The death of a loved one can be an emotional overwhelming experience, and apart from having to deal with the grief and sadness of the event, one has to face the aspect of reporting and the eventual administration of the Estate. At Solomon Law, we understand how challenging this process can be for you, and our Deceased Estate department is here to assist you.
Step by step process:
1. Gathering documentation:
The family of the deceased should establish who the nominated Executor is of the Estate and obtain the death Certificate and Last Will and testament of the deceased, if the Deceased left a valid Will. The next step would be to meet with the executor, and supply the bank account details, accounts, Title-deeds to properties, insurance policy documents and any other documents you can find that pertain to the financial affairs of the deceased.
2. Reporting the Estate:
The Estate of the deceased should ideally be reported to the Master of the High Court within 14 days of date of death. The procedure that must be adhered to in the administration of the estate is prescribed by the Administration of Estate Act 66 of 1965 (as amended). The nominated executor will submit the following documentation to the Master of the High Court so that he/she may be formally appointed, and granted the necessary powers to administer the estate.
- Death notice;
- Acceptance of Trust as executor;
- Next of kin affidavit (if applicable);
- Section 9 Inventory;
- This procedure can take up to 6 weeks.
3. Letter of Executorship:
One the above-mentioned documentation has been submitted, the Master of the High Court will formally appoint the Executor and grant him/her the necessary powers to administer the estate of the deceased, in terms of the Letter of Executorship. Once the executor is in receipt of the Letter of Executorship from the Master’s office, one of the executor’s first steps is to advertise the estate so that any creditors (people or organisations owed money by the estate) can become aware of the need to register their claims. You can expect this to take up to 8 weeks from the person’s death. Advertisements must be placed in the Government Gazette and a local newspaper. Creditors have 30 days from the date of the publication of the advertisements to lodge any claims against the estate.
4. Preparing the Liquidation and Distribution (L&D) account:
Upon the expiration of the 30 days’ notice period to all the creditors of deceased, the executor will prepare the Liquidation and Distribution account (L&D Account). In this account the executor accounts for all the assets and liabilities in the estate, which must also set out the names of the beneficiaries and what their inheritance is in terms of the will, as well as the income and expenditure incurred by the estate from the deceased’s date of death. The executor will submit the L&D account, together with supporting documents and vouchers (if the estate is subject to estate duty), to the Master of the High Court. The Master of the High Court requires that the executor file an L&D account within 6 months of the date of death. If it is not possible to have a first L&D account ready within this period, the executor has to submit a request to the Master for an extension. If the Master has queries regarding the account, he submits them to the executor, who has to respond within a certain time period. The executor must receive and respond to the Master’s enquiry before the Master gives approval for the account to be advertised. The executor will submit the deceased’s final tax return to the Receiver of Revenue at the same time.
5. Inspection period for the liquidation and Distribution account:
The L&D account must be advertised in the Government Gazette and a local newspaper and made available for inspection for 21 days at the Master’s Office and at the Magistrate’s Office in the district where the deceased lived. This can be viewed by any member of the public. The beneficiaries also have the opportunity to review the account before it is finally approved by the Master. If a second L&D account has to be filed, the executor has to go through the same process to make it available to the public. If no objections are lodged against the L&D account, the Master will confirm to the executor that the assets may be distributed to the beneficiaries.
6. Distribution to Heirs and payment to Creditors:
Before distributing the estate, the executor must obtain a release from the Receiver of Revenue. The Receiver must be satisfied that all outstanding taxes have been paid before giving permission for the balance of the estate to be distributed to the beneficiaries. The creditors must also be paid before the estate can be distributed. The executor then prepares a cash statement and distributes the assets to the beneficiaries. He or she will also arrange for the transfer of fixed property – for instance, the house from the deceased’s name to the spouse’s name, if the spouse has inherited it. The estate pays the transfer costs regardless of who inherits the property, and there will be no transfer duty, but conveyancing costs must be paid. It takes, on average, 8 months to finalise an estate and for the beneficiaries to receive their inheritances.
7. Obtain the filing slip:
Once the distribution process has been completed, the Executor must provide the Master’s office with proof that the assets have been distributed and that all creditors have been paid. If the Master is satisfied, a filing slip will be issued, the estate will be deemed to be finalised, and the duties of the Executor are discharged. Sometimes additional assets come to light – for instance, an offshore property – long after the estate has been distributed. In that case, the executor has to deal with these assets, or appoint an offshore executor in the case of offshore assets, and, if the value of assets is R5 000 or more (or an amount that would affect estate duty), you would need to lodge a supplementary L&D account.