By Sophia Steyn
As if the distress of losing a loved one was not enough, the process of winding up their estate immediately following their death can prove overwhelming to a grieving family. But if they cannot promptly produce the legally required information, that critical source of funds may remain frozen much longer than necessary.
The demand for information starts during the preliminary formalities and continues throughout the administration process itself.
Preliminary Formalities
By law, every death must be reported to the Master of the High Court. A full inventory of the deceased’s assets must also be submitted to them within 14 days after the date of death, along with all other information required under the Chief Master’s Directive of 2006. This is part of the duties of the executor, if one was nominated in the deceased’s will.
The above sounds straightforward but, in reality, can be emotionally taxing to the family. To help them cope, they may engage an attorney for professional assistance with the preliminary reporting. Yet, they are often shocked by the long list of information they are required to provide.
The demand for information is onerous enough where the deceased left a will and nominated an executor. Unfortunately, about 75% of South Africans die without a will (intestate). This requires even more information searching during both the preliminary and administration stages.
To their frustration, the family or nominated executor will seldom be able to answer all the standard questions during their first consultation with the chosen attorney. This is magnified where no will was drawn up.
However, information gathered during the preliminary phase is necessary to obtain the Letters of Executorship (LEO) that will allow the administration process to begin.
Administration Process
The executor can commence with the administration process after completing the preliminary work and receiving the LOE from the Master.
In most cases, the appointed executor is someone with limited experience in the administration process. So they will utilise a Special Power of Attorney to appoint an agent (an attorney) to aid them in completing the process.
As with the preliminary phase, after the agent is appointed and administration of the estate commences, the surviving family and heirs are often astounded by the sheer volume of information requested from them.
If the deceased was not personally known by the executor or agent, it is likely that, as they receive more financial documents for the estate, additional information will be needed. Much of this will have been unanticipated during the preliminary process and not raised during initial consultations.
For example: After receiving the deceased’s bank statements, the agent notices a monthly payment to Mary and quarterly deposits from John Nel. With no record of who Mary or John are, or why these transactions occurred, they will likely need to quiz the surviving spouse or family first.
The importance of the executor and agent
Understandably, extensive information digging by the executor and agent can be draining to the heirs, even to the point that they feel they are doing all the work.
However, these professionals play a critical role in reducing the amount of information required of the family to only that data that cannot be sourced from third parties. Without their expertise, surviving members would face the overwhelming task of gathering and reconciling enormous amounts of information themselves.
Yet, information is only the tip of the administration iceberg as the executor and agent labour to prepare and deliver the Liquidation and Distribution Account (L&D) to the satisfaction of the Master of the High Court. With this achieved, the process can be finalised, releasing the family to enjoy the full provisions of the deceased’s will.
Executor’s duties
The executor, often aided by the agent, performs the following duties:
- Opens a banking account in the name of the estate if the cash in hand is R1000 or more
- Gives notice to the deceased’s creditors and debtors in a local newspaper and the Government Gazette
- Determines the solvency of the estate
- Ascertains the value of the estate assets
- Assesses the value of the estate liabilities
- Ensures that the estate liabilities are paid
- Selects a suitable method of liquidation of the assets in the estate
- Prepares and submits the L&D account to the Master
- Pays the estate duty, if applicable
- Obtains permission to advertise the estate account as lying open for inspection in a local newspaper and the Government Gazette
They must also comply with the Master’s final requirements to:
- Provide proof of advertisement of the L&D Account
- Provide proof of payment of Master’s fees
- Provide proof of estate duty payment, if applicable
- Attend to payment of creditors’ claims and the heirs’ inheritances
- Provide proof of the transfer of shares
- Pay, cede, deliver or transfer, as the case may be, the legacies and inheritances to the beneficiaries
- Provide proof of transfer of immovable property
- Provide the final bank statement to the Master reflecting a zero balance in the estate banking account
The executor may only claim their remuneration after the estate has been distributed in terms of the relevant provisions of section 35 of the Administration of Estates Act, 1965.
Relieving information overload
Most clients believe that the combined preliminary and administration process takes only a few months to complete.
In reality, the entire process can take around six to twelve months, or longer if the information needed is not forthcoming. Obviously, the heirs will want to conclude proceedings as soon as possible to relieve financial pressure and gain access to their inheritances.
They should therefore seek out a reputable executor and agent who will doggedly pursue the information needed to finalise the administration process rapidly, duly and accurately.
However, the top professionals in this field are acutely aware that those closest to the deceased often hold the keys to a few locked information doors, and have the emotional intelligence to approach them with sensitivity and consideration for their grief.
Sophia Steyn is an Admitted Attorney at Tax Consulting South Africa
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