DECASED ESTATES

WHAT IS A DECEASED ESTATE?

When a person dies and they have leave behind any assets and money to their name, a deceased estate comes into existence. If the deceased left behind a will, their estate will be administered in accordance with the will. If the deceased died without a will, their estate will be administered in terms of the Intestate Succession Act 81 of 1987. The procedure which must be followed to administer a deceased estate is prescribed by the Administration of Estates Act, 66 of 1965 (as amended).

At death, the estate of the deceased person is frozen, and no one may withdraw funds from the deceased’s bank accounts or deal with any of the estate assets without the necessary permission from the Master of the High Court. If the deceased was married in community of property, the joint estate is also frozen. This situation often creates hardship for the surviving spouse, especially where the bank accounts were all in the name of the joint estate or in the name of the deceased.

Where must estates be reported?

Where the deceased was living in the Republic of South Africa, the estate must be reported to the Master of the High Court in whose area of jurisdiction the deceased was living 12 months prior to his/her death.

Where the deceased was not living in the Republic of South Africa at the time of his/her death, the estate may be reported to any Master of the High Court, provided it is reported to only one Master. An affidavit in which it is stated that the letters of executorships have not already been granted by any other Master of the High Court in the Republic of South Africa must accompany the reporting documents.

Since 5 December 2002, all Magistrates’ Offices are designated service points for the Master of the High Court and estates can be reported there. However, these service points have limited jurisdiction. All estates with wills, as well as estates that exceed R125 000 in value, will be transferred to the provincial Master’s Office. Therefore, it is advisable to report these estates directly the Master’s Office.

When and by whom must estates be reported?

The estate of a deceased person must be reported to the Master of the High Court within 14 days of the date of death. The Master must preferably be notified by the nominated Executor or person in possession of the Will. The Executor of an estate can appoint an agent such as a law firm like Rudolf Buys and Associates Attorneys to assist in the reporting of an estate. The estate is reported by lodging a completed death notice and other reporting documents with the Master which may be obtained from any Office of the Master of the High Court, Magistrate’s Office.

Who can be an Executor?

A person can appoint an executor in terms of their Will. Where a person dies without a Will the heirs to the estate may nominate someone to the executor of the deceased estate. A nomination form must be completed by the heirs of the estate. An attorney can be nominated to be the Executor of a deceased estate. The attorney can be nominated in terms of a will or by the heirs to a deceased estate if the deceased died without a will. A family member can be appointed as the Executor and be assisted by an attorney who will act on behalf of the executors an agent.

Functions of the Executor

The Executor of a deceased estate can:

• settle the liabilities of the deceased;

• open a bank account for the deceased estate;

• close the deceased bank accounts;

• collect the assets for the deceased estate;

• distribute the estate in accordance with the Will or in terms of the Intestate Succession Act where there is no Will;

• making payments toward creditors; and

• sell or transfer the deceased’s property.

Laws that govern deceased estates

There are three sets of laws in South Africa that relate to deceased estates and inheritances.

• The Administration of Estates Act: This gives the legal rules for the disposal of the deceased’s estate. The disposal of an estate means arranging to close off all the deceased person’s financial and legal affairs. This can include paying off any debt and selling or giving away their property, usually according to their wishes as given in their will.

• The Wills Act: This affects all testators – any person who has made a will – with property in South Africa.

• The Intestate Succession Act: This governs the devolution (the legal transfer) of estates for all deceased persons who have property in the Republic but who die without a will.

Intestate succession

Any person of 16 years and over is free to make a will in order to determine how his/her estate should devolve upon his/her death. If you die without a will, your estate will devolve in terms of the rules of intestate succession (your assets will, contrary to general belief, not go to the state). Dying intestate (without a will) will result in the deceased’s estate being distributed as follows:

• If the deceased is survived by a spouse, but not by his/her own descendants (children), the spouse will inherit the entire intestate estate.

• If the deceased is survived by descendants, but no spouse, then the descendants will inherit the intestate estate in equal shares.

• If the deceased is survived by a spouse as well as a descendants, then the spouse will inherit R 250 000 or a child’s share, whichever is the greater and the children will receive the balance of the estate.

In case of a marriage in community of property, half of the deceased estate will automatically belong to the surviving spouse, but the other half will not relinquish according to the rules of intestate succession. A child share is determined by dividing the intestate estate through the number of surviving children and deceased children, plus the number of surviving spouses.

• If a deceased leaves no spouse or descendants, but both parents are alive without any other descendants, then the surviving parents will inherit the intestate estate in equal shares.

• If the deceased leaves no spouse, no descendants but leaves one surviving parent and the deceased parent has descendants (brothers/sisters of the deceased), then the surviving parent will inherit one half of the intestate estate and the descendants of the deceased parent the other half in equal shares.

• If the deceased does not leave a spouse, descendants, parents, or descendants of his/her parents, then the nearest blood relative may inherit the entire intestate estate.

• If the deceased does not leave a spouse, descendants, parents or descendants of his/her parents, and there is no blood relative, then the proceeds of the estate will accrue and transfer to the State.

What happens in the case of a customary union?

When a spouse alleges that he or she is a partner in customary union, proof in the form of a certificate of registration must be lodged (Section 4(5)(b) of the Recognition of Customary Marriages Act 120 of 1998, as amended). Application for a registration certificate can be made to the Department of Home Affairs. When a certificate of registration cannot be lodged, enquiry in terms of section 5 of the Reform of the customary Law of Succession and Resolution of related matters Act 11 of 2011 can be held calling on witnesses from the family of the deceased and the surviving spouse to confirm existence of a customary marriage. The Office of the Master should be contacted to advise on the remedies available.

How has customary law and the distribution of a deceased estate been affected by the decision in the case of Bhe vs The Magistrate Khayelitsha and Others (CCT 49/03) [2004] ZACC 17; 2005 (1) SA 580 (CC); 2005 (1) BCLR 1 (CC) (15 October 2004)?

Customary law has been dramatically affected by the decision in the Bhe and others vs. the Magistrate Khayelitsha and another case, which changed the way estates of deceased persons are now distributed.

What happened in the Bhe case?

While he was still alive, the deceased lived with Ms. Bhe and one of their two daughters in Khayelitsha. There was some doubt whether Ms. Bhe and the deceased were married or not. Their second daughter lived with the father of the deceased in Berlin in the Eastern Cape. The deceased died without a will, and his estate was to be distributed in terms of customary law. This meant that the father of the deceased would have inherited the estate to the exclusion of Ms. Bhe and her two daughters. The estate consisted of a shack and the property on which the shack was built. The father wanted to sell the property to pay for his son’s funeral.

If he proceeded, Ms. Bhe and her children would have been destitute. Ms. Bhe applied to Court to have her two daughters declared the only beneficiaries of her husband’s estate. The Constitutional Court held that the customary law of succession was constrained by Section 23 of the Black Administration Act and was not allowed to develop to meet the changes in the society that it was meant to serve. As a result, it stagnated and became out of touch with the realities of urbanization and changing family relationships. In its current guise it is unconstitutional since it discriminates based on gender and birth.

What was held by the court?

In this case, the court held that, section 23 of the Black Administration Act and its regulations are manifestly discriminatory and in breach of the rights to equality in section 9(3) and dignity in section 10 of our Constitution and must therefore be struck down. The Court ordered that estates that would previously have devolved according to the rules in the Black Administration Act and the customary law rule of male primogeniture must now devolve according to the rules provided in the Intestate Succession Act as it discriminates unfairly against women meaning Ms. Bhe and her two daughters could now inherit the property left by the deceased.

Ngcobo J holds that courts have an obligation under the Constitution to develop indigenous law to bring it in line with the rights in the Bill of Rights, in particular, the right to equality. He held therefore that the principle of primogeniture should not be struck down but instead should be developed to be brought in line with the right to equality, by allowing women to succeed to the deceased as well.

How did the Bhe decision change the way estates will be distributed?

All deceased estates are to be distributed in terms of the Intestate Succession Act as discussed above (for those that die without a will). The Intestate Succession Act should be read in such a way that it could accommodate cases where the deceased was a husband in a polygamous customary union.

When the deceased leaves only spouses and no descendants, the wives will inherit the estate in equal shares. When the deceased leaves spouses and descendants the spouses and descendants will inherit the estate in equal shares, but each wife shall inherit at least R250 000. When the estate is not large enough to allow each wife to inherit the R250 000, the spouses will inherit the estate in equal shares while the descendants will not receive anything.

It is important that all South Africans be made aware of these changes, so that they can plan their estates accordingly.

Has the customary law of succession been abolished?

When planning his/her estate, a person may still arrange that his/ her estate be distributed in terms of customary law, hence it has not been abolished. This should be done by making a will. The Master of the High Court has a constitutional obligation to ensure the development of customary law. This should be done by allowing the family of a deceased to agree on the way the estate should be distributed. The Master of the High Court may not, however, allow vulnerable groups like women and children to be exploited because of a family agreement.

Tax implications for deceased estates

In South Africa, there is no tax payable by the heirs who get an inheritance. However, the costs of Estate Duty – a percentage of the value of the estate that is legally due to the government, are usually payable by the estate. This means the amount needed to pay these taxes will come out of the money left by the person who died.