FISA deputy chairman David Knott wrote the article below on the administration of a deceased estate.
The administration of a deceased estate
Upon the death of a person, all of his assets are blocked until an executor has been appointed. If he was married In community of property, the assets of the spouse would also be blocked as these also fall under the control of the executor. Any power of attorney or signing authority granted by the deceased over an account would also lapse. Any contract other than one of a personal nature would continue and must be followed through.
Assuming that there is a valid will, the next of kin would need to meet with the nominated executor without delay in order to place him in a position to report the estate to the Master of the High Court. The family would advise the executor nominate as to the where-abouts of assets and liabilities and all other details relevant to the estate. The executor nominate would lodge the will, the inventory (reflecting all assets), a death notice (reflecting personal particulars) and an acceptance of trust (indicating his willingness to act) with the Master. The Master would then issue Letters of Executorship.
Once Letters of Executorship are to hand the executor can start taking physical control of assets. He must also place a press notice calling upon all creditors to lodge their claims against the estate. He must attend to the collection of all monies due to the deceased, for example salary and leave pay, assurances due to the estate, debts due and once he is satisfied as to the solvency of the estate, he can attend to the payment of outstanding creditors. Assets not required to be retained by the heirs or to meet cash shortfalls may require to be sold and the executor must arrange these after consultation with the heirs. Other assets may need to be valued for Estate Duty purposes. The final income tax return from 1st March last to date of death must also be lodged with the Receiver of Revenue.
The executor must then prepare the Liquidation and Distribution Account which is required to be lodged with the Master. This Account must reflect all assets of the deceased, all claims against the estate and the manner in which the executor intends distributing the residue, either in terms of the will or in terms of the laws of intestacy.
The claims of creditors must be settled before heirs may benefit. Once the Master is satisfied that the Account is correct, he will allow the Account to lie for a period of public inspection to permit any aggrieved person to lodge his objection. Assuming that no objections are received the executor may then proceed with the transfer of assets and distribution of cash to the heirs.
An executor is entitled to charge a fee equal to 3,5 % of the gross value of the assets comprising the estate (or the joint estate where the marriage is In Community of Property) plus a collection fee of 6% on any post death revenue collected. An executor is not entitled to charge this fee on the proceeds of any life assurance payable direct to a third party. In substantial estates, those in excess of say R2million it might be possible to negotiate a reduction of the executors fee. However, one must be cautious not to be lured by price alone, an executor fulfils a most vital function at a time when a vast array of skills, technical knowledge, emotional support and above all absolute integrity is required.