How does the administration of a deceased estate work?
All deceased estates in South Africa are regulated in terms of the provisions of the Administration of Estates Act (Act 66 of 1965). Estates are filed with the Master of the High Court in the region where the deceased lived before passing. Subsequently, these estates are administered under the oversight of the Master.
When a death is reported, the Master, depending on the monetary value of the estate, proceeds to either issue Letters of Authority or Letters of Executorship. Letters of Authority is issued where the value of the estate is equal or less than R 250 000,00 whilst Letters of Executorship is issued in respect of all estates exceeding this value.
Letters of Authority - Estates up to R 250 000,00 in value
Section 18(3) of the Administration of Estates Act, 66 of 1965, is designed to simplify the administration process for estates of a smaller monetary value. This section allows the Master to forgo appointing an executor for estates that do not exceed R250 00,00 in value. Instead, the Master can issue directions on how such estates should be liquidated and distributed, aiming for a quicker and more cost-effective process.
The value threshold was R125,000, but it has been increased to R250,000 since [date], significantly impacting the handling of smaller estates by reducing administrative costs and streamlining procedures. Under Section 18(3), the appointed Master’s Representative is entrusted with clear directives covering aspects such as asset identification and valuation, debt settlement, and the distribution of the estate’s residue to heirs, without having to adhere strictly to the full provisions and processes typically required for executors.
Letters of Executorship - Estates exceeding R 250 000,00 in value
Letters of Executorship are issued in respect of all deceased estates with a value exceeding R250 000,00. The administration of such estates involves a comprehensive process aimed at ensuring the orderly management and distribution of the deceased’s assets and liabilities. The process involves the following: –
• Notification of Creditors and Debtors (Section 29)
The executor must place a notice in the local newspaper and the Government Gazette, calling for creditors to make claims against the estate and debtors to settle their debts.
• Opening of Estate Bank Account
The executor must also open a bank account in the name of the estate for managing the estate’s finances, including paying debts and collecting any monies owed to the deceased.
• Collating and valuing of estate assets
The executor must take control of all estate assets. This include closing all accounts and having the funds paid out to the estate bank account. A detailed inventory of the deceased’s assets and liabilities must prepared reflecting the value thereof as at the date of death.
• Preparation of Liquidation & Distribution Account
Once all the assets and liabilities of the deceased’s estate have been identified, the executor prepares a Liquidation & Distribution account that detail how the estate’s assets will be liquidated (if necessary) and distributed to the heirs. This account is submitted to the Master for approval.
• Account advertised and lying open for inspection (Section 35)
After the L&D account has been approved by the Master an advertisement is placed informing all who may be interested that the said account shall lay for inspection b for a period of 21 days. The account lies for inspection at the offices of the Master as well as at the Magistrate’s Court in the area where the deceased was resident prior to his/her death.
• Payment of Debts and Distribution of Inheritances
Once the Master approves the accounts and no objections are raised, the executor can distribute the assets according to the will or, if there is no will, according to the laws of intestate succession.
• Finalization
Once all debts are paid and the assets distributed, the executor must submit a final report to the Master, closing the estate.
Each estate is unique, and the process can vary in complexity depending on factors such as the size of the estate, whether the deceased had a valid will, and the nature of the assets and liabilities involved. The selling of immovable property could also have a significant effect on the time it takes to finalize the estate.