Being unprepared for the practical realities of death can make the winding up of a loved one’s estate even more traumatic. The winding-up process can be lengthy, cumbersome, and bureaucratic – worsened recently by delays as a result of the Covid-19 pandemic. Thankfully, all estates follow the same winding-up process which means that there is a large amount of consistency when it comes to estate administration. Generally speaking, the winding-up process follows this pattern:
Report the death to home affairs
In terms of the Births and Registration Act, a person’s death must be reported to the Department of Home Affairs who will then issue a death certificate. In practice, the funeral parlour will report the death on your behalf and then provide you with the death certificate. However, it is important to ensure that you provide the correct details to Home Affairs as any errors on the death certificate can cause unnecessary delays. The executor will not be able to register the estate with the Master’s Office without a correct death certificate.
Find the will
Following your loved one’s death, you will need to locate their will. If you do not know the location of the will, it is advisable to contact your loved one’s bank, attorney, financial advisor or investment house. Besides being an important document in terms of the distribution of your loved one’s assets, it also provides details of who your loved one has nominated as executor to their estate. Once you’ve established who the executor is to the estate, you will need to notify that person of the death.
Register the deceased estate
The executor’s first job is to notify the Master of your loved one’s death by submitting a J94 death notice. It is important to note that all documents required for the winding up of a person’s estate are available online. The death notice needs to be completed by the deceased’s surviving spouse, nearest blood relative, or the person who identified the deceased and should be submitted within 14 days of death. If the deceased was living in South Africa, their estate must be reported to the Master whose jurisdiction the deceased was living 12 months prior to their death. If the deceased was not residing in South Africa at the time of their death but held assets in this country, then their death can be reported to any Master’s Office, provided that it is only reported to one.
Executor to arrange preliminary meeting with family
The next function of the executor is to arrange a preliminary meeting with the deceased’s loved ones, with the primary purpose of this meeting being to check the will, establish who the beneficiaries are, and prepare a rough inventory of the deceased’s assets and liabilities. In preparing for this preliminary meeting, it will help to take copies of the deceased’s bank account details, title deeds, insurance policies, birth and marriage certificates.
Executor to Master for Letters of Executorship
Up until this stage, the executor is still the nominated executor in terms of the will and to have this position formalised they will need to apply to the Master of the High Court to be appointed as executor. To do this, the Master must first ensure that the will is valid and that the executor can be appointed. Where the value of the estate is greater than R250 000 and if the Master is satisfied that the will is valid, they will issue Letters of Executorship to confirm the executor’s mandate. Where the value of the deceased estate is less than R250 000, the Master can dispense with the need for an executor and give directions as to how the estate should be wound up. If the will is found to be invalid, then the deceased’s estate must be wound up in terms of the laws of intestate succession. In such an instance, the Master will appoint an Executor Dative to the deceased estate.
Open bank account
If the estate has cash of more than R1 000, the executor is required to open a bank account in the name of the deceased and deposit all monies into that account.
Report the estate to Sars
The executor is also required to report the deceased estate to Sars and to ensure that all tax liabilities are brought up-to-date. In doing so, they are required to submit tax returns and pay over any CGT that is owing.
In order to wind up the estate, the executor will need a number of documents. Other than the death notice and death certificate, the executor will require the deceased’s ID document, certified copies of the ID documents of all heirs who stand to inherit, the original signed will, marriage certificates, antenuptial contracts, birth certificate, divorce orders, and maintenance agreements. If the deceased has heirs who reside overseas, obtaining certified copies of their ID documents can cause delays in the process.
Advertise the estate
The executor is then required to advertise the deceased estate so that any potential creditors can register their claims. To do this, the executor will need to place a Section 29 advert in the local newspaper and government gazette in the area where the deceased resided prior to their death. Generally speaking, if you contact your local newspaper they will send you the relevant forms to complete, and will forward the advert to be published in the government gazette. Once the advert is published, creditors have 30 days in which to lodge claims against the estate.
Prepare liquidation and distribution account
After the expiration of this 30-day period, the executor must prepare a liquidation and distribution account, also known as the L&D account, which is a complete list of all the assets and liabilities of the deceased estate. It must also include the names of the beneficiaries, what their respective inheritance is in terms of the will, as well as the income and expenditure incurred by the deceased estate. The Master requires that the executor files the L&D account within six months of the date of death although they can request an extension if necessary.
Lodge the L&D account with the Master
Once finalised, the executor must lodge the L&D account with the Master where it must lie for 15 days to allow for queries. The executor is required to respond to any queries that the Master has on the accounts and, once satisfied, the Master will give permission for the L&D account to be advertised.
Advertise L&D account
The executor is then required to place a Section 35 advert in the local newspaper and government gazette announcing that the L&D account will lie open for inspection at the Magistrate’s Court for a period of 21 days. If no objections are received, the Magistrate will issue a certificate of no objection which, once lodged with the Master’s Office, will mean that the executor can distribute the estate.
Release from Sars
Before distributing assets to the beneficiaries, the executor must obtain a release from the receiver of revenue confirming that all outstanding taxes have been paid.
All liabilities in the estate must be paid before the estate can be distributed amongst its heirs, including any amount owing to Sars in respect of estate duty, and any amounts owing to the estate’s creditors. The executor is entitled to charge a prescribed fee of no more than 3.5% of the gross value of the estate, excluding VAT. The executor is also entitled to a fee of 6% of any income, such as dividends, rent or interest, that they collect on behalf of the deceased estate.
Pay heirs and beneficiaries
Once all liabilities have been settled, the executor can distribute the assets either by transferring them into the name of the heirs or by realising the property and paying out the proceeds in terms of the will. The executor must ensure that fixed property is transferred into the names of the nominated beneficiaries, keeping in mind that no transfer duty is payable on inherited property, although the conveyancing fees will be paid by the estate. Once the heirs have received their inheritance, they are required to sign an acquittance as verification of receipt.
Apply to Master for discharge of duties
At this point, the executor can apply to the Master for a discharge from all responsibilities as the executor and, if satisfied, the Master will issue a filing slip and discharge certificate.