16 Steps To Winding-Up A Deceased Estate
The administration of a loved one’s estate might become much more traumatic if you are unprepared for the practical realities of death. Because systems need time to restart, load shedding makes the winding-up process more drawn-out, laborious, and bureaucratic. Fortunately, the winding-up procedure is the same for all estates, so there is a lot of uniformity in estate administration.
In general, the winding up procedure follows the following structure:
- The death must be reported
- Tracking down the will
- Registering the estate of the deceased
- Having an initial meeting with the family
- Obtaining letters of executorship
- Opening a late estate bank account
- Informing SARS about the estate
- Gathering the relevant paperwork
- Advertising the estate
- Compiling the distribution and liquidation account
- Lodge the L&D account with the Master
- Advertise the L&D account
- Obtain a SARS Clearance
- Settle claims
- Distribute to beneficiaries and heirs
- Apply to the Master for duty discharge
1. The death must be reported
A death must be reported under the Births and Registration Act to the Department of Home Affairs, which will thereafter issue a death certificate. In reality, the funeral home will notify the authorities on your behalf and then provide you the death certificate. A mistake on the death certificate, though, could result in needless delays, so it’s crucial to make sure you give Home Affairs the right information. A valid death certificate is required in order for the executor to register the estate with the Master’s Office.
2. Tracking down the will
You must find your loved one’s will after their passing. Contacting your loved one’s bank, lawyer, financial advisor, or investment firm is advised if you are unsure of where the will is located. In addition to being crucial for distributing your loved one’s assets, this document reveals who your loved one has designated as their estate’s executor. The executor must be informed of the death once you’ve determined who they are.
3. Registering the estate of the deceased
The executor must send a J94 death notice to the Master as soon as possible after learning of your loved one’s passing. It is crucial to remember that all paperwork needed to wind up someone’s estate is accessible on the Department of Justice website. The deceased’s surviving spouse, closest blood family, or the person who identified the deceased must fill out the death notification, which must be submitted within 14 days of the deceased’s passing. If the decedent resided in South Africa, their estate must be notified to the Master in the area in which they last resided during a 12-month period before to their passing. If the dead had assets in South Africa at the time of their death while not being a resident there, their death may be reported to any Master’s Office, provided that only one Master’s Office is notified.
4. Having an initial meeting with the family
The executor’s next duty is to set up a preliminary meeting with the deceased’s loved ones. This meeting’s main goals are to check the will, determine who the beneficiaries are, and create a rough inventory of the deceased’s assets and debts. Making copies of the deceased’s birth and marriage certificates, title deeds, insurance policies, and bank account information would be helpful in preparation for this initial meeting.
5. Obtaining letters of executorship
The executor is named in the will as the executor up to this point, but in order to formalise their status, they must apply to the Master of the High Court to be appointed as executor. The Master must first confirm the legitimacy of the will and the eligibility of the executor before she may do this. If the Master is satisfied that the will is valid and the estate’s worth exceeds R250 000, the Master will issue Letters of Executorship to affirm the executor’s authority. If the value of the decedent’s estate is less than R250 000, the Master may waive the requirement for an executor and provide instructions for how the estate should be settled. If the will is determined to be invalid, the deceased’s estate must be settled in accordance with the intestate succession laws. The Master will then appoint an Executor Dative to manage the estate of the deceased in this situation.
6. Opening a late estate bank account
If the estate has more than R1,000 in cash, the executor must open a bank account in the deceased person’s name and deposit all funds there.
7. Informing SARS about the estate
Additionally, the executor is expected to notify Sars of the deceased person’s estate and see to it that all outstanding tax obligations are paid. They are obligated to file tax returns and pay any outstanding capital gains tax in the process.
8. Gathering the relevant paperwork
The executor needs several papers in order to windup the estate. In addition to the death notice and death certificate, the executor will need the deceased’s identification card, certified copies of the identification cards of each inheritor, the original signed will, marriage and birth certificates, ante-nuptial agreements, divorce decrees, and maintenance agreements. Obtaining certified copies of the deceased’s heirs’ identification documents can hold up the process if they are located abroad.
9. Advertising the estate
The executor must then publicise the decedent’s estate so that any possible creditors can file claims. To accomplish this, the executor must publish a Section 29 advertisement in the community’s newspaper and official government gazette, where the deceased person last resided. In most cases, if you get in touch with your neighbourhood paper, they’ll send you the necessary documents to fill out and the advertisement to be published in the official gazette. Upon publication of the advertisement, creditors have 30 days to file claims against the estate.
10. Compiling the distribution and liquidation account
After this 30-day window has passed, the executor is required to create a liquidation and distribution account, or L&D account, which is a comprehensive record of all the assets and liabilities of the decedent’s estate. It must also list the beneficiaries’ names, the amount of their respective inheritance under the terms of the will, as well as the earnings and outgoings of the decedent’s estate. The executor must submit the L&D account in accordance with the Master’s requirements no later than six months after the decedent’s passing, though they may ask for an extension if required.
11. Lodge the L&D account with the Master
The L&D account must be filed by the executor with the Master after it has been finalised, where it must remain for 15 days to allow for inquiries. When the Master gets all of his or her questions about the accounts answered, the Master will then give the go-ahead for the L&D account to be advertised.
12. Advertise the L&D account
The L&D account must then be made available for inspection at the Magistrate’s Court for a period of 21 days, according to a Section 35 advertisement the executor must publish in the local newspaper and government gazette. A certificate of no objection, once filed with the Master’s Office, will allow the executor to divide the estate if there are no objections. If there are no objections, the Magistrate will issue the certificate.
13. Obtain a SARS Clearance
The executor needs a clearance from the Revenue Receiver attesting that all unpaid taxes have been paid before allocating assets to beneficiaries.
14. Settle claims
Before the estate can be divided among the heirs, all responsibilities must be satisfied, including any sums owed to creditors and any estate duties owed to Sars. A stipulated fee of no more than 3.5% of the estate’s gross value, excluded VAT, may be charged by the executor. A charge of 6% of any income, such as dividends, rent, or interest, that the executor receives on behalf of the estate of the deceased person is also theirs to keep.
15. Distribute to beneficiaries and heirs
The executor can disperse the assets once all debts have been paid by transferring them into the names of the heirs or by selling the property and disbursing the earnings in accordance with the instructions of the will. While keeping in mind that no transfer duty is due on inherited property and that the estate will cover the conveyancing costs, they must make sure that fixed property is transferred into the names of the designated beneficiaries. The heirs must sign an acquittance as proof of receipt once they have received their inheritance.
16. Apply to the Master for duty discharge
The executor can now ask the Master for a discharge from all duties as executor, and if the Master is satisfied, he or she will issue a filing slip and discharge certificate.
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Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.