What is estate administration?
When someone dies, their family usually has to wait for the estate to be wound up before they receive what was left to them. The estate must be wound up under the Administration of Estates Act. The executor collects the assets, pays the debts and taxes, and passes what is left to the heirs, under the will or the rules of intestate succession. The Master of the High Court supervises the process.
At death, the estate is frozen. Nobody can use the deceased’s bank accounts or deal with their assets until the Master has appointed someone to administer the estate.
What are the main steps?
- Report the estate to the Master’s office for the area where the person lived, within 14 days of the death. You will need documents such as the death notice, the death certificate, the original will and an inventory of assets.
- The Master appoints an executor. For estates worth more than R250,000, the Master issues letters of executorship. For smaller estates, it can issue letters of authority to a Master’s representative, under a simpler process.
- Advertise for creditors in the Government Gazette and a local newspaper. Creditors have 30 days to claim.
- Collect assets, pay debts and settle the deceased’s tax with SARS.
- Lodge the liquidation and distribution (L&D) account with the Master within six months of the executor’s appointment.
- Advertise the L&D account for inspection for 21 days. If there are no objections, the executor pays out and transfers the assets to the heirs.
What does it cost?
- Executor’s fee: up to 3.5% of the gross value of the assets, plus 6% of income earned after death, plus VAT if the executor is registered for VAT.
- Other costs: Master’s fees, advertising, valuations and bank charges.
- Estate duty: after deductions and a R3.5 million abatement (an amount every estate can deduct), estate duty is 20% of the dutiable estate, and 25% of any part above R30 million. The executor submits the estate duty return to SARS.
Our role: we work on estate administration with our attorney partners, Hay & Scott.
Things to know
- Executors need support. An executor who is not a professional should get help from an attorney, trust company or accounting firm. They may also have to give the Master security, unless the will exempts them or they are the deceased’s parent, spouse or child.
- It takes time. Even a simple estate takes months, because of the advertising periods and the Master’s and SARS’s checks.
- Policies paid directly to named beneficiaries do not go through the estate, although estate duty can still apply to them.
Who it suits
Help with estate administration suits families who have lost someone and need the estate wound up, and executors who want a professional to work with them.