• Death certificate or death notice.
• Identity document of the deceased.
• Letters of Executorship (J238) (if applicable).
• Letter of Authority (J170) (in cases where the estate is less than R250 000).
• Certified copy of the executor’s identity document.
• Power of attorney(if applicable).
• The name, address and contact details of the executoror agent.
• The last Will and Testament of the deceased.
• An inventory of the deceased’s assets.
• The liquidation and distribution accounts (if available).

• After the date of death of a person, a new taxable entity comes into existence – the “estate”.
• The assets of the deceased will be held by the estate until the liquidation and distribution account has lain for inspection and become final under section 35(12) of the Administration of Estates Act after which the assets will be either handed over to the heirs or delivered to the trustee of a trust estate.
  

References:

• http://www.sars.gov.za/TaxTypes/EstateDuty/Pages/default.aspx
• http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Tax-and-Inheritance.aspx

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For newlyweds, one of the most important tasks to attend to is estate planning. The estate planning will depend on what the couple wants and what form of marriage they are in. It is therefore important to keep the following in mind when planning the years ahead together.

Marriage in community of property

There is a joint estate, with each spouse having a 50 percent share in each and every asset in the estate (no matter in whose name it is registered);

1. In the event of the death of one spouse, the surviving spouse will have a claim for 50 percent of the value of the combined estate. The estate is divided after all the debts have been settled in a deceased estate.
2. When drafting a Last Will and Testament, spouses married in community of property need to be aware that it is only half of any asset that he or she is able to bequeath.
3. Upon the death of one spouse, all banking accounts are frozen (even if they are in the name of one of the spouses), which could affect liquidity.

Marriage out of community of property without the accrual system

Each estate planner (spouse) retains possession of assets owned prior to the marriage. Each spouse’s estate is completely separated, even in the event of death. If you want your spouse to inherit something, you would need to outline this in your Will.

Marriage out of community of property with the accrual system

This is identical to a “marriage out of community of property” but the accrual system will be applicable. The accrual system is a formula that is used to calculate how much the larger estate must pay the smaller estate once the marriage comes to an end through death or divorce.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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The South Africa common law presumption of collation (collatio bonorum) is alive and well.

This presumption is rooted in the belief that a testator intended that there should be equality in the distribution of his estate among his descendants (“children”). Collation is the process by which the inheritance of certain descendants (heirs)of the deceased is adjusted to consider any substantial benefits received from the testator during his lifetime.

Collation is achieved by adding to the inheritance the amount due by each heir. The new total shall then be divided between all the heirs. An heir cannot, if he refuses to collate, enforce legal remedies to claim his share of the inheritance.

Collation further takes place by operation of law and therefore applies automatically to your will, or if you have failed to execute a will it applies to your intestate heirs.

If you, therefore, intend to release any of your descendants (heirs) from this obligation to collate it should be clearly expressed in your will, by adding the following paragraph: –

“I direct that my children need not collate any of the gifts or sums of money they received from me during my lifetime and I remit collation so far as they are concerned.”

Or if you specifically intend for one of your descendants (heirs) to collate it should be clearly expressed in your will, by adding the following paragraph: –

“I record that during my lifetime I advanced to my son, Piet Louw sums totalling in all R300 000 (three hundred thousand rand) to enable him to qualify as an attorney and I direct that he collates that sum with my estate before he is paid his inheritance in terms of this will.

An heir who is obliged to collate has the choice of restoring the property he has received or permitting a deduction equal to the value he received at the time of the gift.

Considering the above it is imperative to have your true intentions reflected in your will and to enlist the services of an estate specialist to assist you with your estate planning and the drafting of your will.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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It is very important for you to plan your estate, which could include a living will, a last will and a living trust. This can help families prepare for difficult times when you are no longer around to assist or advise them. Our lives get busier and more complicated by the day, so estate planning for young and old becomes increasingly important. Young people should consider preparing certain estate planning documents, and in particular financial powers of attorney and living wills.

At the age of 18 a young man or woman officially becomes an adult in the eyes of the world. This means that you are entitled to make important financial, legal or health decisions about your lives. But what if something happens and you are unable to make these decisions at a critical time? Such situations can range from a small inconvenience to a life-threatening crisis, but if your estate is in order, it can speak on your behalf.

Financial power of attorney

A financial power of attorney allows you to appoint someone you trust, like another family member, to make financial decisions on your behalf. This document can be activated when you are incapacitated or right after it has been signed, and it will remain effective until you can resume charge of your own decisions again.

A financial durable power of attorney will allow the appointed person to handle important legal and financial matters on behalf of the grantor. In the case of a business or financial situation which involves the young adult, such as a passport or car registration renewal, it is convenient for the power of attorney to act on his/her behalf if they cannot tend to the problem. This arrangement may come in handy when there is a legal situation which requires quick action and the young adult is unable to attend. Families with a disabled family member can also benefit from the security of a power of attorney.

Living will

A living will enables you to state specific medical wishes if you are alive, but unable to communicate them. Artificial life support in the case of a coma or terminal illness is an issue often discussed in such a document. Preferences regarding administering of pain medication, artificial nutrition and other treatments can be dictated in this document.

The Terry Shaivo case shows what can happen if this document is not in place. The legal battle between her husband, family and state of Florida lasted for years before she was granted her wish and taken off life support.

Health care power of attorney

With this type of power of attorney, you give someone else the power to make health decisions on your behalf. These decisions regarding serious health and emotional crises will be made based on instructions which you have given to your power of attorney beforehand. Sometimes a living will is combined with a health care power of attorney, because both of these can be revoked, i.e. it can be cancelled at any time by destroying it, communicating your wishes to your doctor, writing a letter regarding the cancellation or by creating a new living will and health care power of attorney, indicating that the new will revokes all the previous ones.

Start the conversation

Every family’s legal needs are different, so perhaps you should take the first step in being prepared for the worst. Remember that every time your family composition changes, like when a child is born, you need to adapt your will to include them. Start the process and be prepared.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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If someone leaves a sizeable estate behind, it may cause conflict among the possible heirs. The help of an attorney, when settling an estate after a death, can avoid unnecessary troubles.

The Administration of Estates Act, 1965, determines what must happen with an estate after a person’s death. There are certain steps that should be taken to ensure the process is legal. However, if the estate is worth a lot of money or the deceased has children, then it is a good idea to seek the assistance of an attorney, as family disputes and debts of the deceased can be confusing. In order to do this an executor will be appointed to act on behalf of the estate.

Finding the will of a deceased relative

If the deceased person left a will the first thing to do is find it. If they did not tell you beforehand where their will was, you can try calling the probate court in their district or the office of the Master of the High Court to check if they have a copy of the will. Other places to call would be the deceased’s life insurance company, bank or lawyer. Otherwise, the deceased might have left a copy of it somewhere secure in their home.

Who is the executor?

An executor is the person appointed to handle the process of settling the estate. The executor will either be mentioned in the will of the deceased or appointed by the Master of the High Court. The Master will ultimately decide who will take the role of executor. If the chosen executor doesn’t know how to handle the estate or is unfamiliar with the legal procedure, he or she can go to a lawyer for help. Once the executor has been chosen, the Master will give them “Letters of Executorship”, which will give only them the authority to handle the estate.

What does the executor need to do?

The executor has several responsibilities such as arranging the valuation of the estate’s property and assets. They will also be responsible for contacting and dealing with all the beneficiaries.

Some other responsibilities of the executor include:

• Arranging provisional payments for the family’s immediate needs.
• Opening a bank account for the estate and depositing the estates money in it.
• Paying all the necessary estate duties.

It’s important that any person who wants to act on behalf of the deceased person’s estate have the Letters of Executorship. If not, their actions would be considered illegal. This also applies to the spouse of the deceased person. This eliminates the possibility of several different family members trying to influence the estate’s dealings. The executor will also decide how the assets will be divided between the heirs and if any or all assets need to be sold. If a will is in place the executor will base his/her decisions on it.

Eventually, the executor will prepare a liquidation and distribution account. This would include what they intend to do with all the assets left after expenses. This account would be delivered to the Master, who will check to see if the executor’s actions reflect the will of the deceased and that all legal requirements have been fulfilled.

Important things to keep in mind?

The Master of the High Court should be notified of the deceased person’s estate not later than 14 days after the death. According to the Department of Justice, the death of anyone who owned property in South Africa must be reported to the Master, whether or not they died in the country.

All estates that exceed R50 000 should be reported to the Master of the High Court directly because magistrate’s offices have limited jurisdiction. If reported to the magistrate’s office, estates will usually be referred to the Master.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

References

The Department of Justice and Constitutional Development. 2012. “Reporting the estate of the deceased”. Accessed from: http://www.justice.gov.za/services/report-estate.html/ on 11/05/2016.

Administration of Estates Act 66 of 1965. Accessed from: http://www.justice.gov.za/ on 11/05/2016.

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During a person’s lifetime s/he will gather assets, in other words, belongings such as a house or a motor vehicle. These assets and liabilities will form part of a person’s estate. At the death of that person, his/her deceased estate must be administered, in other words, divided, distributed and controlled by someone. This person is called an executor.

However, the role of an estate executor and who can be appointed as one has been largely misunderstood.

What does the executor do?

“Executor” is the legal term for referring to the person, or people, nominated in your will to carry out the directives you set out in your will.

1. This means that it is the executor’s responsibility to disburse your property to the mentioned beneficiaries in your will, but also obtain information on potential heirs, collecting and arranging payments, and approving or disapproving creditors’ claims.
2. It is the executor’s duty to calculate and pay the estate tax, and to ensure that the correct documentation is filed with the relevant authorities.
3. The executor is the individual that represents your estate.

Who can be appointed as the executor?

It has become normal to appoint a friend, family member or beneficiary to act as the executor, as they most likely have intimate knowledge of your estate and your affairs, but also, they will not rack up the fees that a legal body might accrue.

However, there is a misconception that you can avoid the fees by appointing a family member as the estate executor, but this could also mean that you are deferring the cost to the nominated family member.

1. Family members appointed as executors on larger estates immediately find themselves out of their depth, and not only end up hiring a professional executor, but may also pay more for these services than necessary.
2. A simple way to address this is by appointing a “professional” executor during your lifetime. This allows you to negotiate the executor fees.

If you appoint a family member, make sure that they understand that they will have to appoint a professional agent, and that they should negotiate the fee and be very cautious of agreeing to a fee arrangement in terms of which the professional agent charges their professional fee, instead of the legislated scale.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

https://www.legalwise.co.za/help-yourself/legal-articles/duties-executor

http://www.fin24.com/Money/Wills-and-trusts/Role-of-executor-of-deceased-estate-20150513

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In terms of Rule 57 of the High Court Rules any person may apply to the High Court for an order declaring another person (“the patient”) to be of unsound mind and as such incapable of managing his/her affairs.

This type of High Court application is usually made by a family member of the patient. The Notice of Motion must state the grounds upon which the applicant claims locus standi, in other words, what his/her interest in the matter is and why the court should entertain the application. The court is normally requested to do three things:

1. To declare the patient of unsound mind and incapable of managing his/her affairs;
2. To appoint a curator ad litem; and
3. To appoint a curator bonis and/or curator personae.

Furthermore the applicant must state inter alia the following in the application:

1. The grounds upon which locus standi is claimed by the applicant;
2. Why the court has jurisdiction to hear the matter;
3. Information regarding the patient’s age, sex, full particulars of his/her means and general state of the patient’s physical health;
4. The nature and duration of the relationship and association between the applicant and the patient;
5. Facts and circumstances serving to show that the patient is of unsound mind and incapable of managing his/her affairs;
6. The names, occupations and addresses of the persons suggested as curator ad litem and curator bonis or personae.

After hearing the application the court may appoint a curator ad litem. The curator ad litem is someone who conducts a court case or court proceedings on behalf of another. The most important function of the curator ad litem is to manage the patient’s interests in court and acts on the patient’s behalf as the patient is unable to do so because of mental illness. Upon the appointment the curator ad litem must without delay interview the patient and he/she should explain the nature of the application and the appointment to the patient. The curator then draws up a report. Such report is then submitted to the registrar of the court and the Master of the High Court.

After receipt of the report by the Master, the applicant may place the matter on the court roll and request the court for an order that the patient be declared incapable of managing his/her affairs and that the suggested person be appointed as curators bonis and personae. The curator bonis must manage the estate of the patient in accordance with the court order, subject to certain directions of the Master.

Compiled by: Annerine du Plessis

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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IS TAX IMPOSED ON SUMS OF MONEY WHICH HAVE BEEN INHERITED?

Any asset which is attained by an heir to a deceased estate is termed as a ‘capital receipt’ and is not included in the heir’s gross income. Thus, tax is not payable by an heir who receives an inheritance from a deceased estate. Further, an heir to a deceased estate is not liable for payment of Capital Gains Tax (CGT). Any CGT which would be due by the estate is payable before the inheritance is transferred to the beneficiaries. As mentioned above, an asset does not give rise to a capital gain at the time of its inheritance – any capital gain or loss is only worked out once the asset is ultimately sold or disposed of in any other manner.

WHAT IS ESTATE DUTY?

During a person’s lifetime, all one’s income is taxable, that is, up until one’s date of death. After a person’s death, a new taxable entity is formed, which is called an “estate”. Every death must be reported to SARS, even if the estate is not liable for the payment of ‘Estate Duty’.

The estate of a deceased individual is subject to an amount of 20% Estate Duty. This percentage is only imposed once a deduction of R3.5 million against the net value of the estate has been taken into account. To illustrate this, see the worked example below:

Net value of estate:                                                                         R4 million
Estate duty only dutiable on the amount exceeding: R3.5 million
Amount exceeding R3.5 million:                                             R500 000.00
20% of R500 000.00:                                                                     R100 000.00

Thus, the executor of the estate will be responsible for paying the amount of R100 000.00 to South African Revenue Service (SARS) in Estate Duty.

Estate Duty is due to SARS within one year of date of death, or 30 days from date of assessment if assessment is issued within one year of date of death. Currently, interest is charged at 6% p.a. on late payments.

Compiled by: Laura Ames

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Life is unpredictable, therefore we advise our clients to lose no time in drawing up their will and planning their estate. Below are important reasons why this should be one of your top priorities.

Q: Why should I have a will?

A: A will enables you to name your heirs. Should you die without a will (intestate) your assets will be divided according to the Intestate Succession Act. That may advantage people whom you did not wish to name as heirs.

Q: Who is allowed to sign your will as witness?

A: Your will must be signed in the presence of two witnesses, who also sign in each other’s presence. Only persons older than 14 years are qualified to sign as witnesses.

Q: What is the cost of Executor’s fees?

A:The maximum remuneration payable to an Executor is determined by law and is currently fixed at 3.5% of the total gross estate value. Executor’s fees should, however, be negotiated with the person who has been appointed as Executor of your will.

Q: How often should I revise my will?

A:  It is recommended that wills be revised at least every 2 years. It is also important to review your will after events like marriage, birth, divorce or the purchase of property.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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The maximum Executor’s fee is fixed by law. The current maximum permissible Executor’s fee is 3.5% of the gross estate value plus 14% VAT (should the Executor be registered for VAT).

It seems as though this fee is very fair or even at a very low percentage, but let us illustrate with an example:

Let us suppose that the gross estate value is R2 million. Due to the drastic increase in the value of fixed property over the last few years it is quite possible to attain a gross estate value of R2 million and very realistic if you own fixed property.

R2 million x 3.5% = R70 000-00

Plus 14% VAT = R9 800-00

Total Executor’s fee = R79 800-00

This Executor’s fee does not include any additional administrative costs such as transfer fees of the fixed property or funeral costs. Thus it becomes clear that the cost of administering an estate to the value of R2 million could easily escalate to R100 000. The result is that more and more individuals consider appointing the person who lives longest or another family member as Executor, assuming that the appointed Executor is then enabled to negotiate an Executor’s fee with an institution or law firm which will then act as the appointed Executor’s agent.

It does happen, however, that the appointed Executor (e.g. the surviving spouse) is not well-informed about the actions he/she should take when his/her spouse dies, therefore he/she often appoints the first agent who offers his/her services. No negotiation takes place and the agent imposes the maximum tariff as fixed by the law.

Our recommendation is therefore the following:

1. Appoint the person who lives the longest or another family member as Executor of your estate, but ensure that the appointed Executor is fully aware of the fact that he/she may negotiate the Executor’s fee with an institution; or
2. Should you have every confidence in an institution, appoint that institution as Executor of your estate, but negotiate beforehand and fix the agreed tariff in your will. Do not leave it up to any other person to negotiate Executor’s fees after you have passed away.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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