Monday, 17 October 2016

A Guide to the Administration of Deceased Estates

In South Africa, Deceased Estates are administered as prescribed by the Administration of Estates Act, No 66 of 1965, as amended, and distributed in accordance with a valid and accepted Will; of in the absence of a Will, in terms of the Intestate Succession Act, No 81 of 1987, as amended; or a combination of both of the aforementioned Acts. Numerous other Acts and Regulations pertaining to, inter alia, Income Tax (including VAT and CGT), Estate Duty and Donations Tax, and The Maintenance of a Surviving Spouse, may also apply.

Deceased Estates are reported to the branch office of the Master of the High Court of Court of South Africa wherein the deceased had resided prior to his/her demise. Deceased Estates are generally administered by Attorneys, Accountants, Banks and Trust Companies. When a person dies, his/ her estate must be reported to and registered with the Master of the High Court as soon as possible. Certain documents, including the deceased’s last Will, if any, must be submitted to the Master. In the case of Estates with a gross value of less than R125 000, the prescribed administration process is simplified and results in the saving of a great deal of time and costs.

The official administration process to be followed by the Executor will then commence. The Executor's duties are, inter alia, to advertise a Notice to Creditors, to obtain details of the deceased’s assets and liabilities, to have same valued and verified if necessary, and thereafter to collect and take into his/her control the deceased’s assets. The deceased’s known creditors must be made aware of the deceased’s demise. The Executor must thereafter prepare and submit a Liquidation and Distribution Account to the Master (normally within a period of six months of being appointed as Executor), or if he/she is unable to do so, an extension of time must be requested from the Master, which is in most cases allowed.

This Liquidation and Distribution Account should reflect all the deceased’s assets and liabilities, and should also reflect the distribution to heirs, either in terms of the deceased’s Will, or in the absence of a Will, in terms of the Intestate Succession Act. This Account should also contain an Estate Duty Addendum, in which any Estate Duty which may be payable by the Estate is calculated. The Master then examines the Liquidation and Distribution Account after which he furnishes the Executor with his approval of the Account, or a query sheet in respect of any queries which the Master may have.

Once approved, the Account must be advertised and be open to lie for inspection for the required period of 21 days at the Master's office as well as at the Magistrate's office in the district wherein the deceased resided. If any objections are received pursuant to the advertising of the Account, they must be dealt with in the prescribed manner. If there are no objections, or after dealing with any objections which may be received, the Executor must proceed to pay all creditors and heirs, and also proceed to effect the transfer of all other assets to the lawful heirs within a reasonable period of time.

In most cases, the Administration of a Deceased Estate should not be a complex or complicated process and it should be completed within a reasonable period of time (normally between six to twelve months). However, there are many factors beyond the control of the Executor which could delay the Administration of a Deceased Estate. Amongst the most common of these factors are incorrect, contested and impracticable wills, cash shortfalls, and claims by creditors, including the South African Revenue Service. Disputes and discord among heirs, the lack of information, the disarray of the deceased's Income Tax and other related matters, as well as lawsuits before and after death, and in the event of the unnatural death of the deceased where inquests may be required, could also delay the administration process considerably.

The prescribed fee payable to the Executor/s or by the Executor/s to his/her Agents is the equivalent of 3.5% of the gross value of the assets in the estate. However, in simple and uncomplicated Estates, this fee can be negotiated with the Executor/s and/or Agents.

Should any reader require any advice or information regarding the Administration of Deceased Estates or any aspect relating thereto, please contact – Deceased Estate Administration Services Via email : Via tefefax : 086 730 1020 The required advice and/or information will be provided without any cost or obligation. Regrettably, no telephonic enquiries will be entertained.

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