Questions and answers about Deceased Estates
• I don’t trust the executor.
What can I do?
First prize is to maintain a sound relationship with the executor or the actual person in his office who is involved with the winding-up process. Ask for a copy of the will and copies of documents you may be interested in. Keep in mind that you cannot demand the furnishing of these copies. The next option is to check the file at the Master’s Office. However, be warned that you may find that to be a fruitless exercise. There is one important “open door”. Before the executor may distribute inheritances, he must advertise the inspection of the liquidation and distribution account (L&D Account) in the Government Gazette and one newspaper. This document, which sets out the assets, liabilities and who inherits what is available for inspection by anyone for 21 days. In that period any interested party may lodge his objection to the L&D Account. Depending on the amount of money involved, you should
consider instructing an estate attorney to safeguard your interests.
• What are the executor’s fees?
The official tariff is 3,5% of the gross value of the estate – in other words, the value of total assets without deducting estate debts and liabilities.
• How much estate duty is payable?
Estate duty kicks in when the net value of the estate exceeds R3,5 million. The rate is 20% on net value exceeding R3,5 million and 25% on what exceeds R30 million. There are several allowable deductions, exemptions and other factors that may warrant getting professional advice.
• What about income tax, capital gains tax and transfer duty?
As one may expect, income tax is payable on the nett income of the deceased accrued to him/her until date of death. A recent change in law is that a deceased estate should be given a new tax number, as it is regarded as a new tax entity. Income tax accrued after date of death is therefore treated as income of the estate. Furthermore, when a person dies, it is deemed that he/she disposed of his/her assets to the deceased estate the day before date of death. Capital gains tax kicks in as a result. (There are certain exclusions and deductions, which cannot be dealt with here).
Immovable property (like houses, farms etc.) that are transferred to heirs, are not subject to transfer duty.