Estate planning: The role of your executor

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You need to appoint someone with the right set of skills to ensure that the process runs as smoothly as possible. 

Executorship is an onerous position and, given that an estate can take anywhere between six months and several years to wind up, it can also be a time-consuming and laborious job. Understanding the duties and responsibilities of your executor will help you to appoint someone with the right set of skills to ensure that the process runs as smoothly as possible. 

In the event of your passing, your deceased estate automatically comes into existence regardless of whether you die testate or intestate. The winding-up process begins immediately and whoever you have appointed as an executor needs to begin the task of applying for letters of executorship. It is important to bear in mind that if you have nominated a spouse or loved one as your executor, assuming the role of executor while also mourning your passing may be very traumatic. As such, it makes sense to consider appointing an independent person or entity who has experience in deceased estates and who can remain impartial and unemotional through the process. 

The length of the winding-up process largely depends on the size and structure of the deceased estate, but can also be delayed in instances where the deceased died of unnatural causes, where the will is contested, where there are liquidity issues in the estate, or where a surviving spouse or children lodge claims against the estate. The process can also be held up by turnaround times in the Master’s Office, Sars, banks and financial institutions, or where heirs reside overseas. 

The executor’s first job is to meet with the family of the deceased to obtain all necessary information in order to report the estate to the Master’s Office, and this needs to be done within 14 days from the date of death. The death notice must be completed and forwarded to the Master’s Office in the jurisdiction where the deceased lived 12 months prior to his death. Together with the death notice, the executor should include a rough inventory of the deceased’s assets, a copy of the will and an application for a Letter of Executorship. 

If the Master is satisfied with the skill and expertise of the nominated executor, he will issue a Letter of Executorship which effectively gives the executor authority in respect of all matters pertaining to the winding up on the estate which includes opening bank accounts, placing advertisements, paying creditors and selling or transferring assets belonging to the deceased. Any powers of attorney existing at the date of death will automatically fall away. This entire process can take up to three months to complete, and any delays in the appointment of the executor can cause frustration for the family. 

Once appointed, the executor is required to open an estate late bank account and place a Section 29 advert in the local paper and Government Gazette which should appear on the same day. The purpose of this advert is to notify debtors and creditors of the deceased estate, granting them a 30-day period to submit any claims against the estate. 

After the 30-day period has elapsed and all claims have been lodged, it is the executor’s job to prepare a Liquidation and Distribution Account (L&D Account). The L&D Account reflects all the assets and liabilities of the estate and determines its solvency. If there is a will, the executor will use this document to determine how the assets will be distributed. In the absence of a will, the assets will be distributed in accordance with the Intestate Succession Act. Complications can arise, however, where the deceased did not include a clause in his will dealing with the residue of his estate. In such circumstances, the executor will need to distribute any residue of the estate in terms of the laws of intestate succession. 

In addition, complications and delays can also arise where the deceased did not make provision for his surviving spouse or for his minor children to whom he has a duty of support. In these instances, the surviving spouse and/or children will need to lodge a claim against the deceased estate. Further, if the deceased had a maintenance obligation to an ex-spouse that he did not make provision for in his will, this can result in further delays. Such claims can affect the liquidity in the deceased estate which, in turn, can mean that the executor has to realise certain assets in the estate in order to meet its claims and other liabilities. In general, the executor will only realise assets where it is necessary to meet the liabilities in the estate, or where it is more practical – such as where the deceased bequeathed his vehicle to three heirs. 

Any liquidity problems in the estate can result in delays and possibly financial difficulties for the heirs and beneficiaries. The deceased estate is liable for income tax assessment until the date of death, and the executor is required to settle any tax obligations with Sars. In addition, he is required to settle any CGT liabilities and pay over estate duty where applicable. As remuneration for his services, the executor is entitled to 3.5% of the value of the estate, excluding Vat, plus 6% collection commission of any income received by the estate after the death of the deceased. Any complications and/or contestation can also result in prolonged and expensive litigation which can reduce the residue in the estate. 

Once finalised, the L&D Account is lodged with the Master where it is required to lie for 15 days so as to allow for queries. Anything pertaining to the L&D Account can be queried via a query sheet and the executor is obliged to provide answers to the Master. If there are no objections, the Master will grant permission for the account to be advertised. 

At this point, the executor is required to place a Section 35 advert in the local newspaper and the Government Gazette, and the account will lie open for inspection at the Magistrate’s Court for a period of 21 days. This process provides the opportunity for any objections, together with reasons, to be lodged with the Master. If no objections are lodged, the court will issue a ‘certificate of no objection’ and this certificate must then be lodged at the Master’s Office in order to grant the executor the authority to distribute the assets. 

Once he has authority, the executor can begin to distribute the assets in accordance with the L&D Account. Assets such as immoveable property will be transferred into the heirs’ names or, where the property has been realised, the proceeds paid out in accordance with the will. Before any inheritance can be remitted to heirs living abroad, the executor will need to obtain permission from Sars. 

As a final step, the executor is required to provide the Master with proof that the estate has been liquidated in accordance with the will and, as such, must provide the Master with copies of the acquittances, proof that creditors were paid, and that property was duly transferred. Once he is satisfied, the Master will issue a filing slip and formally close the estate. 

https://www.moneyweb.co.za/financial-advisor-views/estate-planning-the-role-of-your-executor/ 

9 June 2020 06:35   /  By  Craig Torr – Crue Invest (Pty) Ltd 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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