UNDERSTANDING ADMINISTRATION OF ESTATES IN SOUTH AFRICA – NAVIGATING THE LEGACY JOURNEY
Eleanore Hiralall | Legal Advisor
Administering estates is not just about paperwork and Executor appointments, it is a voyage that touches lives, memories and the very essence of what we leave behind.
It is therefore the responsibility of all of us to have a valid Will in place, ensuring the financial well- being of those we leave behind.
Understanding the administration process can be a daunting task especially if you are not aware of the requirements to report an estate.
This process can be delayed further if your Executor and family are not aware of the assets held in your name that need to be sold/settled/transferred. Keeping a running inventory of your assets / liabilities, Bank accounts etc, can assist your Executor in identifying assets including making necessary arrangements on settlement of debts.
Understanding what assets you own and their estimated values can also assist in the preparation of an Inventory “J243” document when reporting an estate as it will give your Executor an indication of which type of Letter to apply for i.e. Letter of Executorship v Letter of Authority.
How long to wait before an estate can be reported?
When a person passes away the nominated Executor or next of kin is required to report the estate of the deceased within 14 days of the date of death to the local Masters Office having jurisdiction (the jurisdiction of office is determined where the deceased last resided).
What is the difference between an Executor and a Masters Representative?
An Executor is appointed if one’s assets are valued above R 250 000.00. The Master will issue a Letter of Executorship authorising the Executor to act for and administer the estate. An Executor is required to fully comply with the Administration of Estates Act 66 of 1965 (“the Act”) and any Regulations promulgated under this Act.
A Masters Representative has similar functions to that of an Executor albeit to a limited extent (eg. There is no requirement to advertise or draft a liquidation and distribution account, refer table below). A Masters Representative is appointed if one’s assets are below R 250 000.00. The Master will issue a Letter of Authority (Section 18(3) Appointment) authorising the Representative to act for and administer the estate.
What are the two types of Letters one can apply for at the Master?
There are currently two types of Letters the Master of the High Court (“The Master”) will issue namely a Letter of Authority (for estates valued below R 250 000.00) or a Letter of Executorship (for estates valued above R 250 000.00).
It is important to provide as much information in the J 243 - “Inventory document” in order for the Master to be satisfied with the assets held in the estate and their estimated values, for an appropriate letter to be issued in favour of the nominated Executor / Masters Representative.
What are the major differences between a Letter of Authority v Letter of Executorship?
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Letter of Executorship |
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Can the Master remove an Executor?
Yes, the Master can remove an Executor if the Executor does not follow proper procedure (as regulated in the Act) or in instances where the Executor does not act in the best interest of the deceased estate. The Executor has a fiduciary duty to the heirs and is fully accountable to the Master for fulfilling the responsibilities entrusted to him/her. The Master therefore plays an important role in overseeing the administration of the estate and is therefore in a position to remove Executor/s for non-fulfilment of their duties and responsibilities.
Must an Attorney be appointed for my estate?
The appointment of an Attorney may not be necessary provided that your estate is under R 250 000.00, is a simple estate with minimal assets and there is no immovable property requiring transfer. Complexities may arise if there was no Will (intestate succession will apply), there are minor children, a trust needs to be established or there are various properties requiring transfer etc. An Attorney will be required in these circumstances to assist in the administration process.
Would my Pension Fund fall into my estate?
Funds belonging to a pension fund (death benefits) in terms of Section 37 (C) of the Pension Funds Act No. 24 of 1956, are generally excluded from one’s estate. However, certain circumstances would warrant such benefit to fall into your estate in instances where no beneficiaries / dependants can be identified and in circumstances when your estate is insolvent.
There are also instances in terms of Section 37 D, particularly sub section (1)(b)(ii), where an employer can (but not limited to) for reasons of theft, dishonesty, fraud or misconduct conducted by an employee, deduct any amount due from the employees’ pension fund to satisfy any damages suffered by it.
Where can I find the Reporting Forms?
The forms required to report an estate can be downloaded from the Department of Justice website: www.justice.gov.za/master. When using the new Masters online reporting system, the forms are also available on this platform.
Can an estate be reported online or does one have to physically go to a Masters Office?
The Masters office officially went online effective 10 October 2023 which means that deceased estates can be reported online from anywhere in the world. The link to the new reporting system can be accessed here: dojonline.justice.gov.za
This new system will allow members of the public to register deceased estates, without having to visit a Master's office (except for the lodgement of original wills). Online registrations will also speed up the registration process and ensure quicker availability of the particulars of the beneficiaries and trustees.
Important considerations to adhere to during your lifetime
- Ensure that you leave behind a valid Shariah compliant Will so that you do not leave your family with financial and legal challenges.
- Give a copy of the Will to your Executor and your family members so in the event of death it can be easily and quickly retrieved.
- Be transparent with your financial planning, keep a running inventory of both assets and liabilities. Include in your inventory list, bank accounts, credit cards, properties owned, unpaid debt, mortgage repayments, insurance policies, pension or provident funds, retirement annuities and the like.
- Keep essential documents at hand, copies of Identity documents for you, your spouse, children and other dependants, Marriage Certificates, ANC contracts etc.
- Ensure that your dependants have sufficient cash on hand to assist with at least 6 months of living expenses, as your bank accounts and other assets will be frozen and deceased estates take a long time to wind up.
- If you have minor children, make provisions for their education and support.
*The above is for general information purposes and should not be construed as advice. For legal advice relating to the Administration of Estates and the implications thereof, it is recommended that you seek guidance and advice from a Legal Practitioner*