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Key Milestones in the Estates Administration Process

Step 1- Report the estate to the Master of the High Court and obtain Letters of Executorship  

If a person dies testate (leaving a valid will), the process to report the estate to the Master’s Office is much smoother, as an executor would have been appointed in terms of the will, a bond of security would most likely not have to be secured and there is a clear direction of the deceased’s intention regarding the distribution of assets.

Whilst, if a person dies intestate (without leaving a valid will), there are further requirements that have to be met in order for Letters of Executorship to be issued by the Master, such as obtaining nominations by all interested parties for an executor to be appointed, providing security may be required by the Master and the heirs are determined by the provisions of the Intestate Succession Act, which may not always align with the deceased’s intention regarding the distribution of assets.

The usual turnaround time for Letters of Executorship to be issued by the Master ranges from is 4-6 weeks from date of lodgment of all relevant estate reporting documents.

Step 2 – Open estate late bank account and attend to the debtors and creditors advert (section 29) 

Upon receipt of Letters of Executorship an estate late bank account needs to be opened to receipt funds due to the estate and pay creditors. The section 29 advert is published in the local newspaper and Government Gazette. All persons/entities who have a claim against the estate may lodge their claim with the executor for consideration and acceptance within a period of 30 days. Likewise, all persons who owe the estate monies may approach the executor and attend to payment.

Step 3 – Collate all information regarding the deceased’s assets and liabilities 

This information gathering exercise is aimed at finalizing the liquidation and distribution account to be lodged with the Master, which account will reflect the assets (awarded or realized) and liabilities in the estate and how the net estate is to be distributed. 

If the deceased was married in community of property, where the joint estate is to be administered, then the executor will also need to determine the extent of the surviving spouse’s assets and liabilities to be reflected in the liquidation and distribution account to be lodged with the Master.

The Executor is given a statutory period of 6 months from date of issuing of Letters of Executorship to lodge the liquidation and distribution account with the Master and may, on good cause shown, apply to the Master for an extension of time to lodge the account.

It is at this milestone where the executor may face delays with obtaining valuations of assets and certificates of balance and closure of the deceased’s bank accounts. Post COVID19, most banks are still faced with back-logs and are slow to provide the requested information and closure of accounts. Securing valuations of business interest and loan accounts can also be problematic as in most cases the financial statements and tax affairs are seldom up to date. Bringing the estates income tax affairs up to date and assessed by SARS can also result in lengthy delays in the administration process.  Assets may need to be reduced to cash to provide liquidity to settle estate liabilities which can also delay the administration process. To avoid having to reduce assets to cash and possible delays, heirs may also introduce cash into the estate to cover the estate liabilities and take transfer of the estate assets.

Step 4 – Lodge the liquidation and Distribution Account with the Master’s Office

Once the Executor has lodged the liquidation and distribution account with the Master of the High Court, the Master’s Office will scrutinize the account and once all “A” queries have been addressed thereafter provide the necessary approval to proceed with advertising the account for inspection in terms of section 35 of the Administration of Estates Act.

The Master’s turnaround time to provide the necessary approval is usually 4-6 weeks from date of lodgment of the account.

Step 5 – advertising the account to lie for inspection and tax clearance from SARS 

Once the account has been approved by the Master, a copy of the account is forwarded to SARS for audit purposes and thereafter to issue a Tax Compliance Certificate. This process should take 21 days, but very rarely does, depending on their findings and any delays at the instance of SARS.

The section 35 advert is published in the local newspaper and the Government Gazette in which account is advertised as lying for inspection at the High Court and where appropriate, the appropriate Magistrates Court for a period of 21 days. 

Step 6 – Transfer of Assets

Upon expiry of the section 35 advert, without objection, and provided a Tax Compliance Certificate has been issued by SARS confirming that the estate tax affairs are in good order and complete, the executor may proceed to settle all liabilities after which the estate bank account can be closed and the cash and assets transferred to the heirs in accordance with the account.

Step 7- Finalisation of the Estate

Once the distributions to the heirs have taken place the Executor will then turn to satisfy the Master’s final queries at which point the estate will be regarded as finalized.

The average time to finalise a fairly simple estate is around 9-12 months from the date of receiving Letters of Executorship from the Masters Office, bearing in mind that the estate administration process is very much reliant on the efficiency, assistance and cooperation of third parties such as the Masters Office, Financial Institutions, Municipal Offices, SARS and the Deeds Office, but to name a few.