting of all the assets and liabilities of the estate. This account must reach the Master’s offices within 6 months after the Letters of Executorship was issued, failing which the Executor must request an extension stating the reason for the delay in submitting the account.
  • Once the account has been finalised, it is submitted to the Master for examination. If the Master’s queries have been answered satisfactorily, the Master will give his approval for the Liquidation and Distribution Account to lie open for inspection for 21 days at the Master’s office and the Magistrate’s Court in the area of jurisdiction where the deceased ordinarily resided before his/her death. The Executor will proceed to publish an advertisement in the Government Gazette and a local newspaper, in terms of Section 35 of the Act, notifying all interested parties of the same and inviting them to inspect the account and to lodge objections, if necessary.
  • After the 21 day period has expired, the Magistrate’s court will inform the Executor and the Master’s offices, as to whether or not any objections have been lodged against the Account and in turn the Master’s office will either request the Executor to proceed with the distribution of the assets or to amend the Account accordingly.
  • If the account has laid for inspection free from any objections, the Executor may proceed with the distribution of the assets in accordance with the account, with the approval of the Master. The distribution must take place within 2 months after the inspection period has expired.
  • Before distribution can be realised, the Executor must settle all outstanding debts and liabilities as far as the estate is concerned (i.e. Costs relating to Estate Duty, Capital Gains Tax, Income Tax, Executor’s Remuneration etc.) Once this has been finalised the assets may be distributed which includes the transfer of immovable and movable properties to the heirs and the distribution of the proceeds, as per the account.
    1. Estate Duty is a tax levied on the estate of the deceased, at a flat rate of 20%, in accordance with the provision of the Estate Duty Act. Estate Duty is due and payable when the deceased’s net estate exceeds R3.5 million. A person’s net estate is the value of the estate after all the permissible deductions have been deducted. Estate Duty is due and payable 1 year after the person has passed and currently the interest levied on late payments is 6% per annum.
    2. The Executor’s fee is calculated and based on the gross value of the deceased’s estate, including all property owned by or due to the deceased, at date of death. Thus, he is only allowed to levy his fee on the assets that form part of the estate and proceeds/balances paid to the estate. The maximum fee which can be levied is 3,5 % on the gross value of the estate (Excluding VAT) and 6% on income accrued and collected after death, during the period of administration. If the Executor/the appointed Agent is registered as a VAT Vendor, he is entitled to charge VAT on his fee. Any services rendered not directly pertaining to the administration of the estate shall be charged in addition.
  • Once the distribution has been realised, the Executor must furnish the Master with proof that all the creditors have been paid, all the heirs have received their benefit and that the estate has been liquidated.
  • If the Executor has complied with all the requirements, he may request a Filing sheet from the Master and if the Master is satisfied, he will issue a Filing sheet releasing the Executor of all his duties.

Above summary is intended as a general guideline and not as a detailed explanation on the process, and complexities of the administration of a deceased estate.