Your Estate
What is an estate?
An estate comprises the immovable and movable assets of the Testator/Testatrix.
“Sustainable wealth is predictable with a wealth plan, leadership and a solid wealth foundation. Proper estate planning ensures your wealth is not only transferred to future generations but also sustained.”
From Jim Rohn’s One-Year Success Plan
Winding up the Estate
At the death of a person, his/her estate is reported at the office of the Master, who issues Letters of Executorship in terms of which the executor is authorized to administer (wind up) the estate. After the Letters of Executorship have been issued, a notice is published in local newspapers, in which debtors are requested to pay their debts and creditors to submit their claims against the estate within 30 days after the date of publication of the notice. All amounts owing to the estate are collected.
Fixed property, movable property and shares are appraised by persons specially appointed by the Executor, and certificates to assert all other estate assets, are acquired. If the estate is solvent, the estate debts are paid, or arrangements are made to take over debts by heirs, for example, the taking over of existing mortgage bonds over fixed properties. Within six months after the appointment of an executor, an estate account is prepared and submitted to the Master.
This account is a report of all the assets and liabilities as of the date of death, and it also reflects the distribution of the net surplus between the heirs. This distribution takes place in accordance with the directions in the will, or where the deceased died without a will, the distribution is done in terms of the law of intestate succession.
Sometimes we need to apply for an extension of the six-month period if, for example, we have not sold a property or awaiting tax clearance from the Receiver The Master examines the account, and if he is satisfied therewith, an advertisement is placed in a local newspaper to the effect that the account is available for inspection, should any interested person wish to object against the account, this account lies for inspection at the local Magistrates offices for a period of 21 days. After the account has lain free from objections, inheritances are paid over to the heirs, and any property which he/she inherits is handed over to them.
Fixed property, such as a house, is formally transferred in the Deeds Office into the name of the heir. After all the assets have been handed over or transferred to the heirs and all debts of the estate have been paid, an application is made to the Master for discharge of the executor, and the estate is therewith finalised.
The Executor takes the executor’s fees allowed by the Master as remuneration for the work done in winding up the estate, which presently is the sum of 3½% of the gross value of the estate. Deeds Office work, if any, is done at the usual conveyancing tariffs. If no complications arise, a deceased estate can be completely finalised in less than a year.
Is it possible that beneficiaries would need to pay in at all if it is a bankrupt estate or if there is a lot of debt?
A beneficiary is not required by law to pay the debts of the deceased in the normal course of the estate administration. However, they could be called upon to do so if:-
- The marriage was a Community of Property marriage. The surviving spouse’s assets are brought into the estate of the first dying, and all debts are paid, or transferred, taken over by the spouse;
- Where there may be a cash shortfall in an estate, the beneficiaries could be given the choice of paying in the cash shortfall in lieu of liquidating assets.