Estate Assist – Cloete Inc

Category: Deceased Estates

  • When an Inheritance Gets Complicated: Properties, Investments and Business Interests

    Part 1 of our series on administering complex deceased estates in South Africa.

    A family home. Two rental properties. An investment portfolio. An interest in a business built over decades.

    On paper, the family has inherited substantial wealth. In practice, they may be struggling to establish who owns what, who is collecting the income, what the assets are worth and when the estate can be finalised.

    The question soon becomes: Who is looking after the value of the inheritance while the estate is being wound up?

    Where an estate involves several properties, companies, close corporations or significant investments, careful financial administration becomes particularly important. Decisions about one asset can affect the tax position, available cash and eventual distribution of the entire estate.

    1. Start by establishing what the deceased actually owned

    Families often describe assets as “Dad’s properties” or “Mom’s business”. That description does not necessarily tell us who legally owns them.

    A property may be registered in the deceased’s personal name, owned jointly with someone else, or held by a company, close corporation or trust. Those distinctions change how the estate must be approached.

    If a CC owns a property, the deceased’s asset is ordinarily their member’s interest in the CC, together with any separate loan claim they held against it. The property remains an asset of the CC. Similarly, a shareholder’s estate ordinarily holds the deceased’s shares, rather than the company’s individual assets.

    A trust’s assets also do not automatically become estate assets merely because the deceased founded or managed the trust. Any loan claims, vested rights and relevant tax treatment need separate examination.

    The first task is therefore to build an accurate picture of the ownership structure, supported by title deeds, company records, trust documents and financial statements.

    2. Valuable assets still need attention during administration

    While paperwork is being processed, rental properties need maintenance, insurance must be checked and accounts continue to fall due.

    Imagine an estate involving three rental properties. One tenant stops paying, another pays into an old account, and nobody can explain whether the municipal accounts are up to date. The properties may be valuable, but their income and condition still need attention.

    For each property, the people administering the estate should establish:

    • Who owns it and who has authority to manage it.
    • Who occupies it and what agreement applies.
    • Where rental income is being paid.
    • Which expenses, arrears and repairs need attention.
    • Whether income and expenditure are properly recorded and reconciled.

    The ownership structure matters here too: rent earned by a company belongs to the company. It should not simply be treated as money available for distribution by a shareholder’s deceased estate.

    3. A property valuation may only be part of the picture

    The market value of a property does not necessarily equal the value of the deceased’s interest in the entity that owns it.

    Even where a property is a CC’s only asset, the valuation of the deceased’s member’s interest must consider the CC’s financial position and the interest actually held. Bank debt, other liabilities and member loan accounts can materially affect the result.

    SARS’s valuation checklist calls for a valuation of the shares or member’s interest, supporting financial statements and additional property information where the entity owns fixed property.

    For an operating business, the investigation may also involve its earnings, contracts, assets and dependence on the deceased’s personal involvement.

    Reliable valuations help the executor and beneficiaries understand what is available, assess proposed transactions and approach distribution on an informed basis.

    Our next article will examine property held in a CC or company, including the important distinction between a member’s interest and a loan account.

    4. A substantial inheritance does not mean immediate access to cash

    An estate may hold valuable assets without having enough readily available money to cover every obligation as it arises.

    There may be property expenses, administration costs, creditors and tax liabilities to address. Death can also trigger capital gains tax consequences without an actual sale, subject to applicable exclusions and rollover relief. Income earned by the estate after death requires separate tax attention.

    Money in a company’s bank account is not automatically estate cash. Nor should the family assume that an investment can be paid out immediately without first checking its nature and the applicable process.

    A cash-flow forecast helps identify the likely obligations, available funds and decisions that need to be made early. It can also help avoid unnecessary pressure to sell an asset at an unsuitable time.

    5. The heirs may want different outcomes

    One beneficiary wants to retain the holiday home. Another needs cash. A third wants to continue running the family business.

    These preferences are understandable, but a workable arrangement requires more than agreement on a headline value.

    The will, the estate’s obligations, the rights of those involved and the relevant legal requirements must be considered. Any proposed buyout or redistribution also needs to be assessed for affordability, tax consequences and implementation costs.

    Independent valuations and complete financial records give the family a firmer basis for those discussions. Documenting decisions clearly can reduce the scope for misunderstandings later.

    6. Progress should be explained in concrete terms

    Complex estates can take time. An outstanding valuation, missing financial statements or an unresolved tax issue may create a genuine obstacle.

    Beneficiaries should nevertheless be able to ask focused questions:

    • Have the assets and ownership interests been identified?
    • Which valuations or records are outstanding?
    • Are income and expenses being accounted for?
    • What is preventing the next stage of administration?
    • What action is being taken, and by whom?

    The liquidation and distribution account is a formal part of the administration process, setting out the estate’s assets, liabilities and proposed distribution. Practical progress updates help the family understand the work leading up to that stage.

    Delay alone does not establish misconduct or make an executor personally liable. Any concern about loss or improper conduct needs to be assessed against the executor’s duties and the evidence.

    Bringing the financial picture together

    Where an estate includes several properties, business interests and investments, someone needs to bring the records, valuations, income, liabilities and outstanding tasks into one coherent picture.

    Professional assistance can help identify gaps, coordinate the necessary specialists and give the executor and beneficiaries a clearer understanding of what must happen next.

    Estate Assist operates through Marlise Cloete of Cloete Inc., assisting with deceased estate administration in our capacity as accountants. Where conveyancing, litigation or specialist legal advice is required, the appropriate legal professionals need to be involved.

    Does your family’s estate involve multiple properties, investments, a CC or a company?

    Contact Estate Assist with a brief description of the assets, whether an executor has been appointed, the main difficulty you are experiencing and your contact number. We can discuss the assistance required and the scope and fees before work begins.

    Visit www.estateassist.co.za to get in touch.

    This article provides general information. The appropriate approach depends on the will, ownership structures, financial records and circumstances of the estate.

    Sources and further reading

  • The Estate Owns a House — So Why Is There No Money to Pay the Bills?

    A person passes away owning a house worth R2 million.

    The family naturally assumes that the estate is financially comfortable. After all, there is a valuable property sitting in the estate.

    Then the executor starts asking questions.

    There may be municipal arrears to settle. There may still be a bond over the property. SARS needs to be dealt with. There are administration expenses, advertising costs, transfer costs and executor’s fees.

    But there may only be R10 000 sitting in the deceased’s bank account.

    Suddenly, the family is told:

    “There isn’t enough cash in the estate.”

    For many heirs, this makes absolutely no sense.

    How can an estate own a valuable house and still not have enough money to pay its bills?

    The answer is surprisingly simple.

    An Estate Can Be Wealthy on Paper but Have Very Little Cash

    One of the most important concepts to understand when administering a deceased estate is the difference between assets and liquidity.

    A house worth R2 million is an asset.

    But it cannot normally be used to pay a R30 000 municipal account, a SARS liability or an administration expense unless money is somehow generated from that asset.

    The same applies where the estate consists largely of a farm, business interest, vehicles or other valuable property.

    The estate may therefore have substantial value while having very little actual cash available.

    This is often referred to as an estate being asset-rich but cash-poor.

    The Executor Cannot Simply Give the Property to the Heirs and Ignore the Debts

    When someone dies, their assets form part of their deceased estate.

    The executor is responsible for administering that estate, identifying its assets and liabilities and ultimately distributing what remains to the beneficiaries.

    Creditors must also be given an opportunity to lodge claims against the estate.

    Under the Administration of Estates Act, an executor is required to publish a notice calling upon creditors to lodge their claims. The executor must thereafter prepare the required Liquidation and Distribution Account reflecting how the estate is to be dealt with.

    The executor cannot simply transfer valuable assets to the heirs while legitimate estate debts remain unpaid.

    Only what remains after the estate’s liabilities and administration have been dealt with can ultimately be distributed to the beneficiaries.

    What Bills Might Have to Be Paid?

    Every estate is different, but an estate involving immovable property may have expenses and liabilities such as:

    • Outstanding home loan or bond amounts;
    • Municipal rates, taxes and other municipal charges;
    • SARS liabilities;
    • Funeral or administration-related claims properly payable by the estate;
    • Executor’s remuneration;
    • Advertising and Master’s Office expenses;
    • Valuation costs;
    • Conveyancing and property-related expenses where applicable;
    • Existing creditors of the deceased; and
    • Other debts that were owed by the deceased at the time of death.

    This does not necessarily mean that every expense has to be paid immediately or that every amount claimed against an estate is automatically valid.

    Part of proper estate administration is determining what is actually owed, by whom, and how it should be dealt with.

    So Where Does the Money Come From?

    This is where the difficulty arises in a cash-poor estate.

    Imagine the estate contains:

    House: R2 000 000
    Bank account: R15 000

    But the estate requires substantially more than R15 000 to complete the administration.

    Something has to be done to create sufficient liquidity.

    Depending on the circumstances, there may be several possibilities.

    1. Other Estate Assets Can Be Realised

    If the estate owns vehicles, investments, shares or other assets that do not have to pass specifically to a particular beneficiary, it may be possible to realise some of those assets to provide the cash required.

    2. Money Owed to the Estate Can Be Collected

    Sometimes the deceased estate itself has debtors.

    Money owed to the deceased may need to be collected and brought into the estate before distribution takes place.

    3. The Property May Have to Be Sold

    In some estates, selling an immovable property may ultimately be necessary to create sufficient cash to settle the estate’s obligations.

    This is particularly important where there are significant debts and no other realistic source of funds.

    That does not mean that an executor should simply sell a family home without properly considering the will, the interests of the beneficiaries, the estate’s financial position and the applicable legal requirements.

    But heirs also cannot necessarily insist that a property be retained if doing so leaves the estate unable to meet its obligations.

    4. An Heir Who Wants to Keep the Property May Have to Find Another Solution

    This is a situation we encounter surprisingly often.

    An heir wants the house.

    That is understandable. It may have been the family home for decades.

    But wanting the house and being financially able to retain it are two different things.

    If keeping the property means that the estate will not have sufficient cash to settle its obligations, the heir may need to consider whether funds can be contributed or whether another arrangement can lawfully be made.

    For example, there may still be a home loan that needs to be addressed, municipal amounts that must be settled, or other estate liabilities requiring payment.

    The solution will depend entirely on the circumstances of the particular estate.

    Do the Heirs Have to Pay the Estate’s Debts From Their Own Pockets?

    Generally, an heir does not simply inherit the deceased’s debts personally merely because they are a beneficiary.

    The debts are claims against the deceased estate.

    But there is an important practical distinction.

    If an heir wants to retain a particular asset and the estate does not otherwise have enough cash to complete the administration, that heir may decide to contribute money or make another arrangement so that the asset does not have to be sold.

    That is very different from saying that the creditor can automatically demand payment from the heir personally.

    This distinction is often misunderstood.

    What If the Estate Owes More Than Everything in the Estate Is Worth?

    That is a different and more serious situation.

    If the executor determines that the deceased estate cannot settle its debts, the estate may be insolvent.

    The Administration of Estates Act contains a specific process dealing with insolvent deceased estates.

    An executor therefore needs to distinguish between:

    A solvent but cash-poor estate:
    The assets exceed the liabilities, but there is insufficient cash immediately available.

    and

    An insolvent estate:
    The liabilities exceed the value available to settle them.

    Those are not the same problem and should not be treated as if they are.

    Be Careful Before Simply Paying Money Into an Estate

    Family members are sometimes told:

    “We need R50 000 to carry on with the estate.”

    That may be completely legitimate.

    But before paying a substantial amount personally, an heir should understand exactly what the money is required for.

    Ask for a breakdown.

    What are the assets?

    What cash is already available?

    What debts have been lodged?

    What is owed to SARS?

    What municipal amounts remain outstanding?

    Is there a bond?

    What administration expenses remain?

    Is the property intended to be transferred to an heir or sold?

    Most importantly:

    Why is there a cash shortfall and how much money is actually required to complete the estate?

    A proper estate administration should be capable of answering these questions.

    A Valuable Property Does Not Automatically Mean an Easy Estate

    Some of the most difficult deceased estates are not estates with no assets.

    They are estates with valuable assets but no liquidity.

    A R3 million house does not pay a R40 000 account by itself.

    Someone administering the estate therefore has to look at the whole financial picture and develop a practical way of dealing with the liabilities while protecting the estate and the beneficiaries.

    That may require selling an asset.

    It may require collecting money owed to the estate.

    It may require dealing with SARS.

    It may require an heir who wants to retain the property to make a financial arrangement.

    And sometimes it may simply require someone to properly calculate the estate’s position before unnecessary decisions are made.

    Need Help Understanding the Financial Position of a Deceased Estate?

    If you are an executor or beneficiary and have been told that there is insufficient money in the estate, the first question should not simply be:

    “How much must I pay?”

    The first question should be:

    “Why is there a shortfall?”

    Estate Assist can assist with reviewing the assets, liabilities and administration requirements of a deceased estate and explaining what needs to happen before the estate can be finalised.

    We also assist executors and families with deceased estate administration, Master’s Office processes and the tax requirements arising from deceased estates.

    Estate Assist – Cloete Inc

    This article provides general information regarding deceased estate administration in South Africa and should not be regarded as legal advice applicable to any particular estate.

  • Trying to Avoid Executor’s Fees? The Tax Bill Could Cost You Far More

    When someone dies, families understandably want to keep the costs of winding up the estate as low as possible.

    Executor’s fees can be substantial, particularly where the deceased owned valuable property, a business, shares or a member’s interest in a close corporation.

    This sometimes leads families to look for a shortcut.

    Perhaps the deceased owned a company or close corporation and somebody suggests:

    “Why don’t we just change the members or directors and leave the deceased estate alone?”

    Or:

    “The only real asset is a property. Why should we go through an expensive estate administration process?”

    At first glance, the shortcut may appear to save a considerable amount of money.

    The problem is that a deceased estate does not disappear simply because nobody administers it properly.

    And very often, the problem that eventually brings everything to a halt is tax.

    Death Has Tax Consequences

    The administration of a deceased estate is not simply a process involving the Master of the High Court.

    SARS is also an important part of the process.

    Depending on the circumstances, the executor or estate administrator may need to deal with:

    • Outstanding income tax returns of the deceased;
    • Income earned up to the date of death;
    • Capital gains tax consequences arising from death;
    • Income earned by the deceased estate after death;
    • Estate duty;
    • Tax relating to companies, close corporations or trusts in which the deceased had an interest;
    • Valuations of assets and business interests;
    • Outstanding historic tax liabilities; and
    • Ultimately, SARS compliance relating to the deceased estate.

    SARS regards an executor as the representative taxpayer responsible for finalising the deceased’s financial and tax affairs.

    Tax administration is therefore not an optional extra to deceased-estate administration.

    Death Can Trigger Capital Gains Tax

    One of the areas that is frequently misunderstood is capital gains tax.

    For capital gains tax purposes, death itself can constitute a disposal of an asset.

    This does not mean that every deceased estate automatically has a huge capital gains tax bill.

    Various exclusions, deductions, base-cost rules and spouse rollovers may apply.

    But it does mean that an executor should identify the deceased’s assets and properly consider the tax consequences arising from them.

    For example, the deceased may have owned:

    • Investment properties;
    • Shares;
    • A member’s interest in a close corporation;
    • Business interests;
    • Unit trusts or investments;
    • Valuable movable assets; or
    • Other capital assets.

    Simply changing a registration somewhere does not necessarily eliminate the underlying tax event.

    A Property Owned by a CC Is Not the Same as a Property Owned Personally

    This is another area where mistakes are easily made.

    Suppose a deceased person was the sole member of a close corporation.

    The close corporation owns a property worth R4 million.

    The deceased did not personally own that R4 million property.

    The close corporation is a separate legal entity and owns the property.

    The deceased owned a member’s interest in the close corporation.

    That member’s interest is the asset that must be considered in the deceased estate.

    This distinction can become extremely important when dealing with both the estate administration and its tax consequences.

    The Close Corporations Act specifically provides for an executor of a deceased member’s estate to deal with the deceased member’s interest.

    Simply arranging for somebody else’s name to appear as the member of the close corporation does not necessarily mean that the deceased estate has been lawfully administered.

    “But We Changed the CC Years Ago and Nobody Complained”

    This is where these matters can become particularly dangerous.

    Imagine the following situation.

    A father owns 100% of a close corporation.

    The CC owns valuable immovable property.

    The father dies.

    Instead of properly administering his estate, the family simply arranges for the membership of the CC to be transferred to his wife.

    Years later, the wife dies.

    The children then decide to do exactly the same thing.

    Nobody reports the relevant asset properly.

    Nobody investigates the capital gains tax position.

    Nobody considers estate duty.

    Nobody obtains the necessary valuations.

    Nobody checks whether all of the deceased persons’ historic tax returns were filed.

    And for several years it appears that the shortcut worked perfectly.

    Until somebody wants to sell the property.

    The Problem Often Appears Years Later

    A tax problem does not necessarily announce itself immediately after someone dies.

    Sometimes an irregular estate remains untouched for years.

    Then something happens.

    The heirs want to sell a property.

    A purchaser requires documents.

    A conveyancer starts investigating the ownership history.

    A bank becomes involved.

    SARS compliance is required.

    A tax clearance issue arises.

    An accountant discovers that returns were never submitted.

    The historic ownership of a company or CC no longer makes sense.

    Suddenly, a shortcut that saved money five or ten years earlier has to be reconstructed.

    And instead of administering one clean deceased estate, the family may now need to unravel two or even three generations of estates and transactions.

    Estate Duty Is Another Consideration

    Capital gains tax is not the only tax that needs to be considered.

    Estate duty may also apply.

    Under the current estate-duty regime, a basic abatement of R3.5 million is generally available when determining the dutiable amount of an estate, with estate duty then charged at the applicable statutory rates on the dutiable amount.

    There are also important deductions and exemptions, including particular treatment of property accruing to a surviving spouse.

    It is therefore incorrect to look at an estate worth R4 million and simply say:

    “Estate duty will definitely be payable.”

    Equally, however, it is dangerous to simply assume:

    “There is no tax to worry about.”

    The estate has to be properly calculated.

    Business Interests May Need Proper Valuations

    Where the deceased owned shares in an unlisted company or a member’s interest in a close corporation, determining the value is not always as simple as looking at the value of one underlying asset.

    The business may own:

    • Property;
    • Vehicles;
    • Investments;
    • Equipment;
    • Cash;
    • Loan accounts; and
    • Other assets.

    It may also have:

    • Bank debt;
    • Tax liabilities;
    • Creditors;
    • Member loan accounts; and
    • Other liabilities.

    A proper valuation may therefore be required.

    SARS specifically provides for valuations relating to interests in unlisted companies and close corporations for estate-duty purposes.

    This is another reason why simply changing the registered member of a close corporation can create serious problems later.

    What About Property That Passes to a Surviving Spouse?

    Transfers between spouses receive particularly important treatment in deceased-estate taxation.

    There are circumstances in which assets passing to a surviving spouse receive rollover treatment for capital gains tax purposes, and there are important estate-duty deductions relating to property accruing to a surviving spouse.

    But this does not mean that the tax disappears forever.

    It may effectively mean that the tax consequences are deferred until a later event.

    That becomes particularly important where the surviving spouse later dies and the assets pass to the children.

    The tax treatment of:

    Husband → Wife

    may be very different from:

    Mother → Children.

    Each death must therefore be considered separately.

    Saving Executor’s Fees Should Not Become the Only Objective

    There is nothing wrong with wanting to administer an estate cost-effectively.

    Executor’s remuneration can be significant, and heirs are perfectly entitled to discuss fees and negotiate appropriate arrangements where possible.

    But it is dangerous to make avoiding the executor’s fee the sole objective.

    The correct question is not:

    “How do we avoid paying executor’s fees?”

    It should be:

    “What is the most cost-effective lawful way to properly administer the estate and deal with its tax obligations?”

    There can be an enormous difference between the two.

    A shortcut that saves R50,000 or R100,000 today may become extremely expensive if someone later has to reconstruct years of missing estate and tax records.

    Old Estates Require Particular Care

    Estate Assist regularly encounters estates that were never properly finalised.

    Sometimes the deceased died five, ten or even twenty years ago.

    Properties have continued to be occupied.

    Businesses have continued trading.

    CC memberships or company records may have changed.

    Family members may have treated assets as though they already belonged to them.

    Tax returns may not have been submitted.

    The longer this continues, the more difficult it can become to establish:

    • Who legally owns what;
    • What should have formed part of each estate;
    • What values applied at the relevant dates of death;
    • What tax returns should have been submitted;
    • Whether capital gains arose;
    • Whether estate duty was payable;
    • What happened to company or CC interests; and
    • How the position can now be corrected.

    That does not necessarily mean that the situation cannot be fixed.

    It does mean that it should be investigated properly before further transactions are undertaken.

    Deceased-Estate Tax Is Often More Complicated Than Expected

    A deceased estate can involve several separate areas of tax.

    There may be a final return for the deceased person.

    There may also be taxable income earned by the deceased estate after death, such as rental income or interest.

    There may be capital gains tax consequences.

    There may be estate duty.

    There may be separate tax issues in companies, close corporations or trusts connected to the deceased.

    This is why deceased-estate tax administration should not simply be left until the end of the estate as an afterthought.

    Ideally, the tax position should be considered from the beginning.

    Estate Assist Can Assist With Both the Estate and the Tax Administration

    At Estate Assist, we work together with experienced accounting and tax professionals so that the legal, administrative and tax aspects of a deceased estate can be dealt with together.

    This is particularly useful where an estate includes:

    • Companies or close corporations;
    • Immovable property;
    • Investment assets;
    • Historic outstanding tax returns;
    • Capital gains tax issues;
    • Estate duty;
    • Old estates that were never properly finalised; or
    • Complicated transactions that took place after the deceased’s death.

    We can also assist executors and other deceased-estate administrators who are already attending to an estate but require assistance specifically with the accounting or SARS aspects of the administration.

    It is not necessary to hand over the entire estate merely because the tax side has become complicated.

    The tax component can be dealt with separately while the appointed executor or administrator continues managing the remainder of the estate.

    Don’t Wait Until You Want to Sell the Property

    If you know that a deceased estate was never properly administered, postponing the problem rarely makes it easier.

    This is especially true where valuable property, companies, close corporations or business interests are involved.

    A transaction that appears to have worked years ago may eventually have to be explained to the Master, SARS, a conveyancer, a purchaser or another professional.

    The sooner the ownership and tax position is properly established, the more options there usually are to correct it.

    Avoiding an executor’s fee does not make the deceased estate disappear.

    Sometimes it simply means that the estate — and the tax problem — is waiting for you later.

    If you are dealing with an old deceased estate, an estate involving a company or close corporation, or a deceased estate with unresolved SARS issues, contact Estate Assist and we can assess what needs to be done.

    Executors and estate administrators who require assistance specifically with deceased-estate tax calculations, historic returns or SARS administration are also welcome to contact us.

    Estate Assist – deceased-estate administration with the legal, accounting and tax considerations dealt with together.

    This article provides general information regarding deceased estates and taxation in South Africa. Tax consequences depend on the particular circumstances of each estate and professional advice should be obtained before implementing any transaction.

  • Can an Heir Live in the Deceased’s House Without Paying Rent?

    A person dies leaving behind a house that is meant to benefit several heirs.

    One family member is already living in the property—or moves in shortly after the death. They change the locks, exclude the other heirs, refuse to pay rent and begin treating the house as though it belongs to them alone.

    The other heirs are then told:

    “I am also an heir, so I have every right to live here.”

    But is that correct?

    Can one heir occupy the deceased’s house to the exclusion of everyone else? Can the estate claim occupational rent or damages? And can the amount owing be deducted from that heir’s inheritance?

    The answer depends on the circumstances, but an heir does not ordinarily acquire the right to take exclusive control of estate property merely because they expect to inherit from the estate.

    An Heir Does Not Automatically Own the House When the Deceased Dies

    A common misunderstanding is that ownership of the deceased’s property passes immediately to the heirs on the date of death.

    That is not how the administration process works.

    The executor must first take control of the estate assets, establish the estate’s debts and liabilities, prepare the liquidation and distribution account and distribute the remaining assets in accordance with the will or the law of intestate succession.

    Section 26 of the Administration of Estates Act places the custody and control of estate property in the hands of the duly appointed executor. South African courts have similarly confirmed that the executor must obtain control of estate assets, realise assets where necessary, settle the estate’s obligations and only then distribute what remains to the heirs.

    An heir therefore generally has a right to receive what is awarded to them through the estate administration process. They do not simply become the registered owner of a particular estate asset immediately after the death.

    This means that an heir cannot ordinarily say:

    “I inherit one-third of the estate, so I am entitled to occupy the whole house without paying anything.”

    Who Decides Who May Occupy the Property?

    While the property remains in the deceased estate, the executor is responsible for controlling and protecting it.

    The executor should establish:

    • Who is living in the property;
    • On what basis they are occupying it;
    • Whether the deceased permitted them to live there;
    • Whether the will grants them a right of occupation or usufruct;
    • Whether they are required to pay rent;
    • Who is responsible for municipal charges, levies and maintenance;
    • Whether the property should be rented, sold or transferred; and
    • Whether the continued occupation is prejudicing the estate.

    An executor is not merely an agent who must follow the instructions of whichever heir is most forceful. The executor is legally responsible for administering the estate and is the person authorised to deal with its assets.

    Does an Heir Have a Right to Live in the House?

    Possibly—but not merely because they are an heir.

    The right to occupy may arise from:

    • A lease concluded with the deceased;
    • A lease or written arrangement concluded with the executor;
    • A right of occupation contained in the will;
    • A usufruct or similar limited right;
    • Ownership of a separate share of the property;
    • The rights of a surviving spouse;
    • A maintenance claim;
    • A genuine agreement between the executor and all affected parties; or
    • Another legally recognised basis.

    The facts therefore matter.

    For example, a will may provide that the deceased’s spouse may live in the house for the rest of their life. In that situation, the spouse’s occupation is not simply unauthorised occupation by an heir.

    Similarly, where the deceased allowed a child to occupy the property free of charge for many years, it may be necessary to determine whether that permission continued after death and whether the executor properly terminated it.

    However, a family member who has no lease, no right under the will and no permission from the executor cannot necessarily remain indefinitely simply because they may inherit a share of the estate.

    What Does It Mean to “Hijack” an Estate Property?

    An heir may effectively hijack the property where they:

    • Move into it without the executor’s authority;
    • Change the locks and refuse the executor access;
    • Prevent the other heirs from entering;
    • Refuse to provide keys;
    • Prevent the property from being valued;
    • Block prospective purchasers or tenants from viewing it;
    • Refuse to leave after receiving notice;
    • Use estate furniture and assets as their own;
    • Collect rental from tenants without accounting to the estate;
    • Allow the property to deteriorate;
    • Use municipal services while the estate pays the accounts; or
    • Claim exclusive rights that they do not legally have.

    This conduct can cause substantial financial loss.

    The estate may lose rental income, incur additional municipal charges, suffer deterioration to the property or be unable to sell or transfer the house.

    Can the Estate Charge the Heir Rent?

    Potentially, yes.

    An executor may require an occupying heir to enter into a proper rental or occupation agreement. That agreement should ideally record:

    • The monthly rental;
    • The commencement date;
    • Who must pay water, electricity, rates and levies;
    • Responsibility for maintenance;
    • Access rights;
    • The period of occupation; and
    • What happens if the property must be sold or transferred.

    The executor should not permit one heir to enjoy the exclusive use of an estate asset indefinitely while the estate and the other heirs carry the cost.

    However, the executor should also avoid imposing arbitrary rental retrospectively without first establishing the legal and factual basis for the claim.

    Can the Estate Claim Occupational Rent or Damages?

    A claim may arise where the heir remains in occupation without lawful authority or refuses to vacate after their right of occupation has ended.

    Depending on the facts, the estate may potentially claim:

    • Reasonable occupational rental;
    • Damages for unlawful holding over;
    • Loss of rental income;
    • Municipal charges and utilities paid on the occupier’s behalf;
    • Damage caused to the property;
    • Costs of restoring or securing the property;
    • Rental secretly collected from third parties; or
    • Other losses directly caused by the heir’s conduct.

    South African courts recognise that an owner may claim compensation where an occupier unlawfully remains in possession after the right to occupy has ended. The amount is often linked to reasonable market rental, although the legal basis and proof of the claim remain important.

    A claim is therefore possible, but it is not automatic merely because one heir lived in the property.

    From What Date Can Rent or Damages Be Claimed?

    This is one of the most important questions.

    The claim may not necessarily run from the date of death.

    The relevant date could be:

    • The date on which the executor was appointed;
    • The date on which permission to occupy was terminated;
    • The date on which the executor demanded rental;
    • The date on which the heir was instructed to leave;
    • The expiry of an agreed occupation period;
    • The date on which the occupier began excluding the executor;
    • The date on which a sale or rental opportunity was lost; or
    • Another date determined by the particular facts.

    The executor’s position is generally stronger where the occupier has received a clear written demand stating that they must:

    1. Pay an agreed or reasonable rental;
    2. Provide access to the executor;
    3. Pay specified property expenses; or
    4. Vacate the property by a particular date.

    A court has, for example, considered an executrix’s attempt to evict an occupier who continued living in estate property without paying rent and who allegedly obstructed the administration of the estate.

    Must the Estate Prove Its Loss?

    Yes.

    The executor cannot simply choose a convenient figure and call it damages.

    The estate may need evidence showing:

    • The period of unauthorised occupation;
    • The market rental value of the property;
    • Whether the property could realistically have been rented;
    • Whether prospective tenants or purchasers were turned away;
    • The municipal charges and expenses paid by the estate;
    • Damage caused during occupation;
    • Rental received by the occupier;
    • The date permission was withdrawn; and
    • The connection between the heir’s conduct and the estate’s loss.

    An independent rental valuation from an estate agent or property practitioner may be useful.

    For a damages claim, the executor may also need to prove that the loss was actually caused by the heir’s conduct rather than merely assuming that the property would otherwise have produced income.

    What if the Heir Paid Rates, Repairs or Maintenance?

    Those payments must be considered.

    An occupying heir may argue that they:

    • Paid municipal accounts;
    • Paid levies;
    • Maintained the garden;
    • Repaired the roof;
    • Secured the property;
    • Paid insurance;
    • Prevented vandalism; or
    • Improved the house.

    This does not automatically cancel the estate’s claim. However, legitimate and properly proved expenses may have to be credited against any amount owing.

    The executor should distinguish between:

    • Necessary expenses that preserved the estate asset;
    • Ordinary living expenses that benefited the occupier;
    • Luxury improvements undertaken without authority;
    • Repairs that were never approved;
    • Amounts supported by invoices and proof of payment; and
    • Unsupported estimates.

    An heir cannot necessarily renovate the property without permission and then unilaterally deduct whatever amount they choose from the rent or damages claimed by the estate.

    Can the Other Heirs Claim Their Own Rent Directly?

    Usually, the safer approach is for the executor to pursue the claim on behalf of the deceased estate while the property still forms part of the estate.

    The property is under the executor’s control, and the financial loss is ordinarily suffered by the estate itself.

    Any amount recovered should then be brought into the estate and dealt with through the liquidation and distribution account. The benefit would ultimately flow to the heirs according to their respective entitlements.

    The other heirs should therefore normally demand that the executor investigate and act rather than each heir separately attempting to invoice the occupier for their personal percentage of the rent.

    Can the Amount Be Deducted From the Occupying Heir’s Inheritance?

    Potentially, yes—but only if the estate has a proper claim.

    Where an heir owes money to the deceased estate, the executor must account for that debt as an asset of the estate. The Administration of Estates Act requires debts due to the estate to be reflected and collected or properly explained in the estate accounts.

    In practice, an amount lawfully owing by the heir may sometimes be set off or accounted for against the inheritance due to that heir.

    For example:

    • The heir is entitled to inherit R500,000;
    • The estate has an agreed or established claim of R180,000 against that heir;
    • The heir may ultimately receive the net balance of R320,000.

    However, the executor should not simply declare that a disputed amount is owed and reduce the inheritance without a proper basis.

    What if the Heir Disputes the Claim?

    If the heir admits the debt and agrees to the deduction in writing, the matter may be relatively straightforward.

    The position becomes more difficult where the heir disputes:

    • That rent was payable;
    • The date from which it became payable;
    • The rental amount;
    • Whether occupation was authorised;
    • Whether the executor consented;
    • Whether the estate suffered any loss;
    • Whether expenses should be credited;
    • Whether the occupier had a right under the will; or
    • Whether the proposed deduction is lawful.

    The executor cannot safely act as both claimant and final judge in a genuinely disputed claim.

    Depending on the circumstances, the executor may need to:

    • Negotiate a written settlement;
    • Refer the matter for mediation;
    • Obtain legal advice;
    • Institute proceedings to establish the estate’s claim;
    • Seek eviction or other court relief; or
    • Reflect the dispute transparently in the liquidation and distribution account.

    The executor must ensure that any deduction is lawful, properly quantified and supported by evidence.

    A Practical Example

    A mother dies leaving her estate equally to her three children.

    One child remains in the deceased’s house after the death. The executor initially allows the child to remain temporarily while the estate is reported.

    Six months later, the executor informs the child in writing that:

    • The house must be sold;
    • Prospective buyers require access;
    • The child must either sign a temporary occupation agreement and pay R9,000 per month or vacate within 30 days.

    The child refuses, changes the locks and prevents viewings for another 18 months.

    An independent rental assessment places the reasonable rental at R9,000 per month.

    The starting calculation may be:

    R9,000 × 18 months = R162,000

    The estate may also have paid:

    • R24,000 in municipal charges;
    • R12,000 in levies; and
    • R15,000 to repair damage caused during the occupation.

    However, the occupier produces proof that they paid R20,000 for an essential plumbing repair authorised by the executor.

    The executor would have to consider all of these amounts carefully. The estate’s claim may not simply equal the gross rental calculation.

    Once the claim is agreed or legally established, it may potentially be accounted for against the occupying heir’s share of the inheritance.

    What if the Heir Collects Rent From Tenants?

    This can be even more serious.

    An heir may take control of the property and rent rooms, flats or outbuildings to third parties while keeping the rental income.

    That rental belongs to the estate unless the heir has a lawful agreement entitling them to it.

    The executor should demand:

    • Copies of all leases;
    • The names of tenants;
    • Rental statements;
    • Bank statements showing payments received;
    • Details of deposits held;
    • An account of expenses deducted; and
    • Immediate payment of the net rental to the estate bank account.

    An heir who collects estate income for personal use may be required to repay it and account fully to the executor.

    What if the Heir Damages the Property?

    The estate may have a separate claim for physical damage.

    Examples include:

    • Removing fittings;
    • Selling estate furniture;
    • Failing to attend to major leaks;
    • Allowing the property to become vandalised;
    • Making unauthorised structural alterations;
    • Damaging doors or locks;
    • Failing to maintain a swimming pool;
    • Permitting unlawful subletting; or
    • Removing appliances that belong to the estate.

    The executor should document the condition of the property with photographs, inspection reports, quotations and valuations.

    The claim should distinguish ordinary wear and tear from actual neglect or intentional damage.

    Can the Executor Evict the Heir?

    Potentially, yes.

    If the heir has no lawful right to remain, the executor may seek eviction so that the property can be controlled, sold, transferred or rented for the benefit of the estate.

    The executor should not resort to self-help by changing the locks while the occupier is away, removing their belongings or cutting off essential services.

    A lawful eviction process may be required, including compliance with the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act.

    Recent cases confirm that executors can approach the court for eviction from property belonging to a deceased estate where the occupier has no established right to remain.

    What if the Executor Is Also the Occupying Heir?

    This creates a serious conflict of interest.

    An executor who lives in the estate property must still act in the interests of the estate and all its beneficiaries.

    Warning signs include an executor who:

    • Lives rent-free without proper authority;
    • Uses estate funds to pay their household expenses;
    • Prevents the property from being sold;
    • Refuses to disclose rental arrangements;
    • Excludes the other heirs;
    • Delays the estate for personal benefit;
    • Fails to account for occupation in the liquidation and distribution account; or
    • Uses their position to secure the property for themselves.

    An executor is not free to treat estate property as their own. Serious misconduct, conflicts of interest or failure to administer the estate properly may justify a complaint to the Master or, in appropriate circumstances, an application for removal.

    What Should the Other Heirs Do?

    The heirs should place their concerns before the executor in writing.

    They can request:

    • A copy of the will;
    • The Letters of Executorship;
    • Confirmation of the occupier’s legal basis for remaining;
    • A copy of any lease or occupation agreement;
    • Details of rental being paid;
    • Municipal and levy statements;
    • Confirmation of who holds the keys;
    • Information about any rental collected;
    • A valuation of reasonable market rental;
    • Confirmation of whether the property will be sold or transferred; and
    • An explanation of how any claim against the occupier will be dealt with in the estate account.

    The complaint should be specific.

    Instead of merely saying:

    “My brother has hijacked the house,”

    the heir should explain:

    “My brother has occupied the estate property exclusively since March 2024, changed the locks, refused the executor access, paid no rental and prevented two prospective purchasers from viewing the property.”

    That gives the executor, the Master or a court something concrete to investigate.

    The Executor Must Act Before the Loss Escalates

    An executor should not allow the situation to continue indefinitely.

    The longer an unauthorised occupier remains:

    • The larger the potential rental claim becomes;
    • The more difficult the evidence may be to reconstruct;
    • The greater the municipal and maintenance costs become;
    • The more likely the property is to deteriorate;
    • The harder it may be to sell or transfer the property; and
    • The greater the conflict between the heirs becomes.

    The executor should establish the occupation terms early and put them in writing.

    Where the occupier refuses to cooperate, the executor should obtain advice and take proportionate action rather than allowing one heir to control an asset belonging to the estate.

    The Important Distinction

    There are two incorrect assumptions:

    Incorrect assumption 1:
    An heir may live in the whole property for free because they will inherit part of the estate.

    Incorrect assumption 2:
    The executor may automatically charge any amount they choose and deduct it from the heir’s inheritance.

    The correct position lies between these extremes.

    An heir’s expected inheritance does not ordinarily give them the right to occupy the estate’s property exclusively and without accountability.

    At the same time, any claim for occupational rent, damages or expenses must be legally justified, properly calculated and fairly dealt with.

    Need Help With an Heir Occupying Estate Property?

    Disputes over the family home can delay an estate for years and significantly reduce what ultimately remains for the beneficiaries.

    Before deciding what action should be taken, it is necessary to establish:

    • Who owns the property;
    • What the will provides;
    • Who the lawful heirs are;
    • Whether the occupier has a legal right to remain;
    • Whether the executor authorised the occupation;
    • Whether the estate has suffered a measurable loss;
    • Whether rental or damages can be proved;
    • Whether expenses must be credited; and
    • Whether the claim can lawfully be accounted for against the occupier’s inheritance.

    Estate Assist can review the relevant documents, assess the executor’s handling of the property and assist in determining the appropriate steps to protect the estate.

    Contact Estate Assist if an heir has taken control of estate property, refuses to pay rent, excludes the other heirs or prevents the estate from being finalised.

    This article provides general information about South African deceased-estate law. The legal position depends on the will, the rights of the occupier, the conduct of the executor and the evidence available. It should not be treated as legal advice for a specific estate.

  • Can an Executor Sell the Family Home Without the Heirs’ Consent?

    A family member dies and leaves behind a house.

    Before long, the executor announces that the property is going to be sold. The heirs are shocked. Some want to keep the property in the family, while others believe it is being sold too cheaply.

    This raises an important question:

    Can an executor sell a deceased estate property without the heirs’ consent?

    The answer is not a simple yes or no.

    An executor is responsible for administering the deceased estate and may sometimes have good reason to sell a property. However, the executor does not ordinarily have an unrestricted right to sell estate property in any manner or on any terms they choose.

    The Executor Controls the Administration of the Estate

    Once appointed by the Master of the High Court, the executor assumes responsibility for administering the deceased estate.

    The executor’s duties include:

    • Identifying and securing estate assets;
    • Establishing the estate’s debts and liabilities;
    • Collecting money owed to the deceased;
    • Paying valid estate expenses and creditors;
    • Preparing the liquidation and distribution account; and
    • Distributing the remaining assets to the heirs.

    The executor is therefore not merely acting as an agent for the heirs. The executor has independent statutory duties and remains responsible for ensuring that the estate is administered properly.

    This means that the heirs cannot simply take possession of the house, sell it themselves or decide amongst themselves how the estate will be administered.

    However, that does not mean the executor may disregard the heirs altogether.

    What Does Section 47 of the Administration of Estates Act Say?

    Section 47 of the Administration of Estates Act 66 of 1965 regulates the sale of property by an executor.

    Unless a sale would be contrary to the deceased’s will, an executor must generally sell estate property in the manner and subject to the conditions approved in writing by the heirs who have an interest in that property.

    In practical terms, this means that the affected heirs would ordinarily be asked to approve important aspects of the sale, including:

    • Whether the property will be sold privately or by public auction;
    • The proposed purchase price;
    • The identity of the purchaser;
    • The conditions contained in the offer to purchase; and
    • Any commission, occupational rent or other important terms.

    The heirs’ approval should not be treated as a meaningless formality. It allows the heirs to protect their interests and question a sale that appears unnecessary, irregular or financially prejudicial.

    What Happens if the Heirs Do Not Agree?

    One heir may want to keep the property, another may want an immediate sale, and a third may believe that the proposed purchase price is too low.

    An estate cannot remain unresolved indefinitely merely because the heirs cannot agree.

    Where the heirs are unable to agree on the manner or conditions of the sale, the executor may approach the Master of the High Court for approval to proceed with the sale.

    The Master can then consider matters such as:

    • The provisions of the will;
    • The estate’s debts and available cash;
    • The valuation of the property;
    • The proposed selling price;
    • The reasons for the sale;
    • The interests of the heirs;
    • The objections raised by any heir; and
    • Whether the proposed sale is in the best interests of the estate.

    The heirs therefore do not necessarily have an absolute veto over a sale. However, an executor should not simply ignore an heir’s refusal and proceed as though consent were unnecessary.

    When Might the Property Have to Be Sold?

    An executor may have to sell the property when the estate does not have enough cash to meet its obligations.

    For example, the estate may have to pay:

    • Home loan debt;
    • Municipal charges;
    • Income tax or estate duty;
    • Funeral or administration expenses;
    • Executor’s fees;
    • Maintenance claims;
    • Other valid creditors; and
    • Costs associated with transferring or maintaining the property.

    A deceased estate may appear wealthy because it owns a valuable home, but still be cash-poor.

    If the estate owns a house worth several million rand but has little money in its bank account, the property may have to be sold to settle the estate’s liabilities.

    An heir cannot ordinarily insist on receiving the property while expecting the estate’s creditors and administration expenses to remain unpaid.

    What if an Heir Wants to Keep the Property?

    An heir may be able to take transfer of the property instead of allowing it to be sold to an outsider.

    Whether that is possible will depend on:

    • The wording of the will;
    • Who inherits the property or the residue of the estate;
    • The value of the property;
    • The amount owing to other heirs;
    • The estate’s debts and expenses;
    • Whether the heir can obtain a home loan or provide the required cash; and
    • Whether the proposed arrangement can lawfully be reflected in the liquidation and distribution account.

    Suppose a house is worth R2 million and two children inherit the estate equally. One child may wish to keep the house, but that child may have to compensate the other child for their share.

    The heir taking the property may also have to contribute enough money to cover estate debts, transfer costs and other administration expenses.

    Wanting to keep the family home is therefore not always enough. The proposed arrangement must also be financially workable.

    What if the Will Specifically Leaves the House to an Heir?

    The wording of the will is extremely important.

    A will may state:

    “I leave my house situated at [address] to my daughter.”

    That is different from a will that merely leaves the entire residue of the estate equally to several heirs.

    Where a particular property is specifically bequeathed to an heir, the executor should ordinarily give effect to that instruction unless there is a lawful and compelling reason why the property must be sold.

    A sale may still become necessary if, for example, the estate has insufficient cash to settle its debts and there is no other practical solution.

    However, an executor should not casually disregard a specific bequest merely because selling the property would be more convenient.

    What if the Surviving Spouse Lives in the Property?

    The surviving spouse’s position requires careful consideration.

    The spouse may:

    • Own a share of the property;
    • Have inherited the property under the will;
    • Have a claim arising from a marriage in community of property;
    • Have a maintenance claim against the estate;
    • Have a right of occupation created by the will; or
    • Simply be occupying a property that belongs entirely to the estate.

    Occupation alone does not necessarily give the surviving spouse ownership of the property. However, the executor must establish the spouse’s legal rights before attempting to sell or transfer it.

    A surviving spouse should not assume that the property can never be sold, while an executor should not assume that the spouse can simply be removed without proper legal consideration.

    Can the Executor Sell the Property Below Market Value?

    An executor has a duty to protect the estate and act in the interests of those entitled to its assets.

    A sale below market value may be justifiable in limited circumstances—for example, where a property has serious defects, there is little market interest or an urgent sale is genuinely required.

    However, heirs are entitled to question a sale where:

    • The price appears substantially below market value;
    • No proper valuation was obtained;
    • The property was never properly marketed;
    • A much higher offer was rejected without explanation;
    • The purchaser is connected to the executor;
    • The estate agent or purchaser appears to have received preferential treatment; or
    • The executor refuses to disclose the offer to purchase.

    The fact that an executor has been appointed does not permit the executor to dispose of estate assets recklessly or for the benefit of a favoured purchaser.

    Can the Executor or a Family Member Buy the Property?

    A transaction involving the executor, the executor’s spouse, parent, child, partner, employer, employee or agent requires particular scrutiny.

    Section 49 of the Administration of Estates Act restricts the purchase of estate property by an executor or certain connected persons unless the necessary consent and confirmation are obtained.

    An executor should never quietly arrange to acquire an estate asset through a relative, business associate or connected entity.

    Any conflict of interest should be disclosed fully, and the prescribed approval process must be followed.

    Can the Executor Sign an Offer to Purchase Before Being Appointed?

    A person nominated as executor in a will does not automatically have authority to administer the estate immediately after the death.

    The executor’s authority ordinarily arises once the Master issues the Letters of Executorship.

    Signing agreements or attempting to dispose of estate property before receiving the necessary authority can create serious complications.

    Heirs should therefore check whether the person claiming to act as executor has actually been appointed by the Master.

    Is the Master’s Certificate Required for Transfer?

    When an executor transfers immovable property following a sale, the conveyancer must satisfy the Deeds Office that the necessary estate requirements have been met.

    Section 42(2) of the Administration of Estates Act requires the Master to certify that there is no objection to the transfer.

    The sale agreement alone is therefore not the final step. The executor and conveyancer must still comply with the estate administration and transfer requirements.

    Warning Signs That Heirs Should Not Ignore

    Heirs should ask questions where:

    • They are suddenly told that the property has already been sold;
    • They were never shown the offer to purchase;
    • Their signatures or approval were never requested;
    • The property appears to have been sold below market value;
    • The purchaser is related to or associated with the executor;
    • The executor refuses to provide a valuation;
    • The executor will not explain why the sale is necessary;
    • The will appears to require the property to be transferred to a specific heir;
    • The estate appears to have enough cash to pay its debts without selling the property; or
    • The executor pressures the heirs to sign documents they do not understand.

    Not every disagreement means that the executor is acting improperly. Nevertheless, heirs should obtain proper advice before signing away their rights.

    What Can an Heir Do if They Object to the Sale?

    The first step is usually to request relevant information from the executor in writing.

    This may include:

    • A copy of the will;
    • The Letters of Executorship;
    • A valuation of the property;
    • The proposed offer to purchase;
    • Details of how the property was marketed;
    • An explanation of why the sale is necessary;
    • A summary of the estate’s debts and cash position; and
    • Confirmation of whether the Master’s approval has been requested.

    The heir should clearly state the grounds for the objection rather than merely saying, “I do not consent.”

    For example:

    “I object to the proposed sale because the purchase price is substantially below the independent valuation and the executor has not explained why the higher offer was rejected.”

    Depending on the circumstances, it may be necessary to submit an objection to the Master, challenge the executor’s conduct or obtain urgent legal assistance before transfer takes place.

    The Important Distinction

    There are two incorrect extremes:

    Incorrect belief 1: The executor can sell the property whenever and however they choose because they control the estate.

    Incorrect belief 2: A single heir can prevent any sale indefinitely simply by refusing to sign.

    The correct position lies between these extremes.

    The executor is responsible for administering the estate, but the wishes and rights of the interested heirs must ordinarily be considered when determining the manner and conditions of the sale.

    Where agreement cannot be reached, the matter may have to be placed before the Master for a decision.

    Need Assistance With a Deceased Estate Property?

    Disputes involving a family home can quickly become emotional and expensive.

    Before agreeing to or opposing a sale, it is important to establish:

    • What the will says;
    • Who legally owns or inherits the property;
    • Whether the estate has enough cash to pay its debts;
    • Whether the proposed selling price is reasonable;
    • Whether the correct approval process was followed; and
    • Whether the executor is acting in the interests of the estate.

    Estate Assist can review the available documents, explain the administration process and help determine whether there are proper grounds to challenge or proceed with the sale.

    Contact Estate Assist for assistance with the administration of a deceased estate or concerns regarding the conduct of an executor.

    This article provides general information based on South African deceased-estate law. Every estate depends on its own will, assets, liabilities and circumstances. The article should not be treated as legal advice for a specific matter.

  • Should You Put Your House and Other Assets Into a Family Trust?

    A family trust in South Africa is frequently promoted as an essential part of estate planning.

    People are often told that they should create a trust, transfer their home and other assets into it, and thereby protect those assets from creditors, reduce estate duty and make it easier for their family when they die.

    A properly structured and administered trust can certainly be useful. However, a trust is not automatically the right solution for every person or every family.

    Transferring assets into a trust can have immediate tax and cost consequences. It may also result in the loss of tax benefits that the person would have enjoyed if the asset had remained registered in their personal name.

    This is particularly important when someone is advised to transfer their primary residence into a family trust or company.

    Before creating a trust or transferring any valuable asset into it, the full costs, tax consequences and long-term purpose of the structure should be properly considered.

    A trust does not automatically save tax

    One of the most common misconceptions is that placing assets into a trust automatically reduces tax.

    A trust is treated as a separate taxpayer and is taxed differently from an individual. An ordinary trust is generally taxed at a flat rate, while individuals are taxed according to a sliding scale.

    The capital gains tax treatment of an ordinary trust can also be less favourable than that of an individual.

    Individuals and qualifying special trusts currently receive an annual capital gains exclusion. An ordinary trust does not receive the same annual exclusion and has a higher capital gains inclusion rate.

    This means that where an asset is eventually sold and the capital gain is retained in the trust, the resulting tax can be considerably higher than it may have been had the asset remained registered in the individual’s name.

    Trusts may be able to distribute certain income or capital gains to beneficiaries in appropriate circumstances, but these transactions must be properly authorised, recorded and implemented. They should not be regarded as an automatic way of avoiding tax.

    You cannot simply move a property into a trust

    A house cannot ordinarily be transferred into a family trust merely by changing the name on the title deed.

    The property must be formally transferred through the Deeds Office, usually by way of a sale or donation to the trust.

    Depending on how the transaction is structured, the transfer may result in:

    • Capital gains tax for the existing owner;
    • Transfer duty payable in respect of the acquisition;
    • Conveyancing fees and Deeds Office charges;
    • Bond cancellation and new bond registration costs;
    • Valuation and professional fees;
    • Donations tax if the property is donated or transferred for less than its market value; and
    • A loan account owing by the trust if the purchase price is not paid immediately.

    Transfer duty is generally calculated according to the value of the property and applies to acquisitions by both natural persons and trusts. The current transfer-duty rates apply to transactions concluded from 1 April 2025 and remained unchanged from 1 April 2026.

    The first R1,210,000 of the property value is currently subject to transfer duty at 0%, after which progressively higher rates apply.

    The fact that the property is being transferred to the owner’s own family trust does not ordinarily mean that transfer duty and the other transfer costs fall away.

    The primary residence exclusion may be lost

    One of the most important issues to consider is the capital gains tax treatment of a primary residence.

    An individual who disposes of a qualifying primary residence may currently disregard up to R3 million of the resulting capital gain or loss.

    This can provide a substantial tax benefit where a person has lived in a home for many years and the property has increased significantly in value.

    An ordinary family trust or company does not generally qualify for the primary residence exclusion. The exclusion ordinarily applies where the owner is an individual or a qualifying special trust.

    A person may therefore transfer a family home into a trust, pay the tax and costs associated with the transfer, and later discover that the trust does not qualify for the primary residence exclusion when the property is sold.

    Consider a simplified example:

    A person purchases a home in their own name for R2 million. Many years later, the property is sold for R6 million.

    Ignoring other allowable costs and adjustments, the capital gain may be approximately R4 million. If the property qualifies as the individual’s primary residence, the R3 million primary residence exclusion may substantially reduce the taxable gain.

    If the same home is owned by an ordinary family trust, that exclusion will generally not be available.

    This does not mean that a primary residence should never be held in a trust. It means that the loss of the exclusion and the trust’s capital gains tax treatment must be weighed against any genuine estate-planning or asset-protection benefit.

    What happens if the property is sold to the trust?

    Instead of donating a property, people are often advised to sell it to the family trust.

    The trust may not have enough money to pay the purchase price. The amount is then recorded as a loan owing by the trust to the seller.

    This is commonly referred to as a loan account.

    The property may then be registered in the trust’s name, but the loan account becomes an asset belonging to the seller.

    If the seller dies while the loan remains outstanding, the value of that loan may still form part of the seller’s deceased estate.

    Therefore, selling an asset to a trust on loan account does not necessarily remove the value of the asset from the person’s estate immediately. The property may no longer be owned personally, but it has effectively been replaced by a debt owed to the person.

    There may also be tax consequences where a loan is interest-free or bears interest at less than the official rate.

    Section 7C of the Income Tax Act may treat the interest benefit arising from certain low-interest or interest-free loans to connected trusts as a deemed annual donation.

    There are exceptions and specific rules, including limited circumstances involving a qualifying primary residence. However, the arrangement must be carefully examined rather than assuming that an interest-free loan has no tax consequences.

    Donating the property can trigger donations tax

    Another option sometimes suggested is to donate the property to the trust.

    A donation is not necessarily tax-free merely because the beneficiaries of the trust are the donor’s spouse, children or other relatives.

    Donations tax is generally charged at:

    • 20% on the aggregated value of taxable donations up to R30 million; and
    • 25% on the portion exceeding R30 million.

    Certain exemptions may apply. For example, a natural person currently receives an annual donations-tax exemption of R100,000.

    However, that exemption is unlikely to cover the value of an ordinary residential property.

    Where an asset is sold to a trust for substantially less than its market value, the difference between the consideration and the market value may also have donations-tax implications.

    Transferring a property to a company presents similar concerns

    Some people are advised to transfer their home or investment property into a private company rather than a trust.

    A company can be useful for conducting a genuine business or holding certain commercial assets. However, a company does not ordinarily receive the primary residence exclusion available to an individual.

    The transfer into the company may also trigger transfer duty, capital gains tax and transfer costs.

    When the company later sells the property, tax may arise in the company. Further tax consequences may follow when the proceeds are extracted from the company for the personal use of its shareholders.

    The fact that the company’s shares are owned by the same family does not mean that the company and the family members are treated as the same taxpayer.

    Trusts have ongoing costs and responsibilities

    The cost of a trust does not end once the trust deed has been signed and the trustees have been appointed.

    A trust must be properly administered as a separate legal arrangement.

    Depending on its activities and assets, proper administration may include:

    • Maintaining a separate trust bank account;
    • Keeping complete accounting records;
    • Preparing annual financial statements;
    • Submitting annual tax returns;
    • Maintaining beneficial ownership information;
    • Holding trustee meetings;
    • Preparing and signing trustee resolutions;
    • Recording loans and distributions correctly;
    • Complying with the terms of the trust deed;
    • Ensuring that trustees act jointly when required; and
    • Keeping trust property separate from the personal property of trustees and beneficiaries.

    SARS has increasingly focused on trust compliance and has issued final demands to trusts that failed to submit annual tax returns.

    A trust should therefore not be created and then forgotten.

    Poor administration may undermine the purpose of the trust and create tax, legal and accounting difficulties for the trustees and beneficiaries.

    A trust is not simply an extension of the founder

    Once an asset has been transferred into a trust, it no longer belongs to the founder personally.

    The trustees must administer the asset for the benefit of the beneficiaries and in accordance with the trust deed.

    The founder cannot simply continue dealing with the asset as though it remains their personal property.

    For example, the founder should not use the trust bank account as a personal account, sell trust assets without proper trustee authority or withdraw trust money whenever they choose.

    Where one person exercises complete personal control over the trust and ignores the duties of the other trustees, the trust may be exposed to challenge. In appropriate circumstances, creditors or other parties may argue that the trust has been used as the founder’s alter ego.

    A trust offers the strongest protection when it is created for a genuine purpose and administered independently and correctly.

    When can a family trust be useful?

    Despite the possible costs and tax consequences, a trust can still be an important estate-planning tool.

    A family trust may be useful where there is a genuine need to:

    • Preserve assets for future generations;
    • Protect assets intended for minor children;
    • Provide for a beneficiary with a disability or special needs;
    • Retain property or investments within a family structure;
    • Hold assets that are expected to increase substantially in value;
    • Facilitate continuity after the death of a founder;
    • Separate control of assets from the right to benefit from them;
    • Protect beneficiaries who are not financially experienced; or
    • Hold shares or business interests as part of a broader succession plan.

    The potential benefit is often greater where appreciating assets are acquired by the trust from the outset, rather than being transferred into the trust only after they have already increased considerably in value.

    However, even in those circumstances, the structure should be considered together with the person’s will, marital regime, existing liabilities, estate-duty exposure, family circumstances and long-term intentions.

    Asset protection is not guaranteed

    People are often told that a trust will protect all their assets from creditors.

    That statement is too broad.

    Assets properly owned and administered by a trust are generally not the personal assets of a trustee, founder or beneficiary. However, simply transferring assets into a trust does not guarantee that they will be protected in every situation.

    A transfer made with the intention of prejudicing existing creditors may be challenged.

    Protection may also be weakened where:

    • The founder continues treating trust property as personal property;
    • Trustees do not exercise independent judgment;
    • Trustee resolutions are not properly adopted;
    • The trust deed is ignored;
    • Trust and personal funds are mixed;
    • The transfer was simulated or not genuinely implemented; or
    • The trust is effectively used as the founder’s alter ego.

    A trust should therefore not be established only after financial trouble has already arisen, with the expectation that assets can simply be placed beyond the reach of creditors.

    Compare the costs with the expected benefit

    Before transferring an asset into a trust or company, a proper calculation should be completed.

    This should consider:

    1. The current market value and original cost of the asset;
    2. The capital gains tax that may arise on transfer;
    3. Transfer duty and conveyancing costs;
    4. Donations tax or loan-account implications;
    5. The expected future growth in the asset;
    6. The tax consequences when the asset is eventually sold;
    7. The loss of any personal tax exemptions or exclusions;
    8. The annual cost of administering the structure;
    9. The estate duty that may genuinely be saved; and
    10. The family’s long-term succession and asset-protection objectives.

    In some cases, the benefits of a trust will justify the immediate and ongoing costs.

    In other cases, particularly where the family’s main asset is its primary residence, transferring the property may cost considerably more than the eventual benefit.

    Obtain advice before transferring valuable assets

    A family trust should be created for a clearly identified purpose—not simply because someone has said that every family should have one.

    The person advising on the structure should be able to explain:

    • Why the trust is required;
    • Which assets should be placed in it;
    • Which assets should remain outside it;
    • What the immediate tax and transfer costs will be;
    • How the trust will be funded;
    • How any loan account will be treated;
    • What the ongoing annual costs will be;
    • What happens when an asset is sold;
    • How the trust interacts with the person’s will; and
    • What will happen when the founder, trustee or beneficiary dies.

    A trust can form an important part of a sound estate plan. However, transferring a primary residence, investment property, business interest or other valuable asset into a trust without first calculating the consequences can create unnecessary tax and expense.

    The correct structure depends on the assets involved, the reason for creating the trust and the family’s long-term objectives.

    How Estate Assist can help

    Estate Assist by Cloete Inc assists individuals, families, trustees and beneficiaries with practical trust and deceased-estate matters.

    We can assist with:

    • Reviewing an existing trust and its administration;
    • Explaining the relationship between a trust and a deceased estate;
    • Changes to trustees and beneficiaries;
    • Master’s Office applications and follow-ups;
    • Obtaining trust documents and Letters of Authority;
    • Updating trust records;
    • Coordinating trust planning with a will and estate plan; and
    • Practical assistance where a founder, trustee or beneficiary has died.

    Before transferring a valuable asset into a trust or company, appropriate legal, tax and accounting advice should be obtained based on the person’s specific circumstances.

    For assistance, contact Estate Assist:

    Phone or WhatsApp: 081 330 7820

    Website: www.estateassist.co.za

    This article provides general information and should not be regarded as individual legal, tax or financial advice. Tax rates, exclusions and legislation may change, and advice should be obtained before implementing any transaction.

  • Can an Executor Take Estate Money for Legal Fees?

    Can an Executor Take Estate Money for Legal Fees?

    When a person passes away, the executor is placed in a position of trust.

    The executor must collect the assets, deal with creditors, prepare the liquidation and distribution account, communicate with beneficiaries, and eventually distribute the estate according to the will or the law of intestate succession.

    But what happens when the executor is also an attorney?

    And more importantly, what happens when estate funds are used to pay that attorney’s legal fees?

    This can become a serious concern for beneficiaries, especially where there is little or no money left in the estate and the beneficiaries are told that the funds were used for “legal fees”, “administration costs” or “work done on the estate”.

    An Executor Is Not Entitled to Treat Estate Money as Their Own

    Estate money belongs to the deceased estate.

    It does not belong to the executor, the attorney, the family, or any individual beneficiary until the estate has been properly administered and the money is lawfully distributed.

    The executor has a duty to deal with estate funds properly, account for the money received, and explain what payments were made from the estate.

    If an executor pays themselves or their firm from the estate, beneficiaries are entitled to ask important questions, including:

    • What work was done?
    • Was the fee agreed to?
    • Was the fee reasonable?
    • Was the payment reflected in the liquidation and distribution account?
    • Was the payment approved where approval was required?
    • Was the executor acting as executor, attorney, or both?
    • Was there a conflict of interest?

    Executor’s Fees and Legal Fees Are Not Always the Same Thing

    One common area of confusion is the difference between executor’s remuneration and legal fees.

    An executor is generally entitled to charge executor’s remuneration for administering the estate. In South Africa, this is usually calculated according to the prescribed tariff, unless a different fee was agreed or provided for in the will.

    Legal fees may be different.

    For example, if the estate becomes involved in a dispute, litigation, eviction, collection of debts, property transfer issue, or other legal process, an attorney may charge professional fees for that legal work.

    The problem arises when the same person is both the executor and the attorney.

    In that situation, the executor must be especially careful. They cannot simply use estate money as an open cheque book. There must be a proper basis for the fees, proper records, and proper accounting to the estate.

    Warning Signs Beneficiaries Should Not Ignore

    Beneficiaries should become concerned where:

    • The executor refuses to provide proper updates.
    • The estate had money, but the executor says there is now nothing left.
    • Large payments were made to the executor or the executor’s firm.
    • The executor cannot provide a clear fee breakdown.
    • The beneficiaries were never told that legal fees were being incurred.
    • The liquidation and distribution account does not properly explain the payments.
    • The executor is delaying the estate while continuing to charge fees.
    • The executor appears to be acting in their own interest instead of the estate’s interest.

    Not every fee charged to an estate is improper.

    Some estates are complicated. There may be disputes, missing documents, difficult heirs, unpaid debts, SARS issues, property problems, or litigation. These issues can create additional work and costs.

    But beneficiaries are still entitled to transparency.

    Can Beneficiaries Ask for a Breakdown?

    Yes.

    Beneficiaries and interested parties can request a proper explanation of what happened to the estate funds.

    Depending on the circumstances, they may ask for:

    • A copy of the liquidation and distribution account.
    • A schedule of payments made from the estate.
    • A breakdown of fees charged.
    • Copies of invoices rendered to the estate.
    • Proof that the payments were necessary and estate-related.
    • Confirmation of whether the Master approved any executor’s remuneration paid before distribution.
    • Confirmation of whether the executor acted personally, through a firm, or through another attorney.

    If the executor refuses to explain, that can itself be a red flag.

    The Master’s Office Can Be Asked to Intervene

    The Master of the High Court supervises deceased estates.

    Where beneficiaries believe that an executor has improperly used estate money, overcharged fees, failed to account, or acted in a conflict of interest, the matter can be raised with the Master’s Office.

    In serious cases, beneficiaries may also need to consider whether the executor should be removed, whether the account should be objected to, or whether further legal steps should be taken.

    If the executor is an attorney, a complaint to the Legal Practice Council may also be appropriate, especially where there are concerns about trust money, overreaching, failure to account, or improper conduct.

    Do Not Wait Until the Estate Is Empty

    Many beneficiaries wait too long.

    They assume the executor knows what they are doing. They do not want to cause conflict. They are told to “be patient”. Months or years pass. Eventually, they discover that the estate funds have been depleted and the explanation is simply that the money was used for fees.

    By that stage, the matter is often more difficult and expensive to fix.

    If something does not make sense, ask questions early.

    Estate Assist Can Help

    Estate Assist assists beneficiaries, heirs, executors and family members who are concerned about the administration of a deceased estate.

    We can help review the position, identify what documents should be requested, assist with Master’s Office follow-ups, and advise on practical next steps where an executor is not properly accounting for estate funds.

    If you are worried that an executor has taken estate money for fees, or if you are not receiving proper answers about the estate, contact Estate Assist.

    Phone / WhatsApp: 081 330 7820
    Website: www.estateassist.co.za

  • What If the Bank Is Executor and the Estate Is Not Moving?

    When a bank executor is dealing with a deceased estate, heirs and family members may feel helpless if the estate is not moving forward. The executor is responsible for administering the deceased estate properly and bringing the estate to finalisation.

    In many wills, a bank is nominated as the executor. This is common, especially where the will was prepared through the bank many years ago. In some matters, this works smoothly. In others, heirs and family members become frustrated because the estate appears to be standing still, communication is poor, or nobody seems to be taking practical responsibility for moving the matter forward.

    This can be extremely stressful for families, especially where there are dependants, outstanding expenses, estate property, vehicles, bank accounts, municipal accounts, or other practical matters that need attention.

    Why a Bank May Be Appointed as Executor

    A bank may be nominated as executor in a will where the deceased signed a will through the bank, used the bank’s estate planning services, or agreed to appoint the bank as the professional executor.

    After death, the nominated executor must still be formally appointed by the Master of the High Court before it can act officially. Once appointed, the executor must take control of the estate administration process and deal with the assets, liabilities, estate bank account, advertisements, liquidation and distribution account, heirs, creditors and final distribution.

    Common Problems Families Experience

    Families often contact us when they feel that the estate is not moving forward.

    Some of the common complaints include:

    • they do not receive proper updates;
    • they cannot get hold of the correct person;
    • the estate is handled by a department rather than a specific person they can speak to;
    • documents are requested more than once;
    • months pass without visible progress;
    • heirs are unsure whether the estate has been reported properly;
    • the family does not know whether Letters of Executorship have been issued;
    • the estate bank account has not been opened;
    • the liquidation and distribution account has not been prepared;
    • the Master’s Office has raised queries and nobody appears to be resolving them;
    • the heirs feel that the matter is not receiving urgent attention.

    Not every delay is the executor’s fault. Deceased estates can be delayed by missing documents, Master’s Office backlogs, disputes between heirs, tax issues, property transfers, creditor claims, bond cancellations, municipal figures and other practical problems.

    However, heirs are entitled to proper communication and reasonable progress. A deceased estate should not simply disappear into a system with no meaningful feedback.

    Can the Bank Be Removed or Replaced?

    In certain circumstances, it may be possible for the bank to step aside or renounce its appointment, especially where the heirs and interested parties agree that another suitable person or professional should take over the administration.

    This depends on the facts of the matter, the wording of the will, whether the bank has already been formally appointed, what work has already been done, and whether the Master will accept the proposed change.

    It is not always as simple as sending one email and demanding that the bank be removed. The correct process must be followed, and the Master’s Office must be dealt with properly.

    Where the matter is handled correctly, however, it may be possible to move the estate from a slow or inactive administration process into a more practical and hands-on process.

    We Have Assisted in Matters Like This

    Estate Assist by Cloete Inc has assisted families in matters where a bank had been appointed or nominated as executor, but the heirs were unhappy with the progress of the estate.

    In appropriate matters, we have helped clients engage with the bank, obtain clarity, deal with the necessary documents, and where possible, assist with the process of having the estate administration moved into more active hands.

    In several matters, once the administration was taken over or properly driven forward, the estates were finalised much more quickly and efficiently, and the clients were very satisfied with the outcome.

    Every estate is different, but the important point is this: heirs do not have to remain completely passive where an estate is not progressing.

    What Should Heirs Do First?

    If the bank is the executor and you are concerned about the lack of progress, it is useful to first establish the basic facts.

    You should try to confirm:

    • whether the estate has been reported to the Master;
    • whether Letters of Executorship have been issued;
    • who exactly is handling the estate;
    • whether an estate bank account has been opened;
    • what documents are still outstanding;
    • whether any advertisements have been placed;
    • whether the liquidation and distribution account has been prepared;
    • whether the Master has raised any queries;
    • what the expected next step is;
    • whether the heirs have received a proper written update.

    It is usually better to request a clear written update rather than relying only on telephone conversations.

    Warning Signs That the Estate May Need Attention

    Families should consider getting assistance if:

    • months have passed with no proper explanation;
    • the executor does not respond to reasonable requests;
    • heirs receive vague or repeated excuses;
    • no one can explain what the next step is;
    • the Master’s Office has raised queries that are not being resolved;
    • the estate has assets or debts that require urgent attention;
    • property, vehicles or accounts are deteriorating or causing further losses;
    • heirs are being left in the dark;
    • there appears to be no practical plan to finalise the estate.

    A delay by itself does not always mean there is wrongdoing. But a lack of communication and lack of progress should be taken seriously.

    Can Estate Assist Help?

    Estate Assist by Cloete Inc assists families, heirs, executors and authorised representatives with practical deceased estate administration support.

    This may include:

    • reviewing the current status of the estate;
    • helping heirs understand what should have happened by now;
    • preparing practical follow-up requests;
    • engaging with the executor or nominated executor;
    • assisting with Master’s Office follow-ups;
    • helping obtain clarity on Letters of Executorship or Letters of Authority;
    • assisting with estate administration steps;
    • helping families understand whether a change of executor may be possible;
    • supporting the process where an estate needs to be moved forward urgently.

    We do not believe families should be left confused, ignored or helpless when a deceased estate is not moving.

    Final Thought

    A bank can be appointed as executor, but that does not mean the estate should remain stuck indefinitely.

    If the estate is not progressing, heirs should first obtain proper information, identify the cause of the delay, and then consider the correct steps to move the matter forward.

    In some cases, the issue may simply be missing documents or a misunderstanding. In other cases, more active intervention may be needed.

    If you are dealing with a deceased estate where the bank is the executor and nothing seems to be happening, Estate Assist by Cloete Inc may be able to help you understand your options and take practical steps to move the estate forward.

    Estate Assist by Cloete Inc
    Phone / WhatsApp: 081 330 7820
    Email: admin@cloeteinc.co.za
    Website: estateassist.co.za

  • Letters of Authority vs Letters of Executorship in South Africa

    When a deceased estate is reported in South Africa, the person dealing with the estate usually needs formal authority from the Master of the High Court before assets can be administered or distributed.

    Two terms families often come across are Letters of Authority and Letters of Executorship. They sound similar, but they are not the same.

    Understanding the difference is important because it affects who may deal with the estate, what process must be followed and what banks, insurers, creditors and other institutions may require.

    1. Why formal authority is needed

    A family member cannot simply take control of estate assets because they are related to the deceased.

    The estate must be dealt with by a properly authorised person. The Administration of Estates Act provides that a deceased estate may not be liquidated or distributed unless this is done under letters of executorship or under a direction by the Master.

    This is why banks and other institutions usually require proof of appointment before they will release information, close accounts or pay estate funds.

    2. What are Letters of Executorship?

    Letters of Executorship are issued by the Master of the High Court when a person is formally appointed as executor of a deceased estate.

    This usually applies where the estate is above the small-estate threshold or where the estate requires the full administration process.

    The Department of Justice explains that if the value of the estate exceeds R250,000, Letters of Executorship must be issued and the full process under the Administration of Estates Act must be followed.

    The executor is then responsible for administering the estate properly, which may include:

    • identifying assets and liabilities;
    • opening an estate late bank account where required;
    • dealing with creditors;
    • preparing and lodging the Liquidation and Distribution Account;
    • communicating with heirs and relevant institutions;
    • distributing the estate once legally permitted.

    3. What are Letters of Authority?

    Letters of Authority are generally used for smaller estates where the Master may dispense with the full executorship process.

    The Department of Justice notes that where 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 Administration of Estates Act.

    A person appointed under Letters of Authority is often referred to as the Master’s representative.

    This process is usually simpler than a full executorship, but the representative must still act properly and within the authority given by the Master.

    4. Main difference between the two

    The simplest way to understand the difference is this:

    Letters of Executorship are used for estates that require the full estate administration process.

    Letters of Authority are usually used for smaller estates where the Master gives directions under section 18(3).

    Both documents give authority to deal with the estate, but they are not interchangeable. The value and circumstances of the estate will determine which appointment is required.

    5. Which one do banks and institutions require?

    Banks, insurers and other institutions will usually ask for either:

    • Letters of Executorship; or
    • Letters of Authority.

    They need to know that the person giving instructions has been appointed by the Master.

    If the wrong document is supplied, or if no appointment has been issued yet, the institution may refuse to release information or process payments.

    6. What documents may be needed when reporting the estate?

    The reporting documents may differ depending on the value and circumstances of the estate.

    The Department of Justice lists documents that may be required when reporting an estate, including the Death Notice, death certificate, marriage documents where applicable, nominations by heirs where needed, acceptance forms, inventory information and other supporting documents.

    The Department of Justice forms page also confirms that a Letter of Authority under section 18(3) and a Letter of Executorship under sections 13 and 14 must be obtained from the Office of the Master.

    7. Can the appointment change later?

    Yes, it can happen in certain circumstances.

    For example, if an estate was initially treated as a small estate but it later becomes clear that the assets exceed the relevant threshold, the matter may need to be dealt with differently.

    The standard section 18(3) undertaking also refers to the representative undertaking not to administer assets not reflected in the inventory and to report to the Master if the value of the assets exceeds R250,000.

    This is one reason why it is important to identify the estate assets and liabilities as accurately as possible when the estate is reported.

    8. Why this distinction matters

    The difference between Letters of Authority and Letters of Executorship affects the whole administration process.

    It can affect:

    • what forms must be completed;
    • who may deal with estate assets;
    • whether a full Liquidation and Distribution Account is required;
    • how creditors and heirs are dealt with;
    • how long the process may take;
    • what banks and institutions will accept.

    Families often experience delays because they are unsure which process applies or because the estate was not reported with the correct supporting information.

    Need help with a deceased estate?

    Estate Assist by Cloete Inc assists families, executors and authorised representatives with practical deceased estate administration support.

    We assist with estate reporting guidance, Master’s Office follow-ups, estate financial administration, Liquidation and Distribution Account support and estate finalisation assistance.

    Phone / WhatsApp: 081 330 7820
    Website: estateassist.co.za