The death of a loved one is traumatic. Unnecessary and costly delays in winding up the estate can prolong the trauma and potentially cause financial hardship.
Many of the delays can be attributed to a poorly drafted will, important documents that are unavailable, delays with the appointment of the executor and service issues at the Office of the Master of the High Court.
A critical starting point for the smooth and efficient winding up of a deceased estate is a valid, well-drafted and original will, says Eben Nel, national chair of the Fiduciary Institute of Southern Africa (Fisa).
A poorly worded will is in many instances the reason for disputes and different interpretations that may result in legal action. This can delay the process for years.
Nel says it is crucial to inform the person drafting the will of “absolutely everything”. Surprises such as hidden assets or hidden children are bound to cause tension and conflict.
“Do not hide the family’s intricacies – share this with your fiduciary advisor in order for him or her to advise you on how to deal with the issues.”
Some wills are extremely complex because people are in their second or third marriage and have children from the different marriages. It is highly likely that there will be tension about how these children will benefit from the couple’s estates.
The unavailability of important documentation is another major cause of delays. This includes the death certificate, an original will, identity document, marriage certificate, ante-nuptial contract, details of next-of-kin and details of all assets.
“Even though the textbooks will tell you that the absence of certain documentation should not prevent the Master of the High Court from appointing an executor, this is not what happens in practice.”
Nel says they experience great difficulty in obtaining an executor’s appointment when, for example, an ante-nuptial contract is not available when reporting the estate.
He advises clients to nominate an experienced executor from the start who knows how to manage the process. If someone nominates a family member or a close friend, the Master’s Office will not appoint the lay person unless there is an experienced agent who will be winding up the estate on his or her behalf.
The Master of the High Court
The appointment of an executor by the Master of the High Court can take anything from three weeks to several months. Once appointed, the executor is to a large extent at the mercy of the Master’s Office and other government departments, such as the South African Revenue Service and the Department of Home Affairs.
Service levels have deteriorated since the outbreak of the coronavirus and considerable delays are the norm.
The executor, once appointed, must advertise the estate in the Government Gazette and one local newspaper for creditors to institute claims against the estate.
Nel says for the first time since he started dealing with deceased estates the Government Gazette is not publishing legal notices, resulting in huge backlogs.
“Although this is supposed to be a standard procedure, even these processes may sometimes cause delays,” says Nel. At the time of speaking to Nel no legal notices have been published for the past six weeks.
Several bodies, including Fisa, are in the process of asking for a court order that will force the Minister of Home Affairs to resolve the issue.
Ways to reduce delays
It is critical to work with a fiduciary practitioner who should perform both an estate and cash analysis. This will confirm whether the testator’s wishes are legally and practically feasible and whether there will be adequate cash to execute the wishes.
It is advisable to read your will at least every two years to ensure it is still applicable.
“Once you die the executor has no discretion and must fulfil the wishes as they are set out in the will. Cash-shortfalls can often be linked to the terms of the deceased’s will,” notes Nel. Testators must also take into consideration that the executor has no access to life policies with nominated beneficiaries, which may contribute to cash-shortfalls.
The estate has to have cash in order to pay legacies as well as costs such as creditors, bonds, vehicle financing, insurance, capital gains tax and estate duty.
It may happen that the deceased stipulates that all eight of his grandchildren should receive R100 000 each. However, there is only R500 000 cash available and the estate’s obligations are R1.2 million.
The executor is now placed in a position where he has to sell assets to make up for the shortfall. That creates a whole range of different problems and potential delays.
The finalisation of the estate is also often delayed because of disputes between beneficiaries. “That basically stops the executor in his tracks. It can take years to finalise an estate when there are internal family disputes. The executor’s hands are tied until the disputes have been resolved.”
This again, goes back to the importance of having a well drafted will that eliminates different interpretations and anomalies which will open the way for disputes, says Nel.
Be ready when it comes
Spouses are advised to have separate investments in their own names to ensure that both have access to funds when one dies, and delays occur.
“If there is only one bank account, we would advise that there should be a separate account or investment in the other spouse’s name with funds that will cover at least six month’s personal expenses.”
Young people who do not have funds to cover six month’s expenses could consider taking out a life insurance policy that will cover expenses. A life policy benefiting the spouse can pay out in about four weeks after death and is not dependent on the appointment of the executor.
Irrespective of your matrimonial property regime – it is always prudent to ensure that the surviving spouse has access to funds in case of unforeseen delays, says Nel.
Brought to you by the Fiduciary Institute of Southern Africa (Fisa).