FAQ — Wills, Trusts & Estates
Key Takeaways:
Estate-related FAQs provide insights into managing assets after a person's passing.
Questions cover wills, administration or probate, and executor responsibilities.
Legal guidance is essential for navigating complexities and ensuring a smooth estate administration.
Administration of deceased estate FAQs
Find comprehensive answers to some of the most popular questions regarding wills, trusts and estates in South Africa and how the legal framework is set up locally. Should you have specific questions pertaining to your situation, then contact us directly with your query or find out more about our wills, trusts and estates.
What is an estate?
A person’s ‘collection” of assets (less any debts on those assets) is also used as the primary way to refer to their net worth i.e. the value of everything a person owns. Meaning their financial and non-financial assets minus their total outstanding liabilities (your debts).
An asset is a resource with economic value that someone owns or controls with the expectation that it may provide a future benefit. Assets can be sorted into short-term (or current) assets, fixed assets, financial investments, and intangible assets.
What is a deceased estate?
A deceased estate comes in existence when a person dies leaving property and assets that need to be distributed to the beneficiaries listed in terms of a will or to intestate beneficiaries (when the deceased did not sign a will). The estate is administered in terms of the Administration of Estates Act 66 of 1965. A deceased estate must be reported to the Master of the High Court.
How does one “wind–up” a deceased estate?
Winding up of a deceased estate relates to the administration process of the deceased estate. We have spoken about the administration of deceased estates in our article What does an Executor actually do?, in our article It Costs How Much “To Die”? The costs involved in administering a deceased estate and more in-depth in our Deceased Estates Guide.
But to summarise and according to the Administration of Estates Act 66 of 1965, once an Executor has been appointed, their duties related to the administration of the deceased estate can be summarised as follows –
Note: An executor is tasked with the winding up of a deceased estate and is responsible for protecting the assets of an estate, making distributions of property to beneficiaries according to the will and paying the debts and various taxes of the estate, ultimately leading to the closing off of the deceased estate.
The executor must meet with the family of the deceased to obtain all the relevant information and documentation needed, such as the death certificate and a list of the deceased’s assets and liabilities;
The deceased estate must be reported to the Master of the High Court in the area where the deceased lived;
The executor must provide notice to the creditors (persons or entities the deceased owed money to) to inform them of the death of the deceased. The notice will also request the creditors to institute their claims against the deceased estate within a period of not less than 30 days or more than 3 months after publication of the notice. The notice must be published in a local newspaper and the Government Gazette;
All existing bank accounts of the deceased must be closed and a separate bank account (estate late bank account) must be opened where all money that forms part of the deceased estate must be kept;
The executor must determine if the deceased estate has enough assets to pay for the liabilities that forms part of the deceased estate. If there is not enough money to pay some or all the liabilities, the Executor must consider selling some of the assets that form part of the deceased estate;
The executor will be responsible for drafting accounts that must be advertised for the public to inspect. These accounts must then be lodged at the offices of the Master of the High Court. These accounts will set out the assets and liabilities, as well as how the deceased estate will be divided and distributed between the heirs of the estate, and
After the accounts have been approved by the Master of the High Court, the executor must pay the creditors and distribute the deceased estate accordingly.
Once step 7 is done (meaning the estate has been effectively wound up), the executor can be discharged from his/her duties.
What are the main steps in the administration of a deceased estate?
The steps are:
Report the estate to the Master of the High Court and the appointment of the executor.
Open an estate bank account.
Take control of the assets and pay debts.
Submit final tax returns to SARS, pay CGT and other taxes (if applicable)
Prepare the Liquidation and Distribution Account and pay estate duty.
Distribution to the heirs
Close the estate bank account and obtain the final discharge from the Master of the High Court.
Which deaths must be reported to the master of the high court?
The death of a person living in South Africa and the death of person who was living and passed away in a foreign country but owned property or assets in South Africa.
To which master of the high court must the estate be reported?
In the area where the deceased was living 12 months prior to his/her death. If the deceased was living outside South Africa the estate can be reported to any Master of the High Court.
By whom must the estate be reported?
The estate must be reported by the person nominated in terms of the Will as the executor. If there is no will the estate must be reported by a family member of the deceased. For an estate where the value of the total assets of the deceased is over R250 000.00 an attorney or accountant must assist the executor or family member in this regard.
What documents are required to report an estate?
The documents and procedure for reporting an estate and the administration thereof differ depending on the value of the total assets of the deceased. If the value of the total assets estate is under R250 000.00 application is made to the Master for the issue of Letters of Authority. If the value of the total assets of the estate is over R250 000.00 application is made to the Master for the issue of Letters of Executorship.
What does it mean to distribute assets?
Once the Executor has the authority to distribute the assets (according to the Will or according to the Intestate Succession Act), he/she can begin to distribute the assets as per the L&D Account.
During this process, assets are either awarded to the heirs (for example, property is transferred into the heir’s name), or property is sold and the amount received from the sale of the property is paid out in accordance with the Will.
Once the heirs have received their inheritance, they are required to sign an acquittance as verification of receipt.
If the value of the total assets of the estate is under R250 000 what documents are required to report an estate and obtain letters of authority from the master of the high court?
The following documents are required:
Death Notice
Undertaking and Acceptance of Masters Directions (in duplicate)
Next of Kin Affidavit
Affidavit (confirming that the estate has not been reported to the Master yet)
Declaration regarding the marriage of the deceased
Inventory
Nomination to Act as Executor (if there is no will)
Certified copy of the death certificate
Certified copy of the ID of the deceased
Certified copy of the ID of the surviving spouse (if applicable)
Certified copy of the ID of the executor
Certified copy of the ID’s of the children of the deceased (if applicable)
Certified copy of the marriage certificate (if applicable)
Certified copy of the ANC (if applicable)
Original Will and codicils (if applicable)
Proof of assets of the deceased (e.g. bank statement)
If the value of the total assets of the estate is over R250 000.00 what documents are required to report an estate and obtain letters of executorship from the master of the high court?
The following documents are required:
Death Notice
Acceptance of Trust as executor (in duplicate)
Next of Kin Affidavit
Affidavit (confirming that the estate has not been reported to the Master yet)
Declaration regarding the marriage of the deceased
Inventory
Nomination to Act as Executor (if there is no will)
Certified copy of the death certificate
Certified copy of the ID of the deceased
Certified copy of the ID of the surviving spouse (if applicable)
Certified copy of the ID of the executor
Certified copy of the ID’s of the children of the deceased (if applicable)
Certified copy of the marriage certificate (if applicable)
Certified copy of the ANC (if applicable)
Original Will and codicils (if applicable)
Fidelity Fund Certificate from the attorney assisting the executor
How is an estate distributed if the deceased did not leave a will?
The estate will devolve intestate and will administered according to the rules of the Intestate Succession Act 81 of 1987.
What is a liquidation and distribution account in a deceased estate?
A Liquidation and Distribution Account is the document that is prepared by the executor which lists the assets and liabilities of the deceased as at date of death, the income and expenditure after date of death and the distribution to the heirs. This document must be submitted to the Master of the High Court within 6 months from the date the executor was appointed. The Liquidation and Distribution Account must be approved by the Master of the High Court.
What is Estate planning?
Estate planning touches on many areas, and involves not only planning for death but also planning during your lifetime – from financial planning, health planning, matrimonial property regime planning, income tax and business planning, to offshore and retirement planning – all of which should form part of any comprehensive estate planning exercise.
It must be highlighted that estate planning is generally misconceived to be simply about ‘making a will’. Whilst a crucial part of your estate planning, a will is only one component of a comprehensive estate plan. Matters such as your marriage contract(s), capital gains tax (CGT) and any income taxes you owe to SARS must be considered in your estate plan to ensure that the process of winding up the estate is smooth.
Estate planning involves putting together and crafting a number of legal documents and processes that will have the effect of creating and maintaining a lifestyle for you and your family while you are alive and thereafter for your loved ones after your death. Planning your estate, will ensure your loved ones are taken care of. Properly.
Estate planning is crucial if you are married, have been married multiple times, have children from different relationships or support people financially. It will allow the protection of your loved ones from legal stresses and financial insecurity after your death. You have the chance to ensure that your estate duties are minimised and that there is sufficient liquidity to meet your estate's financial obligations upon your death - ultimately ensuring that any inheritances are sufficiently distributed or protected for your younger beneficiaries.
What is estate duty?
Estate duty is a tax levied on the deceased estate.
What is the rate of estate duty?
The rate of estate duty payable is 20% on the first R30 million of the dutiable amount and 25% on any excess. There is rebate of R3 500 000.00 on the net value of the estate. Other exemptions may be applicable.
When is estate duty payable?
Estate duty must be paid within 1 year from the date of death of the deceased. Penalties will be levied if payment is not made within this time period. Estate Duty is usually paid once the Liquidation and Distribution Account has been finalized.
What advertisements are required when administering a deceased estate?
1. Notice to debtors and creditors and Notice that the Liquidation - This advertisement advises debtors and creditors of the death of the deceased and advises them to lodge their claims against the estate. The advertisement must appear on the same day in the Government Gazette and a local newspaper circulating the area where the deceased resided. The advertisement states that the debtors and creditors have 30 days in which to lodge their claim.
2. Distribution Account will lie open for inspection - The Liquidation and Distribution Account is lodged with the Master, it is examined and approved by the Master. This advertisement is then placed on the same in the Government Gazette and a local newspaper circulating the area where deceased resided advising all interested parties that the Liquidation and Distribution account is available for inspection at the Master’s office and Magistrate’s Court for a period of 21 days.
How long does it take to administer a deceased estate?
Administering a deceased estate is a complex and lengthy process. It can take anything from 6 months to several years to administer. There are certain factors that could delay the administration of the estate for example the service levels experienced when with dealing with the Master of the High Court and SARS.
What is the role of an executor in a deceased estate?
The appointed Executor is responsible for:
collecting the deceased’s assets;
settling his/her liabilities;
distributing the balance of the estate to the heirs in terms of the will of the deceased, or in
accordance with the provisions of the Intestate Succession Act where the deceased died without a will.
When must a deceased estate be reported to the master of the high court?
Within 14 days from the date of death to the Master of the High Court closest to where the person lived.
If I have assets in a foreign country should I have a separate will for each country?
Because legal administration and regulation differs from country to country you should have a separate will for each country where you have assets.
Final Step — Sign off and close
The final step in the administration or winding-up process is for the Executor to provide the Master of the High Court with proof that the Estate has been liquidated in accordance with the will (or according to the Intestate Succession Act).
To do this, the Master of the High Court must be provided with copies of the acquittances, proof that creditors were paid, and that property was duly transferred.
Once the Master of the High Court is satisfied, he/she is satisfied will issue a filing slip to confirm that the deceased estate has been formally closed.
And that entire process, in a nutshell, is what is referred to as the administration of or “winding-up” of a deceased estate.
Why should you trust Benaters with the winding up of a deceased estate?
Administering or “winding-up” of a deceased estate is not a task that should be approached lightly or by someone who does not have working knowledge of what to do.
At Benaters we truly do work under the assumption that your family is ours too. And we look after you as if that was a fact.
We have assisted many individuals and families with their estates, from the planning thereof to the administration or winding-up of same and have been able to successfully support and guide them through the entire process.
We are here to help you. In any way we can!
So please, get in touch today and let us see how we can assist you as you move through this difficult time. Rest assured that we will undertake your matter, as always, with professionalism and the utmost due care.
Wills FAQS
What is a will?
In its simplest form, a will expresses your final wishes, once you have given up the ghost. A will is a formal, signed, written document, in which the dearly departed (now referred to as the testator) voluntarily sets out their instructions in unambiguous terms as to how their assets are to be “passed down” or inherited following their demise.
What can be contained in a will?
A will allows a testator to dispose of the whole or any part of their estate (now known as the deceased estate) as they please. A person’s estate is made up of the aggregate of assets and liabilities at the time of passing. This can include immovable property, jewelry, shares and unit trusts or even your beloved sheepskin slippers.
A will also enables a testator to institute heirs and appoint legatees (or their substitutes), postpone the vesting of a bequest (something that is handed down by virtue of a will) subject to a condition, create trusts, appoint trustees and administrators (and to regulate their powers), appoint executors and guardians and even make a will without naming beneficiaries (such as one in which a previous will is revoked, an executor appointed, or an heir disinherited).
Basically, as long as it is not illegal, impractical or against public policy you can leave anything to anyone in your will. Provided your will is valid. For example, you can specify in your will that you are leaving your entire estate to your beloved fur child (this happens). Or you could leave your entire estate to a charity like the SPCA or Kitty and Puppy Haven. Perhaps even your favourite church. It is entirely up to you. Which seems obvious. But it is important to note that you do not have to leave all your assets to family, if that is not your wish. You have choice. And this is known as freedom of testation.
What if I don’t leave a will?
This would be unwise and we hope to dissuade you from this.
But, if you fail to draft a valid will, meaning you will have passed intestate (literally meaning without a valid will) the assets in your deceased estate will be distributed in accordance with the Intestate Succession Act 81 of 1987. This in essence means that with no valid will to direct your executor as to what you want to go to who, your estate will be administered and divided according to Section 1 (1) of the Intestate Act.
If you are interested in what the formalities of a valid will are, refer to this article.
Always remember, you don’t just need a will, you need an estate plan. While the two terms “will” and “estate plan” are often used interchangeably, this is wrong. They are two different things. An estate plan is a set of legal documents to prepare for your death. A will is just one of those legal documents, albeit an important one. So, you don’t need to draft just one legal document and get it right, but several.
Can I write my own will without the assistance of an attorney?
Sure as long as the requirements in the Wills Act (7 of 1953) are complied with. However, would I recommend it? No, because even your best intentions may not come out right if you are not aware of certain legal provisions that should be drafted into the document.
What happens to my will if I get divorced?
The Wills Act states that if you die within three months of being divorced, and you have not made a new Will subsequent to your divorce, then your ex-spouse will not benefit, or inherit from your estate. Section 2B of the Wills Act allows a three-month period after a divorce for ex-spouses to update their will based on their changed circumstances. If your will has not been changed during this time, the law stipulates that the terms of your existing will remain in place. This explains why, if you die after 3 months of being divorced without having changed your will, it is assumed your intention was still for your ex-spouse to inherit.
What is a codicil?
A codicil is a schedule or annexure to an existing will, which is made to supplement or amend an existing will. A codicil must comply with the same requirements for a valid will. A codicil need not be signed by the same witnesses who signed the original will.
What is the guardian’s fund?
The Guardian’s Fund falls under the administration of the Master of the High Court. It is a fund created to hold and administer funds that are paid to the Master on behalf of various persons, known or unknown (for example, minors, persons incapable of managing their own affairs, unborn heirs, missing or absent persons or persons having an interest in the moneys of a usufructuary, fiduciary or fidei-commissiary nature).
Trusts FAQs
What is a trust?
Generally speaking, when the notion of forming a trust comes up, most people associate the terminology with wealthy families looking after their own, especially upon death. And that is not wrong, family trusts (where all the beneficiaries to a trust are family members) do exist, but in South Africa, there are basically three types of Trusts -
inter vivos trusts or living trusts - is established by someone during their lifetime to manage certain assets or investments and support beneficiaries, such as family members. An inter vivos trust is a core and most effective form of estate planning and can be vested or discretionary trusts;
testamentary trusts - commonly referred to as a will trusts, these types of trusts are only created in terms of the will of a deceased person. Testamentary trusts are usually created to hold assets on behalf of minor children, since minor children cannot in terms of South African law, inherit anything. They cannot be registered with the Master of the High Court during the lifetime of the Testator (the person making the will), as they do not come into existence until the death of the Testator, and
bewind trusts - provide trustees with limited liability and in some instances tax advantages.
The complexities around the type of trust you form, especially in light of your overall estate planning process, must be discussed with your trusted legal advisor who will be able to advise you on the best way forward. At Benaters we will undertake this responsibility with care and caution, remembering there is always a bigger picture.
How are trusts administered?
The administration of trusts is governed by the provisions of the Trust Property Control Act, 1988 (Act 57 of 1988). There are two types of trusts, inter- vivos and testamentary trusts. An inter-vivos trust is created between living persons. A testamentary trust derives from the valid will of a deceased.
What are the advantages of a trust?
Continuity - a trust survives the life of an individual (donor / trustee / beneficiary) and can span multiple generations
Can protect an individual’s assets from creditors and / or matrimonial and relationship disputes
Utilisation of services, knowledge and abilities of trustees
Custodianship of assets, preventing assets from being squandered
Management and control of trust assets - e.g. where there may be several owners of the same asset who cannot agree on how to manage the asset
Administration of asset for charitable purposes
Tax benefits can be created by the correct distribution of income and capital gains
Estate duty can be minimised or capped because the growth of an asset is no longer in the hands of mortal person
What are the disadvantages of a trust?
Formation and administration of a trust is costly
Higher rate of income and capital gains taxes on distributions, if retained in the trust
Possibility of future legislative amendments which may adversely affect the benefit of the trust
Administrative and Taxation requirements such as:
- Annual financial statements
- Annual income tax return
- Bi-annual provisional tax returns
- Onerous duties of trustees
Must be relinquishment of control (SARS may deem income back to the donor of the asset if there is not adequate relinquishment of control over the asset)
Who can be a beneficiary of a trust?
Any person (unborn or alive) can be a beneficiary of the trust
There is no limit to the number of beneficiaries of a trust
Persons other than natural persons can be beneficiaries (e.g. duly registered trusts, juristic persons, associations etc.)
The founder of a trust may also be a trustee or a beneficiary of the trust or both, but he may not be the only trustee