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In case of death
- When a person dies of natural causes, phone your doctor. If the person has died of unnatural causes, phone the SA Police Services.
- Notify the appointed executor. Also establish if there are possibly special instructions for the funeral in the will and if the deceased had a funeral policy.
- Phone the undertaker. He or she will arrange matters with a minister and organist and help with a funeral policy claim.
- Notify the deceased's employer/pension fund.
- Collect all the deceased's documents and make an appointment with the appointed executor, advisor or broker for the reporting of the deceased estate.
- Give the executor your full co-operation and take him or her into your confidence. Discuss your immediate cash needs with the executor.
- Don't take hasty investment decisions before the estate has been finalised. Consult with the executor of the estate on such decisions.
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Execution process
The administration process for estates is defined in the Administration of Estates Act, in terms of which executors must follow these guidelines:
| Notice of estate and appointment of executor |
3 to 4 weeks |
| Preparatory work for compilation of Liquidation and Distribution account |
6 to 24 weeks |
| Investigation of Liquidation and Distribution account by the Master |
2 to 4 weeks |
| Liquidation and Distribution account for inspection |
4 weeks |
| Finalisation of the estate |
2 to 6 weeks |
| Total: |
5 to 9 months |
Notice of the estate and appointment of the executor
To appoint an executor in an estate, the Master of the High Court must be notified of the death. When the Master receives the reporting documents, he examines them and satisfies himself as to the validity of the will. If he is satisfied, he appoints the executor by issuing a "letters of executorship".
On receipt of the "letters of executorship", the executor will begin to administer the estate. However, while the executor is waiting for the letter of executorship, he obtains all available information and documentary evidence to determine assets and liabilities in the deceased's estate.
When an executor is appointed in terms of a nomination in a will, the process is known as a "testamentary" appointment.
When a deceased does not leave a will, or does leave a will, but the executor nominated therein has already died, a process must be followed in which an executor is appointed "datively".
This is a process where the next of kin of the deceased must propose and nominate an executor. The family members will submit written nominations to the Master for consideration. Should the Master approve the nominated executor, he will confirm the appointment.
However, the Master may:
- reject the nominated executor's application,
- convene a meeting at which he requests the next of kin to nominate an executor.
It is advisable to nominate an executor by will. A "dative" appointment may cause much valuable time to be lost, to the detriment of creditors and heirs.
The appointment process takes approximately 3 to 4 weeks.
Liquidation and Distribution Account preparation and compilation
- On receipt of the letters of executorship, the executor is obliged to insert a notice in the Government Gazette and a local newspaper whereby the creditors of the deceased are requested to notify the executor within 30 days of any claims against the estate. In the meantime the executor continues to obtain valuations of fixed and movable assets in the estate, as well as particulars of the deceased's investments.
- As soon as all particulars have been received, the executor determines whether the estate has sufficient cash to meet its obligations. If not, the beneficiaries are consulted about the way in which they intend supplementing the cash shortfall. Should they not be able to do so, the executor is compelled to sell assets from the estate to cover the cash deficit. When assets have to be sold, it often leads to protracted negotiations with beneficiaries, auctioneers and other persons.
- The executor will have determined the tax position of the deceased by submitting the necessary returns to the South African Revenue Service.
- The preparatory work for the compilation of the Liquidation and Distribution account can take anything from 6 weeks to 6 months, depending on the size and complexity of the relevant estate. In terms of the Administration of Estates Act, the executor is obliged to submit the account within 6 months of the issue of the letter of executorship, unless the Master's permission for extension of time has been obtained in advance.
Preparation and compilation takes 6 weeks to 6 months.
Examination process
- On the basis of the information obtained, the executor now compiles a Liquidation and Distribution account. This sets out all assets, liabilities and administration costs. It explains how assets are divided and whether estate duty is payable or not. The account therefore sums up the entire administration process.
- The account is submitted to the Master. The Master's examiners check the account, with due observance of all legal rules with which the executor must comply. The Master may request further information and proof from the executor in the form of a questionnaire.
The examination process takes 2 to 4 weeks.
Liquidation and Distribution account for inspection
- As soon as the Master has notified the executor that he is satisfied with the account, he is obliged to lay it open for inspection by parties concerned for at least 21 days. This is done by inserting a notice in the Government Gazette and a local newspaper, which indicates where the account will be open for inspection for the said period. Any person who has an interest in the estate and feels aggrieved by the account compiled by the executor, may lodge an objection against it with the Master during the period in which the account is open for inspection.
- The Master will refer the objection to the executor for an answer. After the Master has received the executor's version on the basis of the objection, he will make a decision which must be followed by the executor.
- Should the executor or the person who made the objection not agree with the Master's decision, such person may within 30 days or within the further period of time the Court allows, apply to Court by means of a notice of motion for an order setting aside the Master's decision. The Court may grant an order; or decide that the objection is based on a dispute of fact, and that it cannot make a decision. In such a case the objection will have to be referred to the Court for a hearing. This could mean that witnesses may be called to testify. As a result, the administration process could be postponed indefinitely and the finalisation of the estate will only take place after the objection has been settled.
Providing there are no objections, the period for inspection will be approximately 4 weeks.
Finalisation of the estate
- If no objections are made against the Liquidation and Distribution account or if an objection has been settled, the executor can finalise the estate. He pays the creditors, hands over the inheritances to the heirs and arranges for the transfer of fixed property in the names of those entitled to it. The process of transfer may occasionally take a while, as there are various legislative requirements that have to be met.
- As soon as proof has been provided to the Master that all creditors have been paid, that the heirs have received their inheritances and that the fixed property has been transferred, the estate is regarded as finalised and the executor's office is terminated.
The process of finalisation takes 2 to 6 weeks.
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Documentation for settlements
The executor needs certain documents of the deceased to expedite the administration process. If certain documents cannot be traced, such as title deeds of fixed property or share certificates, the executor will be compelled to obtain duplicate documents thereof at the expense of the estate, which will also involve a delay.
Documents normally required are, inter alia, the following:
- Last signed original will (or particulars of where it may be obtained)
- Identity document of the deceased
- Death certificate
- Marriage certificate
- Ante nuptial contract (if applicable)
- Name and date of death of any predeceased spouse (if applicable)
- Divorce order and deed of settlement (if applicable)
- Copies of identity documents of all heirs
- Copies of marriage certificates of all heirs
- Name and address of deceased's employer, stating the staff number
- Pension number, name and address of pension fund
- Membership number, name and address of medical fund
- Income tax reference number and office where registered
- VAT registration number (if applicable)
- Title deeds/Sectional title deeds/Timeshare certificates or particulars where obtainable
- Lease contracts
- Firearm licences
- Vehicle registration certificates
- Share certificates
- Unit trust certificates/notices
- Certificates of any participation bond investments
- Fixed deposit certificates
- Any other investment certificates
- Savings books
- Last cheque book
- Mortgage bonds
- Promissory notes in respect of loans owed to the estate
- Credit cards and any other bank cards
- Life insurance policies
- Short-term insurance policies
- Particulars of safety deposit boxes at any bank
- Partnership agreements, purchase and sell agreements and latest financial statements in regard of any business being operated (if applicable)
- Any Deed of Sale in which the deceased had an interest
- All debts (or particulars thereof) owed by the deceased.
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Speeding up settlements
The successful administration of estates depends on the service from various external institutions, such as the South African Revenue Service, Master's office, insurance companies and many more. The time spent by these institutions to finalise the affairs of the deceased, affects the success with which the executor can conclude the affairs of the estate.
The executor must attend to income tax as well as all other tax aspects such as VAT up to the date of death. If the deceased's tax affairs had not been recorded properly, the executor might experience problems in obtaining all the information and completing the necessary returns. As a result, valuable time could be lost.
The South African Revenue Service must also issue final assessments against the estate, and the processing of the final assessments may also cause valuable time to be lost.
Should the deceased have been involved in litigation before his death, the executor must evaluate the risk thereof to the estate, and perhaps continue with the litigation. If the litigation must be tried before a court, much time could be lost in obtaining a court date. It also has the potential that huge expenses will have to be incurred in calling witnesses and to prepare documentation for court purposes.
If a person has died of unnatural causes, an inquest must be held. For this, witnesses must be called and the SA Police Services must submit their report to the court. The court must then deliver judgement on the circumstances of death. Due to the backlog facing the courts at present, valuable time will be lost. Executors need the judgement of the court to collect certain assets in the estate, such as accident benefits in terms of insurance policies.
Disputes and discord among the heirs can aggravate things for the executor. This also causes valuable time to be lost in negotiations with the heirs.
To eliminate unforeseen problems with the administration process of estates, it is advisable to have proper and regular estate planning of your affairs done by an expert, your adviser or broker. Proper estate planning will show up deficiencies in your affairs, which can then be addressed timeously. Your will should also be drafted by an expert in conjunction with the estate planning.
Heirs are responsible for the income tax levied on all income collected by the executor from date of death until the date on which the estate is finalised. At finalisation of the estate, the executor will provide the necessary statements reflecting the income accrued during the various fiscal years during which the estate was under administration.
The onus rests on you to state the income on your tax statements. Copies of the statements provided by the executor can be attached to your tax returns for easy reference.
The executor will provide you with copies of the Liquidation and Distribution account, as well as the finalisation statements of the estate. Keep them for purpose of Capital Gains Tax.
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