General worker

TABLE OF CONTENTS

CHAPTER *: ADMINISTRATION

*.* INTRODUCTION 1 1.2 A BRIEF OVERVIEW OF THE ADMINISTRATION PROCESS 1 1.2.1 FIRST CONSULTATION WITH FAMILY MEMBERS 1 1.2.2 REPORTING THE ESTATE AND OBTAINING LETTERS OF EXECUTORSHIP 1 1.2.3 LETTERS OF EXECUTORSHIP (SECTION 13) 2 1.2.4 NOTICE TO CREDITORS (SECTION 29) 2 1.2.5 OPENING OF AN ESTATE BANKING ACCOUNT (SECTION 28) 2 1.2.6 GATHERING OF INFORMATION, VALUATIONS, BALANCE CERTIFICATES AND REALISATION OF ASSETS 3 1.2.7 DRAFTING THE LIQUIDATION AND DISTRIBUTION ACCOUNT

(SECTION 35 READ WITHREGULATION 5) 3 1.2.8 QUERIES BY THE MASTER 3 1.2.9 THE INSPECTION PERIOD 4 1.2.10 FINALISATION OF THE ADMINISTRATION AFTER EXPIRY OF THE INSPECTION PERIOD 4 1.2.11 FINAL REQUIREMENTS 4 1.2.12 FILING NOTICE 5 CHAPTER 2: HOW ESTATES ASSETS AND LIABILITIES ARE ACCOUNTED FOR IN THE ESTATE ACCOUNT

2.1 INTRODUCTION 6 2.2 LIABILITIES 7 CHAPTER 3: SELECTING THE METHOD OF LIQUIDATION

3.1 Award in specie (unrealised) 9 3.2 Partial sale of assets 10 3.3 Total sale of assets 11 3.4 Taking over by the surviving spouse in terms of Section 38 of the Estates Act 12 3.5 Redistribution Agreements 14 CHAPTER 4: TRANSFER OF IMMOVABLE PROPERTY

4.1 INTRODUCTION 16 CHAPTER 5: DRAFTING THE LIQUIDATION AND DISTRIBUTION ACCOUNT

5.1 INTRODUCTION 18 5.2 THE HEADING (Reg 5(1)(a)) 19 5.3 THE MONEY COLUMN (Reg 5(1)(b)) 24 5.4 THE LIQUIDATION ACCOUNT (Regulation 5(1)( c)) 24 5.4.1 Assets 26 5.4.1.1 Immovable property (reg 5(1)( c)(I) 26 5.4.1.2 Movable property (reg 5(1)( c)(ii)) 27 5.4.1.3 Motor vehicles 28 5.4.1.4 Furniture and other personal effects 29 5.4.1.5 Shares 30 5.4.1.6 Insurance policies 32 5.4.1.7 Cash assets 32 5.4.1.8 Voucher number (reg 5(1)( c)(iii) 34 5.4.1.9 Divestment notes (reg 5(1)( c)(v)) 34 5.4.2 Liabilities 35 5.4.2.1 Administration expenses (reg 5(1)( c)(vi)) 35 5.4.2.2 Master's fees 36 5.4.2.3 Executor's remuneration 38 5.4.2.4 Estate advertisements 40 5.4.2.5 Bank charges 41 5.4.2.6 Transfer costs and transfer duty 42 5.4.2.7 Funeral expenses 43 5.4.2.8 Valuation costs 44 5.4.2.9 Costs of realization 46 5.4.3 Claims against the estate (reg 5(1)( c)(vii) 46 5.4.3.1 Diverse claims 47 5.4.3.2 Maintenance claims in respect of minors 48 5.4.3.3 Maintenance claims in respect of the surviving spouse 49 5.4.3.4 Marriage claims 50 5.4.3.5 Estate duty payable by the estate (reg 5(1)( c)(viii)) 52 5.4.3.6 Totals and the balance for distribution 52 5.4.3.7 The recapitulation statement (reg 5(1)(d)) 53 5.5 THE DISTRIBUTION ACCOUNT (reg 5(1)( e )) 55 5.5.1 Intestate succession 59 5.6 COLLATION 64 5.7 REDISTRIBUTION AGREEMANTS 65 5.8 THE INCOME AND EXPENDITURE ACCOUNT (Reg 5(1)(f) 67 5.9 THE FIDUCIARY ASSET ACCOUNT (Reg 5(1)(g) 69 5.10 THE ESTATE DUTY ADDENDUM (Reg 5(1)(h) 72 5.11 THE EXECUTOR'S CERTIFICATE (Reg 5(1)(ii)) 73 CHAPTER 6: STEPS TO BE TAKEN AFTER THE ESTATE ACCOUNT HAS BEEN LODGED 6.1 QUERY SHEET BY THE MASTER 75 6.1.1 Requirements before the estate account is advertised 75 6.1.2 Requirements before distribution 76 6.1.3 Requirements after the estate account has laid open for inspection freefrom objections 76 6.2 THE INSPECTION PERIOD (Sec 35) 76 6.3 FINALISATION AFTER THE INSPECTION PERIOD 77 6.4 THE MASTER'S FINAL REQUIREMENTS 78 6.5 FILING SLIP 78 6.6 FINALISATION OF THE ESTATE 79 CHAPTER 7: INSOLVENT DECEASED ESTATES (SECTION 34 OF THE ADMINISTRATION OF ESTATES ACT)

7.1 INTRODUCTION 80 7.2 ADMINISTRATION PROCEDURES BEFORE THE LODGING OF THE LIQUIDATION AND DISTRIBUTION ACCOUNT 81 7.2.1 Appointment of an executor 81 7.2.2 Determining the solvency of an estate 81 7.2.2.1 Notice to creditors in terms of section 34(1) 81 7.2.2.1.1 Insolvency of the estate at any time before distribution of the estate in terms of section 5(12) 82 7.2.2.1.2 Contents of the notice to creditors 82 7.2.2.1.3 Number and value 83 7.2.3 Surrender in terms of the Insolvency Act 83 7.2.3.1 Placing of notice in the Government Gazette and the local Newspaper 84 7.2.3.2 Copy of notice to all known creditors 84 7.2.3.3 Completion and lodging of statements of affairs 84 7.2.3.4 Court application 85 7.2.4 Administration of the estate where the order is granted by the court 85 7.2.5 Continuance in terms of section 34 of the Administration of Estates Act 86 7.2.5.1 Sale of estate assets 86 7.2.5.1.1 Introduction 86 7.2.5.1.2 Objections to proposed sales (section 34(3)) 87 7.2.5.1.3 Consideration of the objection by the Master 88 7.2.5.2 Date of sequestration 88 7.3 THE DRAFTING AND LODGING OF THE LIQUIDATION AND DISTRIBUTION ACCOUNT 90 7.3.1 Introduction 90 7.3.2 The "prescribed form" of the liquidation and distribution account 90 7.3.2.1 Introduction 90 7.3.2.2 Different parts or sections of the account 91 CHAPTER 8: FOREIGN ASSETS 92 CHAPTER 9: ESTATE DUTY

9.1 INTRODUCTION 93 9.2 THE ESTATE DUTY ACT 45 OF 1955 93 9.3 THE GENERAL FORMULA 94 9.4 GROSS VALUE 96 9.4.1 Brief analysis of section 3 96 9.4.1.1 Subsection (1) of section 3 97 9.4.1.2 Subsection (2) of section 3 97 9.4.1.3 Subsection (2) of section 3 97 9.5 PROPERTY 97 9.5.1 Property in the normal sense of the word (sec3(2)) 97 9.5.1.1 "General rule" as regards value 98 9.5.1.2 Dividends 103 9.5.1.3 Rents 104 9.5.1.3.1 Rent payable in arrears 104 9.5.1.3.2 Rent payable in advance 104 9.5.2 Limited interests 107 9.5.2.1 Introduction 107 9.5.2.2 Usufructuary interests 108 9.5.2.3 Fiduciary interests in property 126 9.5.2.4 Annuities 130 9.5.2.4.1 Introduction 130 9.5.2.4.2 Annuity charged upon property 132 9.5.2.4.3 Valuation for estate duty purposes, of an annuity charged upon property 132 9.5.2.4.4 Formula derived from section 5(1)( c )(I) 135 9.5.2.4.5 Where there is not a further annuitant and the obligation to pay an annuity falls away 138 9.5.2.4.6 Formula derived from section 5(1)( c )(ii) 139 9.5.2.4.7 Annuity not charged upon property (any other annuity)……142 9.5.2.4.8 Valuation, for estate duty purposes, of an annuity not charged upon property 143

9.5.2.4.9 Formula derived from section 5(1)(d) 144 9.6 PROPERTY DEEMED TO BE PROPERTY 146 9.6.1 Introduction 146 9.6.2 Insurance policies on the life of the deceased (section 3(3)(a)) 146 9.6.2.1 Introduction 146 9.6.2.2 Which policies are dutiable, and to what extent 147 9.6.2.3 The extent to which the proceeds are deemed property 151 9.6.2.4 Exceptions (policies which comply with the requirements above, but which are not dutiable) 152 9.6.2.4.1 Proceeds of policy recoverable by spouse or child under ante-or post nuptial contract 153 9.6.2.4.2 Policies taken out by partners or co-shareholders Of the deceased 153 9.6.2.4.3 Proceeds of policies where the estate, relatives or dependants do not benefit 154 9.6.2.5 Illustrative examples 156 9.6.2.6 Extent to which 'proceeds' of a policy is dutiable where the obligation which arises on the death of the deceased is the payment of an annuity 157 9.6.2.6.1 Formula derived from section 5(1)(d)bis 159 9.6.3 Fund benefits (section 3(3)(a)bis) 161 9.6.3.1 Introduction 161 9.6.4 Death-bed donations (donatio mortis causa) 161 9.6.5 Claims in terms of section 3(1) of the Matrimonial Property Act, 1984 (Act 88 of 1984) 162 9.6.5.1 Introduction 162 9.6.5.2 When is a claim in terms of the matrimonial property deemed to be property 163 9.7 ALLOWABLE DEDUCTIONS 165 9.7.1 Funeral and death-bed expenses (section 4(a)) 165 9.7.2 Liabilities as per liquidation and distribution account (section 4(b)) 166 9.7.3 Administration expenses allowed by the Master (except those incurred in administering income after death) - section 4( c) 166 9.7.4 Administration expenses incurred in giving effect to the provisions of the Estate Duty Act (section 4(d)) 166 9.7.5 Foreign assets (section 4( e) 166 9.7.6 Value of bequests to religious, educational or charitable institutions

(section 4(h)) 167 9.7.7 The value of the ususfruct included in the estate which was created by a predeceased spouse (but only if no deduction was made in the estate of the predeceased spouse in terms of section 4(q) - section 4(m) 167 9.7.8 The value of an accrual claim by the surviving spouse in terms of the Matrimonial Property Act - section 4(1A) 168 9.7.9 The value of any benefit received by the surviving spouse as a result of the death of the deceased (section 4(q)) 168 9.8 PRIMARY REBATE (sec 4A) 170 9.9 DUTIABLE AMOUNT AND ESTATE DUTY PAYABLE 172 9.1 APPORTIONMENT OF ESTATE DUTY 173 9.11 FIRST PROVISO TO THE FIRST SCHEDULE ("QUICK SUCCESSION”) 173