Estate planning and the winding up of deceased estates can be complicated areas to navigate. In this article we provide answers to some frequently asked questions about wills, trusts and deceased estates:
When and where must a deceased estate be reported?
When a person dies leaving property or a will, a deceased estate comes into existence. In terms of our law, a deceased estate must either be administered and distributed in terms of the deceased person’s will, if it is found to be valid. If the will is invalid, or if no will exists, the estate must be wound up and distributed in terms of the Intestate Succession Act.
The procedure that must be followed is set out in the Administration of Estates Act. The deceased estate should be reported to the Master in whose area of jurisdiction the deceased was living 12 months prior to his death.
Who is responsible for reporting a deceased estate?
Generally speaking, a deceased estate should be reported by a family member or loved one of the deceased by lodging a death notice with the Master of the High Court.
However, any person who has control or possession of any asset belonging to the deceased, or who is in possession of the deceased’s will, can report the estate.
Once the estate has been reported, the Master will issue letters of executorship after which the full winding-up process must be adhered to.
What documentation is required when reporting a deceased estate?
The person reporting the deceased estate must complete a notice of death and provide the Master with a set of documents which includes the death certificate, marriage certificate, the will and its codicils, an inventory of the deceased’s assets, together with details of the nominated executor.
What happens if there is no will?
If the deceased did not leave a will or a will cannot be found, the state is tasked with the job of appointing an Executor Dative to the estate. The Executor Dative is responsible for trying to locate a will by enquiring at places such as the deceased’s bank, financial planner or accountant. If they cannot locate a will, the estate will be wound up according to the law of intestate succession.
It is important to bear in mind that where the deceased was married in community of property, one half of the estate belongs to the surviving spouse and will therefore not devolve according to the rules of intestate succession. Only the deceased’s half of the joint estate will be available for distribution among the heirs.
How do the laws of intestate succession work?
In terms of the Intestate Succession Act, the deceased’s closest relatives will inherit in accordance with a strict order of inheritance and proportions, with the deceased’s spouse and children always benefiting first. Except in the case of the deceased’s surviving spouse or an adopted child, intestate succession is limited to the blood relatives of the deceased.
This means that where a couple lived together without being formally married, the surviving partner will not be regarded as a ‘spouse’ in terms of the laws of intestate succession and therefore does not stand to inherit from the deceased’s estate.
Who inherits if the person dies without a will?
Where the deceased leaves no valid will, the executor will first look to the surviving spouse and any children to distribute the assets to. Where the deceased leaves a spouse and descendants, the surviving spouse will inherit the great of either a child’s portion of an amount fixed from time-to-time by the Minister of Justice which is currently set at R250 000.
A child’s share is calculated by dividing the estate by the number of surviving children, deceased children who have left offspring, plus the surviving spouse (or spouses in the case of polygamous marriages).
The surviving spouse will therefore inherit the greater of either R250 000 or the child’s share, and the descendants will inherit equally from the residue of the estate.
Where the deceased has a surviving spouse but no descendants then the spouse will inherit the deceased’s entire estate.
On the other hand, if the deceased has descendants but no spouse then the children will inherit the entire estate equally. If the deceased leaves no spouse nor children, then the executor will look to the deceased’s extended family to determine who inherits.
Who can draft a will?
Anyone aged 16 years and older who is of sound mind is considered competent to make a will. A person who is mentally incapable of appreciating the consequence of their actions at the time of drafting a will is considered not competent.
Any person aged 14 years or older who is of sound mind and capable of understanding the consequences of his or her actions and can testify in court, is capable of witnessing a will.
Who is not able to inherit from a will?
There are a number of circumstances that can disqualify a potential heir. Firstly, any person who writes a will, or any part thereof, on behalf of the testator can be disqualified from inheriting, as is the writer’s spouse.
Similarly, the witnesses to a will are not permitted to inherit from the deceased’s estate. Further, anyone who is found to be responsible for the death of the deceased, whether intentionally or negligently, is disqualified from inheriting from that person.
What are the requirements for a valid will?
In order for a will to be valid, it must be handwritten, typed or printed, and the signature of the testator or testatrix must appear at the bottom of each page and at the end of the will.
Further, the testator’s signature must be made in the presence of two or more competent witnesses, and the will must be witnessed accordingly.
How are trusts administered?
Trusts in South Africa are governed by common law and the Trust Property Control Act and are administered by the trustees appointed to the trust.
An inter vivos trust is set up in accordance with the trust deed, whereas testamentary trusts are set up in terms of the trust founder’s will.
What documents are required to set up an inter vivos trust?
In order to set up an inter vivos trust, you will need to lodge the relevant documents with the Master of the High Court who will then register the trust and issue letter of authority to the trustees. Required documentation includes the trust deed, registration fee, acceptance of trusteeship by each nominated trustee, and copies of trustees ID documents.
What is the Guardian’s Fund?
The Guardian’s Fund is designed to receive and manage money on behalf of persons who are legally incapable of doing so themselves and includes any inheritance intended for a minor beneficiary. The funds held in the Guardian’s Fund are invested in the Public Investment Commission and are subject to an annual audit.
The guardian of a minor child whose funds are held in the Guardian’s Fund can claim maintenance for the minor from the fund. The Guardian’s Fund falls under the administration of the Master of the High Court and is currently administered by six branches including Cape Town, Pretoria, Bloemfontein, Kimberley, Pietermaritzburg and Grahamstown.
How does the Guardian’s Fund work?
The guardian of a minor child must claim maintenance from the Guardian’s Fund in respect of the child to cover the costs of the child’s living expenses, school and university fees, clothes, and medical expenses.
A minor can claim the money invested in the Guardian’s Fund, together with any interest accrued, when they reach age 18. Money held in the Guardian’s Fund generally does not earn favourable interest, and the process of claiming can be cumbersome. As such, testamentary trusts are a favoured estate planning tool where a person intends bequeathing assets to minor children.
By Eric Jordaan - Crue Invest (Pty) Ltd
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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)