Learn more about the processes involved in distributing your assets after you pass away, and the importance of having a will.
The New Year is traditionally a time for fresh starts, so the subject of our twentieth PodAcademy Podcast may seem a little sombre. However, it is a topic that we need to talk about… if you’re looking for a New year’s resolution that really matters, make a promise to yourself to write or update your last will and testament. But more about that later.
Life’s two certainties
These are often said to be death and taxes, and both of these are closely linked to today’s topic. We’re looking at the difficult but very necessary issue of how to handle a deceased estate.
The ongoing COVID-19 pandemic has tragically brought home to many families that a loved one can pass away at any time, and with very little warning. Even without the virus, the death of a relative (often a parent) is a reality that we are all likely to have to confront at some point.
As a society, we try and think about death as little as possible. That’s perfectly understandable, but can lead to confusion, unnecessary costs and even family feuds.
You’re probably familiar with the term ‘deceased estate’, but you may be unclear as to what it means. Essentially, a deceased estate is the property that someone leaves to their heirs or beneficiaries when they pass away.
Where the person dies without leaving a will – and remarkably, some 70% of South Africans don’t have one – the assets they leave behind are referred to as ‘intestate succession estate’. The absence of a clear, legally binding expression of intent only slows down and obfuscates the process of administering an estate.
If you don’t have a will, make this a priority. If you die without one, your assets will be distributed according to guidelines laid down by SA legislation, and not necessarily in the way you would have wanted.
Dry those tears – there’s work to be done
When someone passes away, the administrative burden placed on a surviving partner or descendants can be quite onerous. The first necessary step is to report the death to the nearest Master of the High Court within 14 days. Every Province has at least one Master’s Office, which will then issue a Letter of Authorisation (‘LOA’) or Letter of Executorship (‘LOE’) to authorise the distribution of the deceased’s assets.
Until an LOA or LOE has been issued, the assets in question are frozen. The decision to issue an LOA or LOE is based on the value of the deceased estate: if it is less than R250 000, the Master’s Office can issue an LOA and appoint an administrator to distribute the assets.
If the total value is greater than R250 000 – which will almost certainly be the case if any property is involved – then an LOE will be issued in accordance with the provisions of the Administration of Estates Act. Both processes are slow: expect to wait up to a year for an LOA, and potentially twice that long for an LOE.
In both circumstances, an up-to-date, valid will makes everything clearer and more streamlined.
Widows and widowers
The distribution of a deceased estate belonging to a married person will be affected by the type of marriage that they had entered into. That is, whether they were married in or out of community of property.
With a marriage in community of property, the surviving spouse automatically receives 50% of the deceased estate (once any liabilities have been met). Surviving descendants will receive a ‘child’s share’ (an amount worked out according to a slightly complicated formula that takes any deceased offspring and spouses into account).
In the case of a marriage outside of community of property, the surviving spouse could be left with as little as R250 000, with the rest being divided equally between surviving children.
This old house
For the majority of people, their most significant asset is their home. Where a house is inherited by siblings or co-beneficiaries, the most common approach is to sell the property to unlock its value, and then divide the proceeds.
Where a property is jointly owned and subject to a bond or other loan secured upon it, the surviving co-owner becomes liable for the entire outstanding loan amount and any interest. This can be a huge burden, and may well necessitate selling the property. In combination with losing a spouse, this can be a very traumatic experience.
How to ease your passing – especially if you’re a responsible homeowner
At Reeflords Property Development, we would recommend the following steps to make life after your death easier for your beneficiaries and loved ones:
- Make a will, and keep it updated.
- Invest in life insurance – the payout can help with your co-owner’s bond liabilities.
- Find a reputable fiduciary services provider – for a fee calculated as a small % of the value of the estate, they will manage asset distribution.
Here to help
For more advice on handling deceased estates involving property, trust Reeflords Property Development for the answers you need. We understand that bereavement can be a very difficult time, and we’re mindful of the need to be sympathetic as well as professional.
If you’re a homeowner and need to write your will, or you’ve recently inherited property as part of a deceased estate, email catherine@reeflords.co.za with any questions you may have, or contact us via our Facebook page.
Think home. Think Reeflords.
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