Heirs need to be more aware of how an estate will be wound up
Untangling the threads holding an estate together and ensuring that the executor reduces the emotional strain on heirs is a critical part of ensuring the testator’s wishes are met and administered correctly.
While most people understand how and why a Will is needed, very few know what happens when it comes to administering the deceased estate after death in an increasingly complex modern economy.
“The administration of an estate follows closely on what is a life-changing and traumatic event in the lives of all of those impacted by the death of the testator. It is complex due to the array of assets, liabilities, trusts and investments that form part of a modern-day estate and therefore important that the heirs are aware of how the process will unfold,” says Kobus van Schalkwyk, Head of Legal at Standard Trust Limited.
While the administration of a basic estate of under R250,000 would involve an informal process of administration and finalisation, Van Schalkwyk says there are practical considerations and other requirements that cause complications in practice with larger estates.
Divorce orders and maintenance claims in favour of an ex-spouse or minor children for whom the deceased did not make provision for in his or her Will, for example, is a common example of a complication that arises often. Therefore, testators need to ensure their Wills cover for these eventualities as litigation is often the only avenue left to resolve these types of disputes.
The executor must also deal with various taxation aspects of the deceased and the estate depending on the value and nature of the estate assets.
Another complication in estates relates to proceeds of life policies.
“Testators should think carefully as to who should benefit from these policies to avoid cash shortfalls in their estates. If there is a cash shortfall and it is not paid into the estate, assets will have to be sold and disposed of to make up the shortfall,” says Van Schalkwyk, which could include the family home.
According to Standard Trust Limited it is important to understand the difference between pension fund nominations and wishes in terms of a Will.
“Many testators do not complete nomination forms for pension funds, or never update them with their current dependants, as they think it is taken care of in a Will – but trustees of a pension fund will apply their own rules in terms of what is fair and equitable for the dependants of the deceased person,” cautions Van Schalkwyk.
Standard Trust Limited says the nomination of an executor is very important, but this is often a failing of many Wills and their consequent execution in practice. If skilled executors are not appointed, the Master of the High Court will make an appropriate appointment. While small estates of under R250,000 would often not require a specialist executor appointed by the Master, estates of R250,000 and more would mostly require the appointment of a specialist as an executor.
“Estates are getting more complex and it is always better if the testator, in his or her Will, ensures that an experienced executor is appointed. At Standard Trust Limited we have over 150 years’ experience in the fiduciary industry and can assist in ensuring that the administration process runs smoothly,” says Van Schalkwyk.
Standard Trust Limited says a good and fluent administration process begins with a well drafted Will that is immediately available, and so it is also very important to ensure the Will can be quickly and easily retrieved so that the process can begin promptly.
“It is also prudent to keep the original Will in custody with Standard Trust for confidentiality and safe keeping purposes and to ensure on someone’s death that it can be easily retrieved. This is the best possible start to ensuring that the process of administering the estate can be achieved within a reasonable timeframe,” concludes Mr van Schalkwyk.
