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Freezing and availability of funds at death
Date: 11 May 2009
In terms of the Administration of Estates Act no one may take control of the assets and liabilities (estate) of a deceased, except in terms of an official letter of authorisation from the Master of the High Court. This also includes the estate of the surviving spouse in a joint estate.
All powers of attorney in respect of a deceased lapse at his death. If anyone is in possession of an electronic card belonging to the deceased, no further transactions, including withdrawals at an ATM and other electronic transactions on the Internet, may be done on it.
Institutions such as banks must immediately freeze all accounts that form part of a deceased estate. Credit transactions such as payments may continue, but debit transactions such as withdrawals are not permitted.
A deceased's business, such as a one-man business or partnership, may also be suspended temporarily. If an executor cannot be appointed immediately, application may be made for an interim curator to be appointed.
Many surviving dependants, as well as institutions at which funds and other assets of the deceased (or of the surviving spouse in a joint estate) are held, are not aware of the provisions and concession contained in section 11(1)(b) of the Administration of Estates Act, No. 66 of 1965. If they do know about these provisions, they often still insist on an official letter of executorship.
Said section stipulates among other things that funds should be made available for the bona fide purpose of providing a proper funeral for the deceased and/or of providing for the maintenance of his/her family and/or preserving or maintaining any part of the specific assets. For example, a bank with which the deceased did business may be willing to apply said section, but then sufficient funds need to be available. A nominated executor or his agent is under no obligation to advance or make available his own or any other funds.
In practice this problem is overcome in a number of ways. Making a spouse the beneficiary under a life policy is the most common solution. Unless there are circumstances that prevent prompt payment, funds are usually paid out fairly quickly after a death certificate has been submitted.
Bank accounts of a spouse in a joint estate, including assets of a spouse not included in the will, are generally unfrozen quickly, unless insolvency or other circumstances prevent this from being done.
Family and friends also help out with, for example, the payment of funeral costs, which amount is refunded by the executor when circumstances allow.
Therefore there are various ways to ensure that your dependants do not become dependent on others after your death. Obtain expert advice to prevent this.
(Sanlam Trust, April 2008)
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