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Administration of Estates (Act 66 of 1965) - Coggle Diagram
Administration of Estates
(Act 66 of 1965)
Executor
Appointment
Master appoints for each deceased estate
testator can nominate in their Will
Appointed - letter of executorship - Executor Testamentary §14
§18(3), Estates under R250 000: Master may dispense with appointment of executor
Remuneration:
§51 pf Admin of Estates Act: entitled to receive:
remuneration fixed by deceased by Will or
Rem according to prescribed tarriff and taxed by Master
Executor not entitled to receive Rem before assets distributed unless payment approved by Master
Regulated rem:
Gross value of assets: 3.5% plus VAT (4.025%)
Income accrued and collected after death: 6% (6.9%)
In addition, AT may be charged by Executor who is VAT registered.
Can take fees on joint estate if deceased married COP
No fees on:
Proceeds of life insurance policies not paid to Estate
retirement fund benefits not payable to Estate but payable to dependants or nominees
value of living annuity not payable to Estate but to nominee
value of usufruct enjoyed by deceased imm before dth
The Master
Documents required from Executor
prior to issue of executorship
death notice
preliminary inventory at estimated values
original Will
acceptance of executorship, etc
Once letter of executorship issued,
executor must take control of the assets in estate. Prepare L&D accoun
t:
Advertise for creditors to submit claims within 30 days of publication (§29)
Lodge inventory within 30 days of granting letter of executorship showing estimated value of estate §27
open cheque account for Estate when executor has more than R1000 in the eatat §28 - in practice, done immediately
obtain valuation certificates iro assets
Plan the liquidation:
if sufficient cash to pay debts, admin fees, cash legacies, the assets do not have to be liquidated unless instruction to do so
Executor must lodge L&D account within 6 months of date of Letter of Executorship (§35)
Estate pays a Master's Fee - Death after 1 Jan 2018:
R600 if estate over R250 000, to R400 000, plus
R 200 for each additional R100 000 over R400 000
Max fee charged R7 000
if COP - fee charged on value of joint estate
L&D account
Liquidation account
:
Part 1:
Assets
Part 2:
Liabilities
(incl debts,
admin costs, estate duty)
Total
gross value of estate
Recapitulation statement
:
Cash flow (liquidity) statement
Shows
cash available, and debts/legacies that must be paid in cash
.
If Cash shortfall, E must indicate how to make it up
H/L pay cash into estate to prevent assets being sold
Distribution account
:
amount for
distribution and how
Income and expenditure account
:
Income accrued after deat
h (interest, rental income)
Liabilities such as
E fees
deducted from this.
Fiduciary assets account
:
Reflect assets held by Deceased as Fiduciary
Estate Duty addendum
:
E must determine amount Estate liable for.
Calc shown at end of L&D account.
Winding up deceased estate
Death reported: Death notice to Master of HC
if had a Will, lodged with Master
Inventory completed and lodged with Master
Nominated E apply for Letter of Executorship
E must advertise in GG and local Newspaper for 30 days in area lived so that creditors can claim
Open bank account for Deceased Estate (R1000)
Then, E determines solvency of Estate and administers accordingly. Not obliged to pay before L&D lain for insp.
Exec gets valuation certs for unrealised assets, draft L&D account, lodge with Master
L&D account lodged within 6 months of date of appointment
Master examines. if in order, returns to E, advertise that account lying open for insp. Obj may be lodged with Master or Mag office. In GG and local paper.
After and no obj, E can pay creditors, heirs, legatees. Fixed Prop can be transferred to beneficiaries. EDuty paid within 1 year of date of death to avoid penalties.
Once all debts paid, all assets transferred, Master will discharge Executor of his duties.
Methods of liquidation and distribution
NB considerations:
Est liabilities, how to pay
ID beneficiaries
stipulations in Will
Practicable method of distribution
Wish/Request by beneficiaries
5 methods of liquidation
Award of assets
in specie
:
Preferrable, usually in best interests of heirs.
Only if enough cash top ay liabilities, legacies and transfer or
if cash s/f, benefic pay deficit
UNLESS: inappropriate, impossible, benefic lacks capacity
Partial Sale of Assets
:
Can't distribute till all liabilities, admin costs, EDuty provided for
requires cash, E must realise assets if shortfall if:
benefic won't pay deficit to receive
in specie
instruction in Will to realise asset
asset is indivisible (agri), unless redistribution agreement
Total sale of assets
:
Exceptional cases only:
to prevent detrimental consequences
due to indivisibility of property
indivisible or inadmissible
insolvent
sale at request of heirs
SPECIFIC ORDER: be aware of possible CGT conseq
1) Testamentary instruct, 2) Heirs Instruct, 3) Sale by pub auction,
4) Sale by private treaty or public tender (most popular)
Taking over of assets by
Surviving
Spouse
§38 of Admin of Estates Act
at amount appraised, "buys out heirs"
distribute proceeds instead of property
used when there are minors. household remains family home.
application by surv spouse, COP/ANC
no contrary provision in Will
Major heirs and claimants consent
no interested party prejudiced
cash payable to minors paid into guardian's fund.
Redistribution of assets: agreement between benef
:
common, used to avoid sale of asset. Must be give and take, otherwise donation. Main objective important.
VAT and deceased estate
:
VAT Act 89 of 1991
Deceased estate = person
Example of
L&D
- pg 946
Firearms in deceased estate
:
SAPS website Firearms Control Act 2000
License required, or deactivate or dispose of
Pg 949, reporting and safe storage
Income tax and deceased estates
:
Income Tax: 1 March to date of death = liability for Estate Duty (§25(1)), incl Exec income
Admin of insolvent deceased estate
§34 of Admin of Estates
Must inform creditors immediately on knowing, copy to Master
Notice to state that unless majority of creditors request him to surrender the estate ito Insolvency Act, the Exect must liquidate assets ito §34(2). Quicker, less costly.