Disputes after death
Losing a loved one can be extremely traumatic – and grief often brings families together. Sadly, there are many times when these states of bonding only lasts until the will is read – if there is even a will! Many a drama and ugly dispute can be avoided if people simply get their affairs in order whilst they are still alive.
Money and property left behind when someone dies has broken families apart – mainly because the departed person, has not properly prepared for what happens after their death.
Here are some frequently asked questions and answers on deceased estates.
What will happen to my estate after I die?
If you die without a valid will, your family might suffer inconvenience and even severe hardship. Your estate will devolve in accordance with the Intestate Succession Act – and may devolve in favour of the surviving spouse or the surviving spouse and the children of the deceased and the grandchildren (where a child has predeceased the deceased living children).
A greater concern is when after the death of the first parent, the surviving spouse gets married to someone else, and the subsequent surviving spouse could end up inheriting the entire estate – and the children of the first dying parent would not inherit anything. Sadly, this does happen and can end up ripping families apart.
How does the administration of the deceased estate start?
Within 14 days from date of death of a person, it must be reported to the Master of the High Court. The Master appoints an executor by issuing a Letter of Executorship (if the deceased’s assets have a gross value of more than R250 000) or a Letter of Authority (if the deceased’s assets have a gross value of less than R250 000).
What is the executor’s role?
The executor is required to collect the assets, settle the liabilities, pay any legacies, and distribute the balance of the estate to the heirs. The heirs may enter into a Redistribution Agreement subject to the approval and acceptance of the Master of the High Court. Heirs may find themselves competing for the same assets in the estate. It is therefore recommended that proper estate planning with an attorney is discussed prior to your death.
What takes place in relation to the estate account?
After the Letter of Executorship has been issued, the Executor places an advert calling on all persons having claims against the estate to lodge the claims with the Executor within 30 days from the date of the advert. Thereafter, within 6 months the Executor is obliged to submit to the Master an account of the liquidation and distribution of the estate (commonly referred to as the L & D account).
Thereafter the Master will authorise the executor to advertise the L & D account to lie for inspection at the Office of the Master and at the office of the Magistrate Court for not less than 21 days, for inspection by any person interested in that estate. Once the inspection period has passed, the Master will notify the Executor that he/she can pay the creditors and distribute the estate in accordance with the account.
What about VAT, capital gains, income tax and estate duty
The Executor will ascertain whether the estate is liable for value added tax (Vat) and/or income tax.
Estate duty is currently charged on the dutiable amount of the estate at a flat rate of 20%. The dutiable amount is calculated by deducting 3.5 million primary abatement from the ‘nett value of the estate’.
This is a specialised exercise and could have an influence on the amount of the inheritance available to heirs. It is therefore of great importance to discuss the options with your Attorney.
Death and debt
Sadly, most people in South Africa are not aware that all credit agreements entered into after amendments to the National Credit Act in 2017, must have credit life insurance. Even if those credit agreements are under debt review. With credit life insurance in place, any unforeseen circumstance – from death, to disability and even interruption of income – will see your debt or debt payments covered. If you are under debt review, speak to your debt counsellor about credit insurance for your accounts.