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Executor’s duties, risks and the process of administering an estate
Estate administration is a confusing and complicated process, which is why it is important to have a knowledgeable executor to ensure that the estate administration process is undertaken in line with the Administration of Estates Act, 66 of 1965 (as amended) and that it is handled with empathy, efficiency and professionalism.
A deceased estate comes into existence when a person dies, at which point an executor must be appointed. The executor is appointed by the Master of the High Court within 14 days of the date of death by means of a letter of executorship. An executor is needed to take control of the estate and the process of transferring and disposing of assets, as well as liquidating any debt before closing the estate.
Executor’s Duties
The role of an executor has legal, accounting and facilitation facets to it. As such, there is a degree of risk taken on when becoming the executor of an estate and consequences attached to incorrectly transferring assets in an estate. The risk involved is such that it carries severe legal implications should the executor not act in line with his/her duties and responsibilities. Some of the executor’s duties include:
- To act in a representative capacity on behalf of the deceased estate.
- Take responsibility in a position of a fiduciary nature in good faith.
- Legally obligated to act on behalf of the estate and not the heirs or creditors.
- To ensure the estate is administered in accordance with the will and testament in the estate or the law of intestate succession.
The basic process followed when administering an estate
The basic process of estate administration is listed below, however, it should be noted that all estates carry their own responsibilities and duties. The process may differ or entail additional admin responsibilities on an estate specific basis. The process is as follows:
- Report the estate to the Master.
- Take custody of estate property.
- Place a Section 29 Advertisement calling for debtors and creditors to lodge their claims with the executor.
- Determine the solvency of the estate and advise creditors how to proceed, if the estate is insolvent.
- Proceed to open an estate late banking account.
- Investigate and determine the nature and value of the estate assets and liabilities.
- Examination of claims – claims lodged against the estate need to be considered and approved or rejected by the executor.
- Income tax – the executor is required to ensure that the deceased’s final tax return (period return to date of death) plus any outstanding returns are completed and submitted for assessment.
- Lodging of the Liquidation Account with the Master of the High Court.
- Section 35 advertisement – following confirmation from the Master, the executor will proceed to advertise that the liquidation and distribution account is lying open for inspection.
- Distribution of the estate – upon expiration of the section 35 advert and provided no objections to the account have been lodged, the executor, following approval from the Master of the High Court, may proceed to distribute the estate to the heirs as per the liquidation account drafted.
Factors which may prolong the administration of the estate
While estate administration is advertised to take 6 to 12 months there are multiple factors which make it impossible to predict the period of time it may take to wind up an estate on a case by case basis. Some of these factors include:
- Will directing the sale of specific assets: assets, such as immovable property, can take an unpredictable amount of time to sell and transfer.
- Divorce and/or maintenance claims.
- Accrual calculations.
- Disputed claims.
Fees and charges associated with the administration of an estate
Executor’s fees are laid down in terms of the Administration of Estates Act 66 of 1965, and are assessed according to tariff. These are, however, not the only fees associated with the administration of an estate. Fees and charges are summarised as follows:
- Executor fees are charged on the gross value of the assets in the estate at 3.5% plus 15% VAT, as well as on income accrued and collected after death at 6% plus 15% VAT.
- Costs for advertisements.
- Conveyancing fees to transfer fixed property.
- Master’s fees (maximum of R600).
- Estate bank charges.
- Astute, firearm and motor vehicle search fees.
- Sworn valuation fees.
- Rates and taxes clearance certificate costs.
Risks associated with executorship
The risks involved in being an executor vary. If more than one executor is appointed, all are subject to the same risks simultaneously. When an agent is appointed to act on behalf of the executor, it does not mean the executor is relieved of his/her responsibilities. The executor is fully responsible and the agent simply assists. An executor can be penalised and/or imprisoned if he or she does not abide by the laws as set out in the Administration of Estates Act (Act No. 66 of 1965). The executor can be held personally liable for, among other things, the following:
- Losing an original will that was in his/her possession and not yet lodged with the Master.
- Failing to publish the first estate notice in the Government Gazette as well as a local newspaper, or publishing it in the incorrect newspaper.
- Failing to post the second notice of the estate account being open for inspection, or failing to arrange for it to be open for inspection in a Magistrate’s Court.
- Receiving objections or submitting claims after the estate has been finalised.
- Failing to follow the correct instructions and procedures if a claim (including a maintenance claim) is not accepted, or is contested, ignored or submitted late, and the claimant insists on payment after the finalisation of the estate.
The importance of having an experienced executor
A testator may nominate any natural person as an executor, including a spouse, child or family member, but should not underestimate the complexity of the process or responsibility involved when winding up an estate.
Considering the above it is common that fees in the winding up of an estate can be extensive. That being said, the process involved in winding up an estate is often more complicated than anticipated. As such, if an executor is not properly elected in an estate it can become more of an expensive process to appoint an agent to deal with deficiencies after mistakes have already been made. The executor, in turn, is subject to legal liability if he/she does not perform his/her duties correctly.
For this reason, it is vital to take proper consideration before appointing an executor in an estate on a whim and imposing additional responsibility and pressure on a family member who is grieving after a death.
ABOUT THE AUTHOR:
Savannah Solomons
Savannah Solomons is an LLB Graduate of the North West University (NWU). She practices in the commercial field and has experience in transactional work such as mergers, acquisitions, joint ventures, due diligence, compliance investigations and reports. She has worked for large corporates as well as multinational companies.
