The passing of a loved one is always a traumatic experience. Not being prepared for the financial realities can add more anxiety to an already painful and stressful time in your family’s life. According to Statistics South Africa, more than 70% of South Africans don’t have a last will and testament. If you want to leave a legacy for your family, Misha Badassy from Momentum suggests you get your estate plans in order as soon as possible.
“You never quite know when your time is up,” says Misha. “It is important to have your financial affairs in order to ensure your loved ones will be taken care of when you pass on," says Misha.
In line with the Administration of Estates Act, once a loved one passes away, their estate comes into existence and must be wound up; it can be an overwhelming process. "Depending on the size and complexity, winding up an estate can take five months to a number of years”.
A useful guide to winding up your estate:
Step 1: A deceased estate must be reported within 14 days of the person's death. It must be reported to the Master of the High Court in whose area of jurisdiction the deceased was living 12 months prior to his/her death. Once the state becomes aware of the death, the nominated/appointed executor will consult with the deceased’s family to gather information and report back to the Master of the High Court.
Step 2: The appointed executor will be provided with a letter of Executorship, which gives them the power to start winding up the estate. If the value of the estate exceeds R250 000, “letters of executorship” must be issued by the Master and the entire process determined by the Act must be complied with.
If the value of the estate is less than R250 000, the Master may dispense with letters of executorship and issue “letters of authority” in terms of section 18(3) of the Act, in which case the full procedure need not be complied with.
Misha explains that 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 estate in the local newspaper and Government Gazette. “This is to notify debtors and creditors of the death so that they
can submit 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 (SARS) also needs to be notified”.
Step 4: Financial competence will only be determined after 30 days and all complaints have been lodged. "A Liquidation and Distribution Account will then be drafted detailing the deceased's assets and liabilities".
"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. This Act sets out how the deceased’s estate will be distributed among beneficiaries, including a spouse, parents and children”.
Step 5: The Liquidation and Distribution account drafted by the executor, including the information about how the estate will be distributed, will be sent to the Master of the High Court’s Office for approval.
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, in the area where the deceased lived for the last 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.
Finally, the executor must lodge proof with the Master that the distribution has been completed fully and satisfactorily.
"Grieving for a loved one is devasting enough. Ensure your affairs are in order to save your family from an additional administrative burden. Speak to your financial adviser to ensure that your journey to success not only outlives your passing, but benefits those you leave behind”.
(Articles sourced from FANews)