The Estate Administration Process

The Estate
Administration
Process

DECEASED ESTATE ADMINISTRATION

At the time of death

The next of kin/friend is required to firstly obtain a death certificate and then arrange for the deceased’s documents for hand-over to the nominated Executor. Where Appleton is the nominated Executor, once we are notified of the death, we will guide the next of kin or appointed person through the immediate steps to be taken and provide them with a full information pack outlining which documents are required to report the Estate.

Estate
interview

The next step is for the next of kin or nominated person to meet with an Appleton administrator to:

Hand over all relevant documentation

Advise details of all beneficiaries

Establish all assets and liabilities in the estate

Complete necessary documentation required to report the estate

Application for appointment as Executor

The Master of the High Court (MOHC) must formally appoint the Executor (Appleton) and grant the necessary powers to administer the Estate, by issuing Letters of Executorship (LE) in favour of the Executor (Appleton)

The length of time this process takes is dependent on the MOHC

It can be more than eight weeks for the LE to be issued

Advertisement
for Creditors

Once the Letter of Executorship is issued to Appleton, we:

Advertise the Estate in the Government Gazette and the local newspaper

Creditors then have 30 days to lodge any claims against the estate

Draft the Liquidation and Distribution Account

Appleton then drafts an account of the assets and liabilities of the Estate

Appleton is also responsible for ensuring that the tax returns for the estate, both pre and post death, are submitted.

The drafted account shows a ‘snapshot’ of all assets and liabilities, distribution to the beneficiaries as per the Will, as well as income and expenditure incurred after date of death.

The Executor has six months from the date the LE is issued to lodge the account with the MOHC.

Approval of the Liquidation and Distribution Account by the MOHC

Once the Letter of Executorship is issued to Appleton, we:

The Liquidation and Distribution account is then lodged with the MOHC for perusal and approval.

Once the MOHC has perused the account, s/he will issue his ‘Query Sheet’. In this query sheet, s/he will grant the Executor permission to advertise the account as lying open for inspection.

Note, it can take more than eight weeks for the query sheet to be issued.

Advertisement of Liquidation and Distribution Account for Inspection

On confirmation of acceptance of our account from the Master of the High Court, Appleton proceeds to request for the advertisement in terms of Section 35 of the Administration of Estates Act to be published in the Government Gazette and local newspaper that circulates in the jurisdiction that the deceased resided advising that our account is lying open for inspection.

The account then lies open for inspection for 21 days.

The account is now a public document and open for inspection by anyone who has an interest in the estate.

Any objections against the account are lodged with the Master during this time.

Distribution of the Estate assets

Once the Letter of Executorship is issued to Appleton, we:

Thereafter Appleton must obtain the deceased Estate compliance letter from SARS.

Appleton as Executors then pay creditors of the Estate.

Once creditors have been paid, Appleton then prepares an updated cash statement reflecting any changes in the cash in the estate.

Assets are then distributed.

Fixed properties are transferred.

The inheritance to heirs paid out.

Finalisation of the estate/Filing Slip issued by the Master of the High Court

Appleton as the Executor provides the Master’s office with proof that all creditors have been paid and all assets distributed in terms of the Last Will and Testament and the L&D Account.

The estate file is closed and archived.

The Master of the High Court issues a filing slip confirming closure of their file.

The Fiduciary Institute of South Africa (FISA) published the below table giving timelines for the length of time it can take for the winding up of an Estate.

THE ESTATE ADMINISTRATION TIMELINE

Action

From death to reporting the death to the Master of the High Court and handing in the Will

Waiting for the Master to issue letters of executorship to the Executor

Placing the advertisement for debtors and creditors

Advertisement time period

Time to finalise drafting the account and lodging with the Master

Waiting for approval from the Master

Preparing to advertise the account

Advertisement period

Distribution of assets

Final requirements and final cash pay-out to residual heirs

Total

Shortest possible time

150

Time if delays are experienced

180

721

The Costs Of
Estate Administration

The Fiduciary Institute of Southern Africa (FISA) www.fisa.net.za has a number of excellent Consumer Education pieces posted on its website. The following is a summary of a piece designed to alert consumers to the costs associated with death.

In addition to the immense emotional cost of the loss of a loved one, together with the possible immediate loss of income to a spouse or partner, the costs of Estate administration need to be borne in mind and planned for.

The quantum of administration costs is often determined by the complexity of the Estate, but every Estate above R250,000 in value has certain requirements and formalities that have to be met and thus, certain costs that are incurred and that have to be borne by the Estate.

These include funeral expenses, Master of the High Court fees, Executor’s remuneration (currently, the prescribed tariff is set at 3,5% of the gross value of the assets), costs of a bond of security of approximately 0,5% of the gross value of the Estate, mortgage bond cancellation and conveyancing costs, costs of transferring other assets such as shares and timeshares, maintenance assets within the Estate, tax fees and vehicle registration certificates.

Remember too that there may be a host of claims against the Estate, including those of SARS, rates and taxes, mortgage bonds, bank overdrafts and other sundry creditors. This may mean that while the Estate may be solvent in that its assets exceed its liabilities, there may be insufficient cash to pay the costs associated with the administration of the Estate. This situation creates what is termed a ‘cash shortfall’ in the Estate that needs to be met by for example, the heirs contributing cash into the Estate, or by the sale of assets within the estate such as property or motor vehicles. Thus, it is vitally important that you consider the cash requirements of the winding up of your Estate when conducting your Estate planning with your advisor.