Not being prepared for the financial realities of a loved one passing away can add more anxiety to an already painful and stressful time in your family’s life, according to Misha Badassy, legal adviser, Momentum.
Badassy urges people to get their estate plans in order as soon as possible.
“You never quite know when your time is up. It is important to have your financial affairs in order to ensure your loved ones will be taken care of when you pass on,” Badassy said.
Here is a guide to help you with the winding up of an estate:
Step 1
A deceased estate must be reported to the Master of the High Court within 14 days of the person’s death.
The death must be reported to the Master of the High Court in whose area of jurisdiction the deceased was living 12 months before his/her death
After the state is aware of the death, then the nominated/appointed executor will consult with the family of the deceased to gather information which must then be reported back to the Master of the High Court.
Step 2
The appointed executor will be provided a letter of executorship, giving them power to begin winding up the estate.
If the value of the estate is over R250 000 then “letters of executorship” must be issued by the Master and the entire process determined by the Administration of Estates Act must be complied with.
If the value of the estate is less than R250 000 then the Master may dispense with letters of executorship and issue “letters of authority” in terms of section 18(3) of the act. This means that full procedure need not be complied with.
Badassy said: “Once a person passes away, all their accounts are frozen, and no one will be able to access funds or deal with their assets without the approval of the Master of the High Court.”
“If the person is married within community of property, the joint estate of both parties will be frozen.”
Step 3
The executor must publicise the deceased’s estate in the local newspaper as well as the Government Gazette to notify debtors and creditors of the death so that they can put through any claims against the estate.
“The notice will request the creditors to institute their claims against the deceased estate within 30 days or not more than three months after publication of the notice. The South African Revenue Service also needs to be notified,” Badassy said.
Step 4
According to Badassy, financial competence can only be determined after 30 days and all complaints against the estate have been lodged.
Badassy said a Liquidation and Distribution Account will then be drafted that will detail the assets and liabilities of the deceased.
“If the deceased had a last Will and testament, that Will determines how the assets will be distributed. If there is no Will or valid Will in place, the assets will be distributed in line with the Intestate Succession Act,” Badassy said.
“This act sets out how the deceased’s estate will be distributed among beneficiaries, including a spouse, parents and children.”
Step 5
Badassy said the Liquidation and Distribution account drafted by the executor will be sent to the Master of the High Court’s Office for approval.
The account will include the information about how the estate will be distributed.
A copy of the Liquidation and Distribution Account will be made available for public inspection at the Master’s office and the nearest Magistrate’s office.
The deceased will have had to live in the area of the magistrate for the past 12 months of his/her life.
“The inspection period is 21 days from the day the advertisements appeared in the local newspaper and government gazette. If no one objects, the executor may pay creditors and distribute assets,” Badassy said.
“Finally, the executor must lodge proof with the Master that the distribution has been completed fully and satisfactorily.”
According to Badassy people need to speak to a financial adviser to ensure their affairs are in order to save their family from an additional administrative burden.
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