Should an estate be reported?
The estate of any person leaving a Will or property should be reported.
When will funds be available?
Funds will only be available once the Executor is sure that the estate is solvent, with the provision that there are funds in the estate banking account.
How much will it cost?
The Executor’s fee is 3.5% of the gross value of the assets in the estate plus VAT thereon. The current rate is set by Regulation 8(1)(b) in terms of Section 103 of the Administration of Estates Act, 1965 as amended.
How long does it take to wind up an estate?
The average time to wind up an estate is plus minus a year. However, every estate is unique with unique circumstances that would determine the time span.
What happens if an heir cannot be traced?
The money will be deposited into the Guardians Fund on behalf of such heir.
What if there is no Will; or if the Will does not nominate a specific Executor; or the nominated Executor has died or has declined appointment?
The heirs (family in case of no Will) can nominate a new Executor or Master’s Representative. Only a spouse, child or parent is exempt from furnishing security for the appointment as Executor, anyone other than these persons mentioned will have to furnish security. A Trust Company such as Legatus can act as Agent for the nominated Executor. Legatus can also be nominated if no one else to take the appointment.
What is a Trust?
A Trust is a legal entity that may own assets. A Testamentary Trust is a Trust created in terms of a Will of a deceased person, usually for the benefit of minor heirs. The Trust will own the assets until a/the beneficiary/ies attain a certain age.
An Inter Vivos Trust, also known as a Living Trust. This type of Trust is usually registered to protect your assets from creditors. If an asset duly vests in an Inter Vivos Trust, this asset will not form part of the estate of any of the trustee/s or any of the beneficiaries and can therefore be protected from creditors (there are some exceptions).
What is a trustee
A Trustee is the fiduciary put in charge of overseeing property owned by a Trust. A Trustee can either be an individual or an institution such as a bank or a trust company.
Is it really necessary to create a Trust for minor heirs?
It is. If you do not create a Trust in your Will the assets in your estate will be sold and the cash will be paid over to the Guardians Fund. As the Guardians Fund only accepts cash ALL the assets will be sold.
Will all the payments from a Trust be made directly to the guardian?
No, most of the payments will be affected directly to the institutions, i.e. school fees will be paid directly to the school and varsity fees will be paid directly to the varsity/ies, etc. The only payments directly to the guardian will be monthly maintenance and, in some cases, a clothing allowance.
Is it necessary for quotations/receipts to be submitted?
Yes, when a guardian applies for monthly maintenance the guardian will be expected to submit supporting documentation so the Trustees can confirm the guardian’s income and expenditure. They will then, in consultation with the guardian, decide on an amount payable for the monthly maintenance of the beneficiary. Once the Trustees have decided on this amount, the guardian will not be expected to submit monthly receipts for this allowance. Any and all other requests must be confirmed with a quotation. If the Trustees accept the quotation, the guardian can pay the costs and provide the trustees with the receipt in order for a refund to be effected or the costs can be paid directly to the institution.
All expenditure (except monthly maintenance) in the financial statement must be supported by a receipt or a quotation/invoice.
Who decides on where and how the Trust capital should be invested?
The Trustees, subject to the provisions of the conditions of the Will. Once the maintenance requirements for the beneficiary/ies have been determined, the Trustees, in consultation with the guardians of the beneficiaries, will decide on the how much, where and with which institution the capital of the Trust will be invested. As the responsibility of the performance of the investments ultimately rest with the Trustees, they will always have the final say in choosing the investment platform.
What contingencies should I consider in my Will?
Over and above providing for the abovementioned contingencies, the Will must also provide for the following:
Revocation of all previous testamentary acts.
Appointment of an Executor to deal with the administration and liquidation of the estate and the distribution of the assets to the heirs.
Appointment of a Trustee to manage the assets in trust on behalf of the beneficiaries until the happening of a future event.
Exemption of Executor and Trustee to furnish security to the Master of the High Court.
Conferring powers and duties upon the Trustee to manage the trust funds and to utilise the income and/or capital for the benefit of the beneficiaries.
Protection of the inheritance of a beneficiary from any existing or future marriage in community of property.
How often should I review my Will?
The Will has the advantage that it can be reviewed and revised as often as necessary in the light of changing family and/or financial circumstances.
It is particularly important that the Will should be reviewed periodically or whenever circumstances change, especially when you marry where the marriage is in community of property and the estate is substantial, when a child is born or when you get divorced or separated.
When you marry, your existing Will is not automatically cancelled.
Divorce does not automatically cancel your Will either, but any bequests to a former spouse shall be void for a period of three months after the date of divorce, after which period such bequests become effective and valid again if the Will has not been changed
If the marriage is in community of property and the assets are registered in the husband’s name, he could find himself virtually dispossessed of half of his assets if his wife has no Will or if she has a Will nominating heirs other than her husband, or the other way around.
It is also important to revise your Will when you enter into a business venture or go on retirement.
If the Will is not reviewed when your circumstances change, it may result in unnecessary grief and also have severe financial implications.
What can disqualify me from being an Heir?
According to the Wills Act any of the following scenarios will disqualify you from bequests in a Will.
who attests and signs a Will as a witness; or
who attests and signs a Will as a witness and is also the nominated Executor, Trustee or Guardian; or
who signs a Will in the presence and by the direction of the testator; or
who writes out the Will or any part thereof in his own handwriting; or
who is the spouse of such a person (mentioned above) at any time of the execution of the Will.
A benefit includes the nomination of a person as Executor, Trustee or Guardian.
In addition the common law provides for a number of cases where a person cannot benefit under a Will:
A person who had unduly influenced the testator for the purpose of obtaining a benefit under the Will cannot take the benefit.
A person who has married a minor without the consent of the latter’s parents or guardians cannot take any benefit under the Will, not even where the testator was a major at the time of making it nor even if the necessary consent had been obtained after marriage.
A person who has caused the death of the testator cannot benefit under his Will. This is so whether the beneficiary caused the testator’s death directly or indirectly, e.g. by encouraging him to drink himself to death.