Deceased Estate Administration process

What happens when you are appointed as an executor? What will your duties be? Let's look at administration and winding up of deceased estates.

There are 3 phases in the administration and winding up of deceased estates process. The 3 phases are: reporting the estate, the liquidation of the estate and the distribution of the estate.

Phase 1 is reporting the estate

The administration process begins when a person dies. Phase 1 is to report the death of the person to the Master by completing and submitting certain documents. All of these documents are available to download on the Master of the High Court’s website.

This is all done to receive a letter of executorship. This letter entitles the executor to administer and wind up the deceased estate.

While the executor waits for the issued letter of executorship from the Master, he/she may continue with other tasks. For example obtaining valuations of the assets in the deceased estate and establishing the liabilities of the deceased estate.

Phase 2 is the liquidation of the estate

Phase 2 begins when the executor receives the issued letter of executorship. The executor has certain duties that he/she must fulfill. In short, these duties are to:

• Take control of the assets of the estate.

• Advertise for creditors and debtors to submit claims within 30 days after the last date of publication.

• Determine whether the estate is solvent.

• Open a bank account in the name of the estate if there is more than R 1 000.00 in the executor’s possession.

• Choose a method of liquidation in consultation with relatives and beneficiaries.

• Prepare a liquidation and distribution account and submit it to the Master of the High Court.

The distribution of assets can occasionally cause conflict between beneficiaries. This in turn can lead to bitter disputes. That’s why it is best to consult with all the beneficiaries and next of kin to determine a method of liquidation.

There are five methods of liquidation. Let's look at each one separately.

1. Awarding and handing over of specific assets

In this method the beneficiaries receive their benefits in a specific form and not in an alternative form such as cash.

2. Partial sale

Here the executor sells some of the assets in order to meet the liabilities of the estate. This usually happens where there is a shortage of cash or where the will instructs that certain assets must be sold. A partial sale can also occur where the nature of an asset is such that it can’t be divided between multiple beneficiaries. The executor will then sell that asset and divide the proceeds between the beneficiaries.

3. Total sale

This is where the executor sells all the assets in the estate. This usually happens when the testator instructs a total sale in his/her will or if there is a cash shortage. It can also happen when all the beneficiaries request it.

4. Taking over by surviving spouse

Under certain exceptional circumstances the surviving spouse may take the estate over at an amount determined by an appraiser. The surviving spouse does not have to be a beneficiary to do this. Taking over is, however, subject to the discretion of the Master. The Master will only consider an application like that if:

• submission in the prescribed way takes place,

• there is no provision in the will prohibiting it,

• all the beneficiaries and creditors have agreed,

• there exists no disadvantage for any interested parties.

5. Redistribution agreement

If the beneficiaries wish to distribute the assets differently than in the will, they may enter an agreement that redistributes the assets as they desire.

The liquidation and distribution account

The final liquidation and distribution account must be submitted to the Master's office for approval within 6 months after the Master issued the letter of executorship. If the account cannot be submitted in that time frame, an application must be submitted to the Master asking for an extension. The application must contain the following:

• The reasons why the account won't be submitted on time.

• The steps taken to expedite the submission of the account and what progress has been made.

• What progress has been made in respect of the liquidation of the estate.

• What the financial position of the estate is (in other words, the status of the bank account).

• Whether or not the estate is solvent.

Regulation 5 of the Administration of Estates Act 66 of 1965

Regulation 5 of the Administration of Estates Act 66 of 1965 sets out the formalities of the liquidation and distribution account. In short it must contain:

• A heading

• A liquidation account

• A recapitulation statement

• A distribution account

• An income and expenditure account

• A fiduciary assets account

• An estate duty addendum

The executor must certify at the end of the account that it is a true and proper reflection of the liquidation and distribution of the estate.

Back to the process

The account then is submitted to the Master's office for approval. It must first lie for inspection at the Master’s office and at the local Magistrate’s Court. After the inspection period is over (usually 21 days) the Magistrate will furnish you with a certificate and the Master will furnish you with the approved account.

But first you must advertise that the account is lying open for inspection in the Government Gazette and in a local newspaper.

Phase 3 is the distribution of the estate

Phase 3 begins when the Master approves the final liquidation and distribution account. The estate is then distributed in terms of the liquidation and distribution account and the Master’s fees are paid.

And finally, the following documents must be submitted to the Master:

• Proof of advertisement of the liquidation and distribution account

• The certificate of the Magistrate;

• Proof of payment of the Master’s fee;

• Proof of payment to creditors and cash legacies;

• Proof of delivery of legacies and inheritances;

• Final bank statement with a zero balance.

The executor can be discharged after he/she has complied with all the requirements as long as the Master is satisfied. He/she can then obtain a filing slip from the Master. And that essentially concludes the executor's duties.