Losing a loved one is a traumatic time in anyone’s life. Besides dealing with grief, winding up a deceased estate can be incredibly stressful – particularly if you’re not an expert. If you’ve been appointed as the executor of a deceased estate or need help with any aspect of the administration process, we can help. To start, we’ve compiled the answers to some common questions you may be asking at this difficult time.

What happens to someone’s estate and assets when they die?

In South Africa, once a person passes away, their estate will be distributed according to their Will. If they don’t have a Will drawn up, the estate will be distributed according to South Africa’s Intestate Succession Act 81 of 1987. Under the act, your estate will be divided amongst your surviving spouse, children, parents, or siblings according to a set formula.

How does the administration process start? 

When a person passes away, the deceased’s estate must be reported within 14 days to the Master of the High Court in the district where the death occurred. Once the estate has been reported, the high court will appoint an executor via a letter of executorship if the assets are worth more than R250,000, or a letter of authority if the assets are worth less than R250,000. The documents that the Master requires can be found on the Master’s website.

Who is an executor, and what do they do?

The executor’s primary role is to administer the deceased’s assets (property, vehicles, businesses, and investments, etc.), settle their liabilities, pay any outstanding debts, finalize taxes, and distribute the remaining estate to the rightful heirs. If the deceased person named an executor in their Will, the Master of the High Court will appoint them as the executor. In the event the deceased passes away without a Will, the deceased’s family may nominate an executor for the Master to appoint.

What if I’m the executor and don’t have the necessary expertise?

If you’re the executor of a deceased estate and don’t have the necessary expertise to administer it, you can appoint a fiduciary specialist or legal professional to help you administer the estate under power of attorney as an executor agent. Cornerstone offers a comprehensive deceased estate administration service, whether you pass away with or without a Will. Here’s how you can benefit from our holistic service:

• We’re experts in applying the Intestate Succession Act when administering estates without a valid will.
• We can act as executor agents to ensure that the estate is wound up in accordance with legislation.

Remember, too, that the deceased’s Will does not need to have been drafted by us for us to assist with a deceased estate.

What takes place in relation to the estate’s account?

After the Letters of Executorship have been issued, the executor publishes a notice calling on creditors who have claims against the estate to lodge them, usually within 30 days of publication.

Over the next six months, the executor is required to submit an account listing the assets, liabilities, income and expenses. This is referred to as the Liquidation and Distribution Account that is then submitted to the Master of the High Court. This account is examined, and if all is in order, the Master gives the executor permission to advertise the account to lie for inspection for not less than 21 days. Anyone can object to the account during this time.

What happens after the inspection period?

Once the inspection period has passed and no objections are raised, the executor can pay the creditors and distribute the estate assets among the heirs in accordance with the Will. The executor then lodges confirmation that all assets and liabilities have been dealt with to the Master. The Master will then confirm the estate has been finalised releasing the executor of their fiduciary duties.

What happens with tax? 

Every estate must have a tax compliance certificate in order for the Master to allow for the estate to be finalised and closed. The taxes that are to be dealt with is as follows:

• Income Tax
• Post-Death Tax
• Capital Gains Tax
• Outstanding VAT Returns (in the event of the deceased owning a business).

Cornerstone Tax and Accounting Services are experts in this field and can assist with all deceased estate tax needs.

When is estate duty payable?

The estate attracts estate duty tax in the event that nett estate assets are more than R3,500,00.00. Estate duty is a tax paid on the dutiable estate of the deceased person and is charged at a rate of 20% on the first R 30 million and then 25% on any dutiable amount over R 30 million. What is important to remember is any inheritance bequeathed to your surviving spouse or life partner is an allowable deduction, which decreases the estate net value and assists with escaping an estate duty consequence.