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You and Your Rights

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last updated on 3 Aug 2008
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You and Your Rights

Please note that since this book was last published in 1997 some of the laws that have been referenced may have changed. We are doing our best to update the articles, however, it is advisable that you to consult an attorney before relying on any information contained herein.

Estate, Deceased

What happens to a deceased person's property?

The personal property and possessions of deceased persons, as well as any monies owed to them (and by them), are known as deceased estates.

The winding up of a deceased estate, especially if it is one plagued with disputes over assets and debts, can tax the country's best legal minds.

And yet, what is meant to happen is quite simple: when people die, their representatives (executors) settle all outstanding debts, after which the remainder of the estate is passed on to the deceased's heirs.

An executor's first duty is to locate the will (see wills), if there is one. If the will cannot be found among personal papers, inquiries should be made at the deceased's lawyers, accountants, bank or insurance company. It may be in safekeeping with one of them.

If it cannot be traced, even though relatives may be positive that one exists, the estate must be administered as if no will had been drawn up. (See intestacy.) 

Quick Tip - When to use a lawyer

Some deceased estates are fraught with so many complicated issues that winding up can be completed only with the help of a lawyer. Here are examples of situations that may require legal expertise:

  • If there is no will and part of the estate is earmarked for minors (see minor) under the age of 18;
  • The estate is either insolvent or so heavily in debt that there are insufficient assets to pay the debts and legacies;
  • Trusts may have to be administered (see trust and trustee); 
  • An executor may want to work through a lawyer to establish a neutral referee in dividing up an estate among quarrelling heirs or relatives;
  • The estate may include a business worth a great deal of money.

Estates which do not have an executor 

If the deceased has not nominated an executor in the will, or if the person dies intestate, the Master of the Supreme Court may dispense with the appointment of an executor (called an executor dative) if the value of the estate does not exceed R50000. The Master will then authorise the administration and distribution of the estate in order to reduce the time and expense usually involved in winding up an estate.

The Master will, however, not be able to exercise this option if it is inconsistent with the terms of the will. If the estate's value exceeds R50000, the Master will appoint an executor and issue letters of executorship.

Estates for which executors are appointed 

The task of the deceased's executor, or executors, where more than one was appointed, is to: 

  • Evaluate the estate and its debts; 
  • Prepare documents required by the Master of the Supreme Court, who authorises any dealing on behalf of the estate; 
  • Obtain authority to handle the estate; 
  • Collect the assets of the estate; 
  • Settle any debts, estate duty, income tax, or Master's fees; 
  • Pay legal fees and bequests, and distribute or invest the remainder of the estate as required by a will, if applicable, or according to the rules pertaining to intestate succession. (See intestacy.)

Applying for authority of executorship 

A person appointed executor in a will (the executor testamentary) can either handle the estate personally, approach a lawyer, accountant, bank or trustee company for help, or engage them to do the job.

If the deceased appointed a particular institution or legal firm to be one of the executors, the burden of the administration is generally handled by them. No one may handle a deceased estate without: 

  • The permission of the Master of the nearest division of the Supreme Court; 
  • Being in possession of the necessary letters of executorship. 

The Master of the Supreme Court grants letters of executorship to those persons who have been authorised to deal with the estate and who have agreed to accept the job of winding it up.

Several copies of this document will, for example, be needed by banks, insurance companies and legal firms that may hold assets pertaining to the deceased. These institutions regard the 'letters of executorship' as proof that the assets they hold will be passed on to the properly authorised representative of the deceased estate.

Quick Tip - Useful addresses

The postal addresses of the main Masters' offices in South Africa are:

  • Gauteng: Private Bag X60, Pretoria 0001.
  • Free State: Private Bag X20584, Bloemfontein 9300.
  • KwaZulu-Natal: Private Bag X9010, Pietermaritzburg 3200.
  • Eastern Cape: Private Bag X1010, Grahamstown 6140.
  • Northern Cape: Private Bag X5015, Kimberley 8300.
  • Western Cape: Private Bag X9018, Cape Town 8000.

Warning - Determining who handles a deceased estate

The choice of a person to wind up a deceased's affairs depends on whether or not there is a will and whether or not the will nominates an executor.

WHEN THERE IS A WILL The estate is handled by the executors named in the will. Usually the lawyer who drew up the document, an accountant, a trust company or a bank are sole or joint executors with a surviving spouse or other relative. (The surviving spouse can also be nominated to act alone.) The legal procedure by which the executors apply to the Master of the 
Supreme Court for authority to handle and wind up the estate is executed by submitting a signed acceptance of trust to the Master in order to have the letters of executorship granted. (See trust and trustee.)

WHEN NO EXECUTOR IS NOMINATED IN A WILL The Master of the Supreme Court may appoint an executor if one has not been named in the will - this is called an executor dative. If, for example, there is a dispute as to who should be appointed executor dative, the Master will call a meeting of the surviving spouse (if any), heirs and creditors to recommend the appointment of an executor or executors dative. Although the final decision rests with the Master, the nomination of the surviving spouse will usually be accepted.

IF THERE IS NO WILL Generally, the Master of the Supreme Court will appoint an executor, possibly after consulting the surviving spouse, putative heirs or any other interested parties.

Costs of handling an estate 

The costs of employing a specialist agency or party are paid by the estate, as is the case with all costs related to the winding up of an estate. In fact, the costs of winding up the estate, including the Master's fees, are deducted from the assets, with the balance being distributed according to the will. If there is no will, the laws relating to intestacy will apply.

Lawyers' fees are calculated on the basis of the amount of work done and the time taken to complete it, usually at a tariff rate, and may include part of the executor's fee. It is worth asking a lawyer for a rough estimate of what the charge will be. Executors' fees are set by a tariff that is calculated on the value of the estate.

Duties of executorship

The duties of an executor can be divided into three stages: 

  1. Duties immediately after the death. 
  2. Duties involved in obtaining authority to deal with the estate. 
  3. Duties to be carried out on and after receipt of the letter of executorship.

After death 

The following documents must be lodged with the Master of the Supreme Court:

A DEATH NOTICE (not to be confused with the death certificate) Death notice forms are obtainable from the local Master's office, and must be completed in the case of any deceased who leaves assets or a will in South Africa. The document must be completed, signed and lodged with the Master within 14 days by the surviving spouse or, if there is no surviving spouse, by the nearest relative residing in the district where the death occurred. The person in control of the premises in which the death occurred is also required to hand in a death notice if there is any uncertainty whether a relative has already done so.

If the person who signs the death notice was not present at the death, or did not identify the deceased after death, he or she must furnish the Master with proof of the death (a death certificate).

THE LAST WILL AND TESTAMENT The signed, original will must be handed to the Master of the Supreme Court by the person legally in possession of it. The Master normally does not accept a signed copy as a substitute for the original unless it is accompanied by a court order, but will usually accept a duplicate original.

AN INVENTORY OF ASSETS AND PROPERTY The official form can be obtained from the office of the Master of the Supreme Court, or from legal stationers. The form is divided into three sections: 

  • For immoveable property such as land and buildings. 
  • For moveable property such as jewellery, paintings and motor vehicles. 
  • For claims in favour of the estate.

The inventory should indicate whether total assets exceed R50000; if they do not, the Master can shorten the procedure and allow the estate to be wound up in an informal (cost-saving) manner. Whatever the value of the estate, the Master still has the discretion to convene a meeting of interested parties.

The surviving spouse or, if there is not one, the closest relative residing in the district where death occurred, must sign the inventory.

Letters of executorship

The proposed executor must hand two documents to the Master of the Supreme Court before letters of executorship will be granted: 

  • An acceptance of trust, completed and signed in duplicate. This form is available at the Master's office. The legal status of the nominee must be disclosed on the form and the signature of the nominee must be attested to by a magistrate or a commissioner of oaths. A minor cannot be appointed to be the executor of an estate. The Master's office will forward the copy of the acceptance of trust to the South African Revenue Service. The Receiver of Revenue must be informed because of the possible tax implications of a deceased estate. 
  • A security bond for an amount fixed by the Master in cases where security is required to ensure the honesty of the executor. In general, this will cause no problem, because the will in question would prob-ably have exempted the executor from lodging security. Security is generally not required where the executor is the parent, child or surviving spouse of the deceased. A bond can be obtained from an insurance company on submission of a proposal form (available from the company) and a bond of security (available from the Master). An insurance company is not the only source of security: if private sureties are used, there must be at least two, each of whom must either own unbonded landed property or bonded landed property where the excess value of the property over the value of the bond is at least equal to the value of the total assets. The amount of security required is at the discretion of the Master, who generally insists on security covering the value of the assets disclosed in the inventory. When unsure of the value placed on the assets, the Master may have them valued. Letters of executorship are issued once the Master is satisfied with the acceptance of trust and the security bond. Until such authority has been received, the executor may only dispose of property that will enable the arrangement of: 
  • A suitable funeral for the deceased; 
  • Subsistence for the deceased's surviving spouse and family; or 
  • Safe custody of any part of the deceased's estate. The letters finally empower the executor to wind up the estate.

The duties of the executor

A rough guide to the sequence of stages in the administration of a deceased estate.

Duties on appointment 

Executors are required to act in several specific areas: 

  • They must make their own inventories; 
  • They must deal with creditors, income tax, estate duty and the banking accounts; 
  • They must distribute the estate, wind it up and officially terminate their duties as executor. 

INVENTORY After taking custody of the first inventory and all the property, belongings and documents in the estate, the executor, who has been ordered to do so by the Master or was required to find security, has 30 days after the issue of the letters of executorship to prepare the inventory on the prescribed form for the Master. If the Master requires a further inventory, an additional period will be allowed to compile it. An inventory has to show the value of all the estate's assets.

At this stage, it is normal practice to have sworn appraisals made only of those assets that will not be realised and cashed, but will be handed over, in kind, to the proper beneficiary in terms of the will. 

CREDITORS The executor will call on creditors to lodge any claims, usually within 30 days, by a notice in the government gazette and in one or more newspapers circulating in the area or areas in which the deceased resided in the 12 months preceding death. 

INCOME TAX The executor is also the 'representative taxpayer' of the estate, responsible for lodging the necessary income tax returns and for paying any outstanding tax. In most cases, the deceased will have submitted an income tax return to the Department of Inland Revenue for the tax year ending on 28 or 29 February preceding the date of death. It will then be the executor's duty to prepare and lodge a return of the deceased's income from the previous 1 March until the date of death.

The Income Tax Act, 1990, is specific about who is responsible for the payment of income tax on income that is received by or accrues to the estate after the taxpayer's death. The position is: 

  • If the Receiver of Revenue is satisfied that the income has been derived for the benefit of an heir or legatee, that person will be responsible for any tax liability; 
  • If the Receiver is not satisfied that this is so, the income is deemed to be the income of the estate. The executor, as representative taxpayer, is liable for payment of any tax on the income. In other words, the estate will pay the tax.

The Receiver will require details of the income of the estate from the date of death to the date of its final distribution, divided into tax years. The names, addresses and, where possible, the tax reference numbers of those benefiting from the estate will also be required.

The legatee of a particular asset is liable for tax on income derived from that asset. The heirs who receive the balance of the estate, provided these can be ascertained, may also be liable for tax.

In some circumstances the estate may qualify for a tax rebate on the deceased's earnings, particularly if the deceased paid tax on the pay-as-you-earn (paye) system and too much tax was deducted. 

ESTATE DUTY No estate duty is payable in respect of an estate of which the net value is less than R1-million.

In the estate of a spouse who dies first, any bequests or amounts inherited by the surviving spouse need not be liable for estate duty. In this event, however, the surviving spouse's estate would then not be entitled to the rebate formerly allowed for assets inherited from the deceased within a 10-year period of the death of the first spouse dying.

The actual claim by a surviving spouse against a deceased estate will rank as a deduction against the deceased estate. Any accrual claim against the surviving spouse in the estate of the deceased spouse will be regarded as an asset in the estate of the deceased spouse.

Donations made by spouses to each other during their lifetime are not liable for estate duty

BANK ACCOUNT The executor must open a cheque (current) bank account in the name of the estate as soon as more than R100 has been received. All money received on behalf of the estate is deposited into this account, which must be with a bank in South Africa, preferably at the bank and branch used by the deceased.

The executor may also open a savings account in the name of the estate and deposit what is not immediately needed to pay claims; alternatively, this amount may be placed in a higher interest-bearing deposit with a bank.

The executor closes the deceased's account by drawing a cheque for the balance and signing it 'for John Doe, deceased'. The cheque is paid into the new estate account in a simple transfer of funds.

The Master may ask the executor for information in writing of the name of the bank and branch where the estate account has been opened and may, at any time, require a bank statement or other evidence of the position of the account.

Distributing the estate 

Once the prescribed period for recording creditors' claims has expired, the executor must establish whether or not the estate is solvent.

If the estate is insolvent, a written notice must be sent to the creditors (a copy of the notice must also be lodged with the Master) informing them that unless the majority, in number and in value, of all the creditors give written instruction within 14 days to surrender the estate as insolvent under the Insolvency Act, 1936, the executor will proceed to sell all the assets in the estate. (This notice must, of course, outline the manner and conditions of the intended sale of assets.)

A creditor who objects to the executor about the intended sale of an asset must send a copy of this objection to the Master. After inviting comment from the executor, the Master will make a ruling.

Within six months of being granted the letters of executorship, or for any extended period that the Master may allow, the executor must submit an account in the prescribed form of the liquidation and distribution of the estate. It must provide for the distribution of the proceeds in the order of preference prescribed by the Act for an estate administered as insolvent.

Provisions relating to the accounts of a solvent estate apply with the necessary modifications. Provision is made for the submission of a supplementary account where additional assets are subsequently found.

This procedure does not, in terms of the Insolvency Act, prevent the sequestration of any deceased estate as insolvent.

If the estate is solvent, the executor must realise the assets, but only to the extent required for the discharge of the liabilities and the carrying out of the provisions of the will. Within six months of being granted letters of executorship, or any such extended period as the Master may allow, the executor must submit an account, in the prescribed form, of the liquidation and distribution of the estate.

Supporting vouchers to the liquidation and distribution account must be retained by the executor. The Master is empowered to call for a voucher or vouchers in support of the account or any entry in it. The Act also provides for the submission of a supplementary account where additional assets are subsequently found, without existing accounts having to be redrawn.

Submission of this account is usually known as a first and final account, but the Master may direct the executor to file an interim account if there are funds in hand which, in the Master's opinion, should be distributed or used towards the payment of the debts. 

STRUCTURE OF THE LIQUIDATION ACCOUNT One section of the account will disclose all assets in the estate at the date of death, the net proceeds of assets that have been realised, and the valuation of those assets not realised and how they are to be distributed. Income and expenditure accruing to the estate after the date of death are shown separately in an 'income and expenditure account' which should also disclose to whom the balance is awarded. (Generally, it will be distributed among the heirs.)

The other section of the account discloses administration expenses, estate duty and creditors' claims. The balance, or the difference between the sections, is transferred to the distribution account, which reflects the awards to legatees and heirs in terms of the will or intestate succession. (See intestacy.)

If the deceased was married in community of property, the gross value of the joint estate must be shown. The value of the surviving spouse's half share is then calculated, after the deduction of administration costs and creditors' claims. The spouse's half share will be awarded in the distribution account by virtue of the marriage in community of property. The balance is distributed among heirs and legatees in terms of the will or according to the principles of intestate succession.

If the deceased was married under the accrual system introduced by the Matrimonial Property Act, 1984, the account will have to be drawn up accordingly. (See marriage.)

The Act states that when it is necessary to determine the accrual in the estate of a spouse, that spouse, or the executor of his or her estate, must furnish full particulars of the estate to the other spouse or his or her executor.

Working out the value of the estate

An estate cannot be distributed according to the will, or in the event of there being no will, in terms of the laws of intestate succession - and estate duty cannot be paid - until the estate has been evaluated.

Where the estate attracts estate duty, it cannot be distributed without the consent of the Commissioner for Inland Revenue (who will give permission only if the duty has been paid). As a first step, therefore, an executor must list all the estate assets for the Department of Inland Revenue.

If estate duty is payable, both the Master of the Supreme Court and the Department of Inland Revenue will require a sworn appraiser's valuation of all the movable and immovable property. If the estate does not qualify for duty and distribution, and is not dependent on the value of the property, the Master may dispense with a valuation. In this case a municipal valuation to which 25 per cent has been added (if immovable property is involved) will normally be accepted. For movable property where no estate duty is required the written valuation of a competent person is normally sufficient. Hortors' Legal Diary for South Africa and Butterworth's Law Diary and Directory supply a list of appraisers should the Master require a proper valuation.

PERSONAL BELONGINGS Furniture, clothing and personal effects are valued according to what they would fetch if they were sold second-hand. Assessments should be based on the original cost, modified by a realistic allowance for depreciation or appreciation. Most items show a drop rather than an increase in value. Notable exceptions are usually coins, stamps, paintings, valuable furniture and jewellery. Valuables should be the subject of a professional valuation. Resist the temptation to undervalue these items. The Master or the Department of Inland Revenue may query an unrealistically low valuation.

STOCKS AND SHARES If the shares are quoted on the Johannesburg Stock Exchange, the value is based on the average stock exchange quotation on the day of death, which is the average between the minimum and maximum prices ruling on this date. If death occurred during the weekend, the Friday's or Monday's quote can be used. The prices can be found in the official Stock Exchange daily list available at stockbroking firms and banks. Two prices - the daily minimum and maximum - are given for each share. These prices are not necessarily the same as those quoted in newspapers, which are usually the day's closing prices. Take care to give the share's market-quoted price and not the nominal price. Where a sworn appraisal is required, a sworn certificate from a stockbroker will suffice.

VALUATION OF A BUSINESS Professional assistance from a practising chartered accountant will probably be needed to value a business either owned, controlled or partly owned by the deceased. The valuation takes account of stock, property and goodwill, as well as special valuation provisions that are applicable for estate duty purposes only.

DEBTS The estate account must include a statement of debts that will have to be traced. In an effort to avoid disputes over debts, the law provides for notices to be published in the government gazette, and in at least one newspaper circulating in the district where the deceased lived prior to death. Generally, these notices invite creditors to put in their claims by a specific date, normally between 30 days and three months after the publication of the notice.

If the deceased lived in another district within the previous year, the notice must also be published in at least one newspaper circulating there; and if the person was not resident in South Africa during the previous year, in at least one circulating in a district where he or she owned property. The advertising costs are borne by the estate. A creditor does not lose the right to claim if the claim is not lodged within the specified period, but may have to pay additional costs incurred by the estate in redrafting accounts.

If a legitimate claim is made after the estate has been distributed, the executor might have to pay the debt out of his or her own pocket. This would largely depend on whether the executor was at fault in any way, and whether the estate was distributed in a way not provided for by law.

If the executor is not at fault, the creditor can claim the amount from the heirs. If the amount that the heirs received does not meet the whole claim, the balance that is owing may be claimed from the legatees, provided this is done within three years of the date of death.

 INSPECTION OF ACCOUNTS The Master, in examining the liquidation and distribution accounts, may question the executor on any matter and call for any voucher or vouchers to support any entry or entries. When all procedures have been carried out to the Master's satisfaction, the executor publishes in the government gazette, and in at least one local newspaper, a notice stating that the accounts are open for inspection at the Master's office for a specified period of not less than 21 days.

If the deceased resided in any district other than the one in which the Master's office is situated, the accounts will also be open for inspection at the magistrate's office in that area.

During the period of inspection anyone with an interest in the estate may lodge an objection with the Master. The executor is required to reply to the objection before the Master adjudicates the dispute. Should the objector or the executor, or both, disagree with the adjudication, they have 30 days to apply for a court order setting aside the Master's decision.

The court has the discretion to extend this period. At the end of the inspection period and after any objections have been settled, the executor pays the creditors, distributes the balance of the estate and lodges the relevant receipts with the Master. The executor must also produce, for the Master, any deeds of registration of property relative to the distribution.

Alternatively, a certificate by the registration officer or a conveyancer stating which registrations have been carried out may be lodged with the Master. To assist an executor where creditors and heirs and legatees prove uncooperative, the Administration of Estates Act, 1965, states that the Master may accept one of the following documents in place of a receipt: 

  • A cheque made out to a creditor or heir and paid by the drawee bank; or 
  • An affidavit (sworn statement) by the executor that a creditor was paid or an heir or a legatee received the right share in accordance with the account. Within two months of the Master's confirmation of the accounts, all money that the executor is unable to distribute in accordance with the accounts must be deposited in the Guardian's Fund on behalf of those entitled to such money. 

A MINOR BENEFICIARY'S POSITION Subject to the terms of the will, the natural guardian of a minor heir - the parent of a legitimate child, as a rule, and the mother of a child born out of wedlock (see custody) - is entitled to receive, on behalf of the minor, any movable property which has been bequeathed to the minor.

However, unless the will expressly provides to the contrary, no money may be paid in this manner to a natural guardian, and, if the Master directs, no other moveable property may be delivered to a natural guardian, unle

Disclaimer :: You and Your Rights
Although we have gone to great lengths to ensure the accuracy of the information contained in this database, it is important to remember that laws, government departments, interest and taxation rates are constantly changing. If you have a particularly difficult problem you are advised to consult a qualified legal authority. The publishers, editors and their representatives cannot accept responsibility for any act or omission arising from consulting the information contained herein.
General Disclaimer: The content of Legal City does not constitute legal, tax or financial advice, nor does it necessarily reflect the views of our management, staff, shareholders, associates, contributors, authors or suppliers. Even though every endeavour has been made to ensure the accuracy of this information we cannot be held responsible for any errors and/or omissions. By using this web site you agree to accept and abide by our terms and conditions.
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