Losing a loved one is difficult. The last thing you want to worry about is the estate administration process which can be a stressful procedure even in the best of times. We can help. If your loved one left a will appointing you or a family member as executor or maybe he/she passed on without a will, we can assist.
What happens when someone pass away?
A deceased estate comes into existence when a person dies. The estate must then be administered and distributed in terms of the deceased’s will, or failing a valid will, in terms of the Intestate Succession Act, 81 of 1987. The procedure which must be followed to administer a deceased estate is prescribed by the Administration of Estates Act, 66 of 1965.
Where must the Estate be Reported?
The estate must be reported to the Master of the High Court in whose area of jurisdiction the deceased was living at the time of his/her death. The Master has 14 offices in South Africa at Johannesburg, Pretoria, Cape Town, Pietermaritzburg, Grahamstown, Bisho, Umtata, Bloemfontein, Kimberley, Mmabatho/Mafikeng, Polokwane, Durban, Port Elizabeth and Thohoyandou. With the assistance of correspondent attorneys we can assist you with an estate at any Master’s office.
When and by whom must the Estate be Reported?
The estate of a deceased person must be reported to the Master within 14 days from the date of death. For this reason it is important to come and see us as soon as possible. The estate is normally reported by the nominated Executor or his agent. We as specialists in deceased administration will assist you in completing all the necessary forms to report the estate.
Please bring the following documents with you on the first consultation:
- Identity document of person reporting the estate;
- Deceased’s identity document;
- Death Certificate;
- Marriage certificate and Antenuptial Agreement(if applicable);
- Original will (if the deceased had one) otherwise a list of the close relatives (that there can be established who inherits in terms of the Intestate Succession Act, 81 of 1987;
- Identity document of spouse and children of deceased;
- Income tax number of deceased (if he had an accountant, the accountant’s details)
- List of deceased’s assets and liabilities (if available).
How to Report an Estate to the Master of the High Court
The reporting documents will be slightly different depending on the value of the estate and the type of appointment required.
The Magistrate’s Offices service points will only have jurisdiction if the deceased did not leave a valid will and the gross value of the estate is less than R50 000. Letters of authority entitle the nominated representative to administer the estate without following the full procedure set out in the Administration of Estates Act.
However, if the value of the estate is less than R250 000 but more than R50,000.00 the estate must be reported to the Master of the High Court. The Master will issue Letters of Authority in terms of section 18(3) of the Administration of Estates Act and the full process prescribed by the Act will also not need to be followed. We will assist you to obtain the Letter of Authority for a once of fee. Please contact our offices for more information.
If the value of the estate exceeds R250 000, Letters of Executorship must be issued and the full process prescribed by the Administration of Estate Act must be followed.
Administration of an Estate (Process)
- The reporting documents are delivered to the Master.
- The Master appoints an Executor (If you are the executor in your personal capacity, the Master will require that you appoint a professional to assist you. We can then act as your agent)
- The Executor advertises in a local newspaper and the Government Gazette, inviting all creditors to prove their claims.
- The Executor opens an estate bank account.
- The Executor winds up the estate: In this step the executor reports the estate to SARS, all financial and other institutions, close account get valuations of assets etc.)
- A Liquidation and Distribution (L&D) account is drawn up and sent to the Master for their approval.
- The Master of the High Court approves the L&D account.
- The L&D Account has to lay open for inspection at the Master’s Office and Magistrate’s office for 21 (twenty one) days.
- The Executor has to advertise in a local newspaper and the Government Gazette that the L&D account will lay open for inspection at the Magistrate’s court.
- If there are no objections to the L&D account, the Executor pays out all the creditors and the heirs. If there is an immovable property, it can now also be transferred to the heirs.
- Final documents and affidavits are submitted to the Master to close the estate file.
Costs of estate administration
The following costs are typically payable from the funds in the estate during its execution:
- Master’s fees payable to the Master of the High Court. The formula to determine this is:
o If the value of the estate exceeds R15 000, but is less than R17 000: R42
o If the value of the estate exceeds R17 000, then a further R6 is charged for each next full R2 000 by which the gross value exceeds R17 000.
o Subject to a maximum fee of R600.
- Executor’s remuneration, of which the maximum tariff is determined from time to time in the regulations to the Administration of Estates Act. The current maximum tariff (excluding VAT) is:
o 3.5% on the gross value of the estate assets, including on the gross value of a community estate (excluding assets payable outside the estate direct to beneficiaries), and
o 6% of all incomes (e.g. rentals, interest and dividends) which the executor collects on behalf of the estate from the date of the testator’s death to the date of final execution of the estate
- Valuation costs of assets which have to be valued for estate purposes
The Master may insist that the assets of the estate must be valued by a sworn appraiser, and for that the sworn appraiser is entitled to a fee, which is calculated according to a sliding scale. The appraiser is also entitled to levy kilometre charges, which are also calculated on a scale determined from time to time. A sworn appraiser is a person appointed by the Master specifically for the valuation of assets in an estate. Amongst other things, the appraiser must have a good knowledge of property values in the area in which he is appointed. Appraisers are appointed to do valuations of assets in specific areas, and may not do valuations outside the relevant area.
- Advertising costs
The Administration of Estates Act stipulates that, in the case of each estate an executor has been appointed to administer, the executor must place the following advertisements:
o Calling upon creditors to prove their debts against the estate
o Giving notice that the Liquidation and Distribution Account is open for inspection for a given time at a certain venue
Both the above-mentioned advertisements must appear in one or more local newspapers published in the area where the deceased ordinarily lived, as well as in the Government Gazette. If the deceased lived in another district within 12 months prior to his/her death, the advertisement must also appear in one or more newspapers in that district. Currently the cost per advertisement is about R406.
- Costs for the provision of security to the Master in cases where the executor does not qualify for an exemption
In terms of the Administration of Estates Act, only certain executors are exempt from providing security to the Master. If a nominated executor does not qualify for the exemption, the Master will insist that the executor provide the necessary security for the value of the estate, before the executor’s appointment is confirmed. The security must be in the form of a Bond of Security, issued by a short-term insurance company. The current annual rate for this amounts to 0,684% on the value of the security, with a minimum annual premium of R300.
- Estate bank account bank charges
Professional executors, who administer large numbers of estates, negotiate a favourable rate with the bank.
- Transfer costs of fixed property
Before an estate can be finalised, fixed property forming part of the estate must be transferred into the name of its rightful heir in terms of the Deeds Registries Act. The transfer costs involved are payable from the estate and are calculated according to the value of the fixed property, on a sliding scale. As conveyancers we can also assist with the transfer of the property ensuring the best rate. Kindly contact us for a quote.
- Cancellation costs of bonds registered over fixed property in the estate
The executor must cancel all bonds registered over fixed property forming part of the estate, after the outstanding balances have been settled in full. The costs involved are payable by the estate and are calculated according to the amount of the bond, on a sliding scale.
- Funeral costs form part of the claims against the estate and are payable from the funds of the estate.
If there is not enough cash available in the estate to cover the estate expenses, some of the estate assets will usually need to be sold. Sometimes the heirs might want to keep these assets and they will need to pay money into the estate. Depending on the simplicity of the estate and the amount of work that needs to be done, a smaller executor’s fee can be negotiated. You are also welcome to contact our offices for more information in this regard.