The Estate Administration Process Explained
At the time of death
The next of kin/friend is required to firstly obtain a death certificate and then arrange for the deceased’s documents for hand-over to the nominated Executor. Where Appleton is the nominated Executor, once we are notified of the death, we will guide the next of kin or appointed person through the immediate steps to be taken and provide them with a full information pack outlining which documents are required to report the Estate.
Estate interview
The next step is for the next of kin or nominated person to meet with an Appleton administrator to:
Hand over all relevant documentation
Advise details of all beneficiaries
Establish all assets and liabilities in the estate
Complete necessary documentation required to report the estate
Application for appointment as Executor
The Master of the High Court (MOHC) must formally appoint the Executor (Appleton) and grant the necessary powers to administer the Estate, by issuing Letters of Executorship (LE) in favour of the Executor (Appleton)
The length of time this process takes is dependent on the MOHC
It can be more than eight weeks for the LE to be issued
Advertisement for Creditors
Once the Letter of Executorship is issued to Appleton, we:
Advertise the Estate in the Government Gazette and the local newspaper
Creditors then have 30 days to lodge any claims against the estate
Draft the Liquidation and Distribution Account
Appleton then drafts an account of the assets and liabilities of the Estate
Appleton is also responsible for drafting submitting tax returns for the Estate
The drafted account shows a ‘snapshot’ of all assets and liabilities, distribution to the beneficiaries as per the Will, as well as income and expenditure incurred after date of death.
The Executor has six months from the date the LE is issued to lodge the account with the MOHC.
Approval of the Liquidation and Distribution Account by the MOHC
The Liquidation and Distribution account is then lodged with the MOHC for perusal and approval.
Once the MOHC has perused the account, s/he will issue his ‘Query Sheet’. In this query sheet, s/he will grant the Executor permission to advertise the account as lying open for inspection.
Note, it can take more than eight weeks for the query sheet to be issued.
Advertisement of Liquidation and Distribution Account for Inspection
After receipt of the query sheet from the MOHC, Appleton then advertises the account in the Government Gazette and local paper.
The account then lies open for inspection for 21 days.
The account is now a public document and open for inspection by anyone who has an interest in the estate.
Any objections against the account are lodged with the Master during this time.
Distribution of the Estate assets
Thereafter Appleton must obtain the deceased Estate compliance letter from SARS.
Appleton as Executors then pay creditors of the Estate.
Once creditors have been paid, Appleton then prepares an updated cash statement reflecting any changes in the cash in the estate.
Assets are then distributed.
Fixed properties are transferred.
The inheritance to heirs paid out.
Sign-off by the Master of the High Court/Filing Slip
Appleton as the Executor provides the Master’s office with proof that all creditors have been paid and all assets distributed in terms of the Last Will and Testament and the L&D Account.
The Estate is finalised and the duties of the Executor are discharged.
Appleton obtains a formal filing slip from the Master’s office in order for our file to be closed and archived.
The Fiduciary Institute of South Africa (FISA) published the below table giving timelines for the length of time it can take for the winding up of an Estate.
| The Estate Administration Timeline | ||
|---|---|---|
| Action | Shortest possible time (days) | Time if delays are experienced (days) |
| From death to reporting the death to the Master of the High Court and handing in the Will | 2 | 21 |
| Waiting for the Master to issue letters of executorship to the Executor | 2 | 90 |
| Placing the advertisement for debtors and creditors | 7 | 14 |
| Advertisement time period | 30 | 44 |
| Time to finalise drafting the account and lodging with the Master | 7 | 60 |
| Waiting for approval from the Master | 14 | 90 |
| Preparing to advertise the account | 7 | 14 |
| Advertisement period | 21 | 28 |
| Distribution of assets | 30 | 180 |
| Final requirements and final cash pay-out to residual heirs | 30 | 180 |
| Total | 150 | 721 |
THE COSTS OF ESTATE ADMINISTRATION
The Fiduciary Institute of Southern Africa (FISA) www.fisa.net.za has a number of excellent Consumer Education pieces posted on its website. The following is a summary of a piece designed to alert consumers to the costs associated with death.
In addition to the immense emotional cost of the loss of a loved one, together with the possible immediate loss of income to a spouse or partner, the costs of Estate administration need to be borne in mind and planned for. The quantum of administration costs is often determined by the complexity of the Estate, but every Estate above R250,000 in value has certain requirements and formalities that have to be met and thus, certain costs that are incurred and that have to be borne by the Estate. These include: funeral expenses, Master of the High Court fees, Executor’s remuneration (currently, the prescribed tariff is set at 3,5% of the gross value of the assets), costs of a bond of security of approximately 0,5% of the gross value of the Estate, mortgage bond cancellation and conveyancing costs, costs of transferring other assets such as shares and timeshares, maintenance assets within the Estate, tax fees and vehicle registration certificates.
Remember too that there may be a host of claims against the Estate, including those of SARS, rates and taxes, mortgage bonds, bank overdrafts and other sundry creditors. This may mean that while the Estate may be solvent in that its assets exceed its liabilities, there may be insufficient cash to pay the costs associated with the administration of the Estate. This situation creates what is termed a ‘cash shortfall’ in the Estate that needs to be met by for example, the heirs contributing cash into the Estate, or by the sale of assets within the estate such as property or motor vehicles. Thus, it I vitally important that you consider the cash requirements of the winding up of your Estate when conducting your Estate planning with your advisor.