Estate Administration

Frequently Asked Questions

Why do you need a will?

If a person dies without leaving a Will, or if the Will is not valid for any reason, the beneficiaries are determined according to legislation i.e. the Law of Intestacy. The Intestate Succession Act determines who the closest blood relatives are and distribute the assets of your Estate accordingly. This may differ from the people whom you would have chosen to benefit from your Estate.

What happens if a person dies without a Will?

When you die without a Will, you die intestate and you cannot choose your heirs or the executor of your estate. Your estate will be administered in terms of the Intestate Succession Act and the law will determine your heirs. The Master will appoint an executor of his choice to administer the estate.

Can I nominate my spouse as executor?

You can nominate your spouse to act as executor, but this is not recommended. Estate administration is complex and the spouse may not be equipped to deal with all the legalities involved in the process. Rather appoint a professional person as executor. A professional executor can relieve the emotional burden on the heirs by winding up the estate as speedily as possible and to the satisfaction of all the parties concerned.

Who appoints the nominated executor?

A Will only nominates the executor. The Master of the High Court appoints the nominated executor in terms of a document called “Letters of Executorship”. This document gives the nominated executor the legal authority to administer the estate. Generally it takes about 8 weeks after the estate has been reported to the Master’s Office before the Master issues his Letters of Executorship.

When will cash be available for living expenses?

If you were married in community of property to the deceased person or had joint bank accounts, access to cash can take some time. The bank account will be frozen by the bank and executor until he is sure that the estate is solvent. Cash from the estate itself may only be advanced to you once the executor has been appointed. Obviously the executor must also be confident that he can advance cash at this early stage in the estate process. Until then, it is recommended that you have a float to provide for daily living expenses.

What do I do with debit orders on the deceased’s bank account?

If at all possible, provide the companies with an alternative bank account to collect from, especially if the debit orders are for electricity and water, telephone, insurance, etc. These services may be suspended if the debit orders are returned unpaid. Contingent liabilities, like a mortgage bond, overdraft, vehicle instalments and credit cards are not frozen at death and will continue to accumulate interest. It may be in your best interest to continue paying the instalments to avoid penalty interest.

Will the executor sell everything?

The executor will only sell assets if the Will directs him to do so, or if the beneficiaries agree to sell the assets. In some instances, the executor may have to sell an asset in order to generate sufficient cash to meet the debts of the estate, but this can be avoided if the beneficiaries pay cash into the estate to meet the shortfall.

Sometimes the executor may also sell an asset if it is impractical to distributes the assets to more than one heir (for example, a car which is bequeathed to four heirs)

What taxes will be payable?

Outstanding income tax and occasionally VAT will have to be paid by the estate in addition to income tax on anything earned since the last assessment. Estate duty may also be paid. Estate duty is a tax levied on estates with a net value exceeding R3,5 million. If a spouse inherits the estate, no estate duty will be payable. Some estates will also have to pay capital gains tax – this tax will depend on the growth in value of the assets and the nature of the assets.

What fees are charged by an executor?

An executor is by law entitled to charge the statutory tariff of 3.5% of the gross value of the estate. If the executor is a VAT vendor, VAT at 14% will be charged to the executor

The executor is also entitled to a 6% collection commission of any income received by the estate after date of death of the deceased.

Why does it take so long to finalise an estate?

The executor must comply with the law governing estates which is time-consuming. There are other factors that may cause the administration of an estate to be delayed and the most common ones are, if the deceased died of unnatural causes, the absence of a Will, outstanding income tax returns, missing documents and lack of information and delays in the Master’s Office.

When do I receive my inheritance?

After the Liquidation and Distribution Account has been sent to the Master of the High Court for approval and if no objections are raised during the inspection period, the Master will confirm to the executor when the assets may be distributed to the beneficiaries.

This is unlikely to occur before eight months after the executor has been appointed. Where fixed property is concerned, the property will be registered at the Deeds Office.

How will I receive my inheritance if I live overseas?

Before any inheritance can be remitted abroad, the executor must obtain the permission of the South African Reserve Bank.

If you have not formally emigrated, you will, for the purposes of exchange control, be regarded as a South African resident temporarily living abroad. Inheritances may only be paid to bona fide emigrants and nonresidents.

How can I be sure the executor deals with my inheritance properly?

The Master of the High Court oversees the executor’s work. The Master’s function is to protect the rights of beneficiaries and he will ensure that all assets are secured for the correct beneficiaries. The executor has the duty to ensure that cash is kept in an estate late bank account and he must provide the Master with proof of this estate bank account.

Must estate assets be insured?

It is crucial for all assets of the estate to be properly insured. If assets are uninsured there will be no compensation in the event of theft, accident, etc. Where heirs are in possession of a motor vehicle belonging to the deceased, they must ensure that the vehicle is comprehensively insured.

What about fire arms in the name of the deceased?

fire arms must be securely stored in a gun safe in terms of police regulations. If the heir is not a suitable person to own a fire arm, the fire arms must be handed in at a police station for destruction or it may be sold. It is important to liaise with the executor should you be in possession of fire arms belonging to the deceased.

What about the running of a business?

A family member or someone with knowledge of the business will have to continue with the day-to-day running of the business. This person should liaise with the executor as regards the running of the business.

Details of the auditor, bookkeeper, and business partners should be given to the executor to ensure the transition to the business caretaker.