Wills and Estates

It is essential that every person has at least some knowledge of the law of succession. It is a complex and specialised field in law and covers everything from wills to succession to the winding up of estates. This article covers the basic principles concerning wills and estates and aims to provide insight into the operation of this very relevant branch of our law.

Freedom of testation

South African law values the principle of freedom of testation, which allows a person to dispose of his or her property in any way that he or she pleases, even if it means that family members or spouses are disinherited in the process. However, in certain specific instances this principle is limited by legislation.

A person exercises this freedom of testation by having a valid will drafted. The person is then known as a testator, if he is male, or as a testatrix, if she is female. When a testator dies leaving a valid will the law of testate succession applies

Intestate succession

Where a person dies without leaving a valid will the law of intestate succession applies. It is governed by the Intestate Succession Act, which prescribes the manner in which assets devolve upon the deceased's death. If, for example, the deceased was survived only by his or her spouse the spouse will stand to inherit the deceased's entire estate. This act also addresses several other scenarios, for example where the deceased is survived only by his children, or by his children and his spouse.

Although the law of intestate succession provides a solution in instances where there was no valid will, it is obviously not ideal. The intestate estate will always devolve according to the same rules, without regard to the deceased's wishes. It is strongly recommended that every person should have a valid will at all times.

The winding up of the deceased estate

The Master of the High Court (“the Master”) is a statutory creation of section 2 of the Administration of Estates Act (“the Act”) and has his seat at each of the provincial divisions of the high court. The Master oversees the administration of deceased estates and has various supervisory, administrative and judicial functions.

The executor is the person to whom the Master issues letters of executorship and who is then empowered to administer the estate of the deceased. An executor has wide powers to administer the deceased estate and the estate could suffer if the executor is incompetent or dishonest. Great care should therefore be taken when nominating an executor in the will. The Master will normally appoint the executor nominated in the will. The Act requires that the executor provide security to the Master in an amount determined by the Master for the proper performance of his functions. It is desirable and customary to exempt the executor from furnishing security to save the cost of obtaining same.

A testator can appoint an attorney or another person with the required qualifications and experience to be the executor of his or her estate. The nominated person would have to provide security to the Master. However, it often happens that a parent, child or surviving spouse of the testator is nominated, as such persons do not have to provide security to the Master. This family member would then normally grant an attorney the mandate to administer the estate on his or her behalf and the Master would issue letters of executorship to the person confirming his or her appointment.

Where the asset value of a deceased estate is less than R125 000 no executor is appointed and the Master appoints a representative to administer the estate in terms of section 18(3). This Master's representative is exempt from many of the duties and obligations of an executor.

The administration process can be briefly summarised as follows:

1. The family or heirs approach an attorney to administer the estate.

2. The attorney consults with the family of the deceased and obtains information necessary for the administration of the estate.

3. The attorney reports the estate to the Master. The Master opens a file and allocates an estate number to the deceased.

4. Once the Master has issued letters of executorship, the executor (or the attorney as his or her agent) must place a notice advising creditors to prove their claims against the estate within a specified period. The executor opens a bank account in the name of the estate.

5. The executor gathers information, obtains valuations of property in the estate, obtains balance certificates and realizes assets.

6. The executor drafts the liquidation and distribution account, which must be submitted to the Master. This is an account of the administration of the estate by the executor.

7. The Master examines the liquidation and distribution account and may require that certain queries be addressed. When the Master is satisfied that the requirements have been complied with the Master will accept the account as being correct.

8. The account must be advertised as lying open for inspection for a period of 21 days. During this period interested parties may examine the accounts and may object to the manner in which the administration was conducted.

9. After the account has lain free from objection or after all objections have been disposed of, the executor will pay out the heirs and transfer property into their names.

10. The executor must now lodge additional documentation with the Master, including receipts from creditors, a complete set of bank statements and paid cheques. At this stage the attorney will debit his fees.

11. Once all of the above requirements have been complied with the Master will issue a filing notice stating that the estate has been finalised.

The above process normally takes several months, but it can be delayed, for instance where the will was executed under another legal system or if foreign assets form part of the estate.

The deceased estate is taxed by the Receiver of Revenue. Estate duty is payable on the estate. The calculation of estate duty falls outside the scope of this article. The attorney drafting the will should advise the testator of the various deductions that may be utilised to reduce the tax burden on the estate. The most common deduction is in terms of section 4(q) of the Act. This section specifies that estate duty will not be calculated on assets bequeathed to the surviving spouse. Once the net value of the estate has been determined a primary rebate of R1,5 million may be deducted.

6. Conclusion

It is important that every person should have a will that is not only valid, but that is recent. This will should address that person's particular circumstances and should be amended when those circumstances change.

Disclaimer: This article has been written for general information purposes only and is not to be taken as legal advice. No reliance should be placed on any aspect of this article without first consulting and taking the legal advice of a legal practitioner.