How to avoid estate disputes

Dealing with the aftermath of a loved one’s passing is never easy, and disputes over the distribution of their estate can further complicate an already challenging situation.

Estate disputes and litigation are not uncommon, but understanding the common issues that may arise and knowing how to resolve conflicts can help you navigate these challenges with greater ease.

Common estate disputes

Validity of the will

One of the most common sources of estate disputes is the validity of the deceased’s will. Family members may challenge the authenticity of the will, alleging that it was made under duress, coercion or undue influence.

Inheritance claims

Disputes may arise over who is entitled to inherit from the deceased’s estate, especially if there are multiple heirs or beneficiaries with competing claims. This can be particularly contentious in blended families or cases where there are estranged relatives.

Executorship disputes

Conflict may arise over the appointment or actions of the executor responsible for administering the estate. Beneficiaries may question the executor’s decisions or accuse them of misconduct or mismanagement.

Asset distribution

Disputes can also arise over the distribution of specific assets or properties, particularly if there are disagreements about how they should be divided among the beneficiaries.

Disputes among heirs

Family members may also disagree over various aspects of the estate administration process, such as the valuation of assets, the payment of debts and taxes, or the allocation of expenses.

How to resolve estate-related conflicts

Mediation

Mediation is a voluntary and confidential process in which a neutral third party helps disputing parties reach a mutually acceptable resolution. Mediation is usually a less adversarial and a less costly alternative to litigation and can help preserve family relationships.

Negotiation

Family members can attempt to resolve disputes through direct negotiation, either independently or with the assistance of legal counsel. Negotiation allows parties to discuss their concerns and interests openly and work together to find a compromise.

Arbitration

Arbitration involves submitting a dispute to a neutral arbitrator who hears both sides of the case and renders a binding decision. Arbitration can be faster and more flexible than traditional litigation, but parties must agree to abide by the arbitrator’s decision.

Litigation

In cases where disputes cannot be resolved through alternative means, parties may resort to litigation, which involves bringing the matter before a court for resolution. Litigation can be costly and time-consuming, but it may be necessary to protect one’s rights and interests.

Seeking legal advice

Estate disputes and litigation can be emotionally taxing and financially burdensome for all parties involved. Regardless of the chosen dispute resolution method, it’s essential for parties involved in estate disputes to seek legal advice from experienced estate litigation attorneys.

Contact us if you find yourself in a dispute over a deceased estate. We can provide guidance on the best way forward to help you resolve the dispute.

The importance of estate planning

Estate planning is a crucial aspect of financial management. Taking the time to create a comprehensive estate plan is essential for ensuring that your assets are distributed according to your wishes and that your loved ones are taken care of after you’re gone.

What is estate planning?

Estate planning is the process of managing and distributing your assets after your death or incapacitation. It involves making decisions about how your property, finances, and personal belongings will be handled and ensuring that your wishes are legally documented and carried out.

Protecting your loved ones

Estate planning is how you provide for your loved ones after your death. By creating a will or trust, you can specify how your assets should be distributed and ensure that your family members are taken care of financially.

Minimising family disputes

Without clear instructions in place, disagreements among family members can arise regarding the distribution of assets. Estate planning can help minimise the potential for disputes by outlining your wishes in writing and appointing executors or trustees to oversee the process.

Avoiding probate delays

Proper estate planning can help streamline the probate process, the legal procedure for validating a will and distributing assets. By creating a trust or using other estate planning tools, you can potentially avoid probate altogether, saving time and money for your beneficiaries.

Planning for incapacity

Estate planning isn’t just about what happens after you die. It also involves planning for possible incapacity during your lifetime. Through documents like a durable power of attorney and healthcare directives, you can appoint trusted individuals to make financial and medical decisions on your behalf if you become unable to do so.

Reducing estate taxes

Strategic estate planning can help minimise estate taxes, ensuring that more of your assets are passed on to your beneficiaries rather than being lost to taxes. Techniques such as gifting, creating trusts, and utilising tax-saving strategies can help reduce the tax burden on your estate.

Protecting business assets

If you own a business, estate planning is essential ensuring its continuity and protecting its assets. By creating a succession plan and implementing strategies to transfer ownership or control, you can ensure that your business continues to thrive after you’re no longer involved.

Getting started with estate planning

Create a will or trust

The foundation of any estate plan is a will or a trust. A will describes how your assets will be distributed after you die. A trust is a legal arrangement by which a trustee manages assets on behalf of beneficiaries.

Power of attorney

A power of attorney gives someone permission to make decisions on your behalf if you become incapacitated.

Living will

A living will outlines your wishes for medical treatment if you are unable to make decisions for yourself. It is a legal document that provides direction to healthcare professionals and takes the burden off your relatives to make critical decisions during a time of emotional distress.

Review and update regularly

Estate planning is not a one-time event. It’s an ongoing process that should be reviewed and updated regularly to reflect changes in your life circumstances or financial situation.

Consider tax planning

Depending on the size and complexity of your estate, tax planning may be an important aspect of your estate plan. Consult with a tax professional or estate planning attorney to explore tax-saving strategies and ensure that your plan is optimised.

Communicate with your family

While estate planning is a personal matter, it’s essential to communicate your wishes with your family members to avoid surprises or misunderstandings later.

How we can help you

Estate planning is a critical component of financial planning to protect you and your loved ones, minimise potential conflicts, and ensure that your assets are distributed according to your wishes.

Let us assist you in creating a solid estate plan with structures that focus on asset protection and estate duty minimisation.

What is an executor of a deceased estate?

An executor is an individual appointed by the deceased in their will or by the Master of the High Court to administer their estate after they pass away. Executors play a crucial role in ensuring that the deceased’s wishes are carried out and that the estate is settled efficiently and in accordance with the law.

By understanding the responsibilities and duties associated with executorship, individuals can approach this role with confidence, knowing that they are fulfilling their obligations to the deceased and their beneficiaries.

The role of an executor

Gathering assets

One of the primary responsibilities of an executor is to identify and gather all assets belonging to the deceased estate. This may include bank accounts, investments, real estate, vehicles, personal belongings, and any other property owned by the deceased.

Paying debts and expenses

Executors are tasked with settling any outstanding debts and expenses owed by the deceased estate. This can include funeral costs, outstanding bills, taxes, and other liabilities.

Managing the estate

Executors are responsible for managing the deceased estate during the administration process. This may involve maintaining property, handling investments, and taking care of any ongoing financial matters until the estate is fully administered.

Distributing assets

Once all debts and expenses have been settled, the executor is responsible for distributing the remaining assets to the beneficiaries as outlined in the deceased’s will or, if there is no will, according to the laws of intestate succession.

Legal responsibilities and duties of an executor

Acting in good faith

Executors are legally obligated to act in the best interests of the deceased estate and its beneficiaries. This includes acting honestly, diligently, and without any conflicts of interest.

Following the will

If the deceased left a valid will, the executor must follow its instructions to the best of their ability. This may involve interpreting the terms of the will, carrying out specific bequests, and ensuring that assets are distributed according to the deceased’s wishes.

Complying with the law

Executors must comply with all relevant laws and regulations governing the administration of estates. This includes obtaining the necessary legal documents, filing tax returns, and adhering to deadlines set by the Master of the High Court.

Keeping accurate records

Executors are required to keep detailed records of all transactions and communications related to the administration of the estate. This includes documenting asset valuations, expenses paid, and any correspondence with beneficiaries or creditors.

Accounting to beneficiaries

Executors have a duty to provide regular updates and accountings to the beneficiaries of the estate, keeping them informed of the progress of the administration process and any significant developments.

How we can help you

Contact us if you have been appointed as the executor of someone’s estate and need help.

We can assist you throughout the process and will ensure all assets are distributed in accordance with the law and the wishes of the deceased.

The step-by-step process of administering a deceased estate

Navigating the legal intricacies of a deceased estate is complex and time-consuming. Here’s an outline of the process.

Reporting the deceased estate

The death must be reported to the Master of the High Court within a specified time, usually within 14 days, in the jurisdiction where the deceased resided.  The documentation must include the original will, certified copies of the death certificate, the deceased’s identity document, and, if applicable, the marriage certificate and antenuptial contract.

Obtaining Letters of Executorship

Once the estate has been reported, the executor must apply to the Master of the High Court for Letters of Executorship, which grant the executor the legal authority to administer the estate.

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Upon receipt of the Letters of Executorship, the executor must publish a notice to creditors in the Government Gazette and in local newspapers, so that persons with claims against the estate can lodge them within a specified time.

Assessing assets and liabilities

The executor is responsible for identifying, collecting, valuing, and taking control of all assets of the deceased estate. This may include bank accounts, investments, property, vehicles, and personal belongings.

If the deceased was a taxpayer, the executor notifies SARS to establish whether there is any outstanding tax liability and, if necessary, liaise with the deceased’s tax advisor to file outstanding returns.

The executor must also liaise with the deceased’s banks to close accounts and open a new bank account in the name of the estate.

Liquidation and Distribution Account

Once all assets and liabilities are identified, the executor prepares a Liquidation and Distribution Account and submits it to the Master for approval. The L&D Account must be submitted within six months and sets out how the assets will be distributed to the beneficiaries. It also includes any income and expenditure the estate may have incurred.

If the Master raises queries, the executor may have to lodge additional documents or a revised L&D Account. If there are no queries, the Master will give permission to advertise the account as lying for inspection.

Together with the L&D Account, the executor submits an estate duty return to the Master. If the value of the estate is over the estate duty threshold, the executor must also submit an estate duty return to SARS. Usually, SARS then performs an estate duty audit, which can delay the Master granting permission to advertise the L&D Account lying for inspection.

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Once the L&D Account has been approved by the Master, the executor must publish a notice to creditors in the Government Gazette and in local newspapers, that sets out the inspection period during which the account will be available for inspection at the Master’s office. If no objections are lodged during this period, the executor can apply to the Master for authorisation to distribute the estate.

Paying debts and taxes

Before distributing assets to the beneficiaries, the executor must settle any outstanding debts and taxes owed by the deceased estate.

Distributing assets to beneficiaries

Once all debts and taxes have been paid, the executor can distribute the remaining assets to the beneficiaries as outlined in the deceased’s will or according to the laws of intestate succession, if there is no will.

Then the executor closes the estate bank account and applies to the Master for a filing slip to be able to close the file. This includes an affidavit to confirm that all creditors and beneficiaries have been paid, and proof of the transfer of any immovable property.

How we can help you

Contact us if you need help with the administration of a deceased estate. We can handle the entire process, from the appointment of an executor to the distribution of assets. Our conveyancing team is well-equipped to handle any property transfers from deceased estates to beneficiaries.

We will ensure all assets are distributed in accordance with the law and the wishes of the deceased and assist in resolving any disputes that may arise.

Administration of deceased estates: An overview

Losing a loved one is never easy, and dealing with their affairs can be overwhelming, especially when it comes to navigating the legal aspects of their estate.

In South Africa, specific laws and regulations govern the distribution of assets and settlement of debts after someone passes away. Here’s an overview, outlining the relevant legislation and the terminology involved.

The legal framework

The primary legislation governing deceased estates in South Africa is the Administration of Estates Act 66 of 1965. This act provides the legal framework for the administration and distribution of estates of deceased persons. The Wills Act 7 of 1953 regulates the validity and execution of wills, which play a crucial role in the estate administration process.

What is the administration of a deceased estate?

Deceased estate administration involves the process that an executor must follow to manage the estate of the person who has died. In South Africa, this process is governed by the Master of the High Court and usually starts with the appointment of an executor in terms of the deceased person’s will. If the deceased did not have a will, the heirs may appoint an executor.

The executor is responsible for managing the assets, liabilities, and affairs of the deceased estate, and ultimately for distributing the assets to the heirs or beneficiaries in accordance with the law or the wishes of the deceased person.

This involves the reporting of the deceased estate, collecting the property of the deceased estate, paying the debts due by the deceased estate, and distributing the remaining property to the heirs.

The executor and executorship

The executor of the deceased estate is appointed to administer the estate and to ensure that the deceased’s wishes, as outlined in their will, are carried out.

If there is no will or if the appointed executor is unable or unwilling to act, the Master of the High Court may appoint an executor. The executor is responsible for various tasks, including gathering assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries.

The Master of the High Court

The Master appoints the executor, approves the Liquidation and Distribution Account, and gives permission for the assets to be distributed in terms of the L&D Account. The process can take anywhere from a few months to a couple of years. It all depends on the complexity and possible delays caused by third parties, such as SARS, other creditors, or disputes among the beneficiaries.

In our next blog, we’ll outline the step-by-step process of administering a deceased estate.

What is a usufruct?

A usufruct is a legal right given by the owner of a property to a person, usually for a specified period, to use and enjoy the property as if it were their own. This means that the usufructuary has the right to occupy the property and collect any income or profits from it. Subject to certain limitations, the usufructuary may also make necessary changes or improvements to the property.

An example of a usufruct would be if a father leaves a farm to his son in his will but stipulates that his wife should have continued use of the house on the farm until her death (or any other specified period). Upon the father’s death, the property would be transferred to the son, and the wife’s usufruct would be registered simultaneously against the title deed.

The wife, in this instance, has a limited right. She can live in the house but cannot sell the property, mortgage it, or leave it to someone else in her will. She also has certain obligations. Those include maintaining the property and paying rates and taxes. Only upon her death would the usufruct lapse, and the full property rights would automatically vest in her son.

During her lifetime, the son can use the house as security to obtain a mortgage, as he is the legal owner. But he is bound by the terms of the usufruct and may not infringe on the usufructuary’s rights. That means he cannot sell the property without the consent of the usufructuary.

For example, if the son decided to quit farming and wanted to sell the farm, which would include the house, his mother would have to agree to the sale, and both would also have to agree on how to divide the proceeds.

A usufruct is an excellent way for a husband to make provision for his wife and still bequeath a property to his children. The tax benefit in a situation like this is that the usufruct reduces the amount of estate duty payable by the testator’s estate. The value of the entire inherited property is reduced by the value of the usufruct.

In a different scenario that doesn’t involve a will, a usufruct can be granted by the seller of a property in a cession or notarial deed to reduce the amount of transfer duty. There are different tax implications in this scenario.