The death of a loved one can be very hard on family members but dealing with the financial implications can be even harder.
This is what Grace Chonco had to deal with when her husband passed away in November.
At the time of his death, he was still paying off his car and she was informed that she needed to settle his debt.
“When I reported to the bank that he had passed away, they asked me to get a letter from the Master of the high court. I was told that I was going to need an attorney because the debt amounted to R250,000.”
Chonco said she then found a law firm that was able to assist her.
“[We did not get] life cover on it so that if there is anything that happens to the owner, they can settle the debt.
"The bank gave me a settlement amount.”
Legal specialist at PSG Wealth Madelein Steenkamp said the time required to wind up a deceased estate will be determined by, among other things, the size and complexity of the estate.
Steenkamp said for estates above R250,000, an executor needed to be appointed, whereas for an estate less than R250,000, a person (usually a family member), was authorised by the Master of the high court to pay and collect debts and distribute the assets of the deceased to the heirs.
In the case where there is an executor, families should inform them of the death, collect the death certificate and all relevant documents.
Families should also note that some of the costs involved in winding down the deceased estate is the executor’s pay, which is determined by the Administration of Estates Act and is currently 3.5% of the gross value of the estate assets, and 6% of all incomes (e.g. rentals, interest and dividends), which the executor collects on behalf of the estate from the date of the testator’s death until the date of final distribution of the estate.
Pension fund benefits are typically not dealt with by the executor and the family must approach the administrator directly.
Nontsikelelo Jiyane of Jiyane Attorneys said if there was a high debt, the company which was owed would decide whether they wanted to proceed against the estate and claim for that money by issuing summons for the main property to be attached and auctioned.
PSG Weath says a formal winding process includes:
- A deceased estate must be reported to the Master within 14 days from the date of death;
- The nominated executor will consult with the family of the deceased to obtain all necessary information and among other things;
- They will then be issued the letter of executorship which authorises the executor to act in respect of all matters pertaining to winding up the estate. This includes taking control of all assets, opening an estate late bank account, notifying third parties of the death of the deceased, settling liabilities and the transfer or sale of assets.
Steenkamp said: “The executor must also notify SARS of the death – this must be done even in cases where the deceased was not registered for tax purposes and no estate duty is payable. An income tax return must be submitted for each year of assessment until such time as the estate becomes distributable.”
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