The successful administration of estates
depends on the service from various external institutions, such as the
South African Revenue Service, Master's office, insurance companies and
many more. The time spent by these institutions to finalise the affairs
of the deceased, affects the success with which the executor can
conclude the affairs of the estate.
The executor
must attend to income tax (including CGT) as well as all other tax aspects such as VAT
as on the date of death. If the deceased's tax affairs had not been
recorded properly, the executor might experience problems in obtaining
all the information and completing the necessary returns. As a result,
valuable time could be lost.
The South African
Revenue Service must also issue final assessments against the estate,
and the processing of the final assessments may also cause valuable
time to be lost.
Should the deceased have been
involved in litigation before his/her death, the executor must evaluate
the risk thereof to the estate, and perhaps continue with the
litigation. If the litigation must be tried before a court, much time
could be lost in obtaining a court date. It also has the potential that
huge expenses will have to be incurred in calling witnesses and to
prepare documentation for court purposes.
If the
testator has died of unnatural causes, an inquest must be held. For
this, witnesses must be called and the SA Police Services must submit
their report to the court. The court must then deliver judgement on the
circumstances of death. Due to the backlog facing the courts at
present, valuable time will be lost. Executors need the judgement of
the court to collect certain assets in the estate, such as accident
benefits in terms of insurance policies and death benefits under insurance policies younger than two years.
Disputes
and discord among the heirs can aggravate things for the executor. This
also causes valuable time to be lost in negotiations with the heirs.
To eliminate unforeseen problems with the
administration process of estates, it is advisable to have proper and
regular estate planning of your affairs done by an expert, your adviser
or broker. Proper estate planning will show up deficiencies in your
affairs, which can then be addressed timeously. Your will should also
be drafted by an expert in conjunction with the estate planning.
Heirs are responsible for the income tax levied on
all income collected by the executor from date of death until the date
on which the estate is finalised. At finalisation of the estate, the
executor will provide the necessary statements reflecting the income
accrued during the various fiscal years during which the estate was
under administration. The onus rests on the heirs to state the income
on their tax returns.
The executor will provide
heirs with copies of the Liquidation and Distribution account, as well
as the finalisation statements of the estate. Heirs should keep them
for purposes of the new capital gains tax.
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