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17 January 2017
   
 
 
 
 
 
 
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There are only two things in life that are inevitable, death and taxes. Taxes are debatable however death will come knocking on each and every one of our doors at some point in our life. This article is about making wise and responsible decisions prior to your death to ensure that you appoint an executor who is a fit and proper person and who holds a position of trust. In this way you can be sure that your estate will be wound up smoothly and there will be no risks of a family feud whilst dealing with the aftermath of your death.

First, make sure you have a will, even better an up to date will that accurately reflects your assets and who the beneficiaries are. This will assist the executor when locating the assets and may expedite the winding up process. Executors have a fiduciary duty to act in good faith but to also act legally at all times. Where an executor acts contrary to this they can be removed as executor, on application, in terms of Section 54 of the Administration of Estates Act, 66 of 1965 (“the Act”).

Appointing your children or close friends as your executor may seem like a good idea whilst you are alive, but the sad reality is that when large sums of money and inheritances are involved, greed takes over and ‘family’ no longer carries the same meaning. The following case in point, that of Vallabhjee N.O v Vallabhjee N.O and Another [2014] ZAKZDHC 64 illustrates this exact conflict between siblings. In this case two brothers were appointed as joint executors of their late father’s estate. There was a dispute between the two brothers which centred around the one brother’s (“First Respondent’s”) insistence that the estate be wound up in terms of the will dated 15 September 2006 but also be subject to the contents of a letter written by the deceased dated 18 June 2004 in terms whereof the deceased purported to divest his estate of the proceeds of an insurance policy and certain items of jewellery. The contents of the letter are at variance with the contents of the will and differs to the approach of his brother (“the Applicant”) who alleged that the letter could not override the will.

The letters of executorship were issued to both the Applicant and the First Respondent and the liquidation and distribution account was drawn but when it was sent to the First Respondent for signature, he refused to sign it as it did not make provision for the contents of the letter from 2004.

The First Respondent was also entrusted with the collection of monies from various properties that formed part of the deceased estate. The rentals received from these properties were paid into an account held in the First Respondents name. The First Respondent did not account for rental and related income in the sum of R789 215.98 which the first respondent received and / or collected on behalf of the estate. The Applicant thereafter made application in terms of Section 54 the Act for an order that the First Respondent be removed as executor. 

The Court held that the continuance of the First Respondent as a co-executor prejudicially affects the finalising of the estate, particularly in light of the breakdown of trust and communication between him and his co-executor. Further the First Respondent had endangered the property entrusted to his care and no longer upheld his fiduciary duty to act in good faith. The Master was therefore ordered to remove the First Respondent as co-executor due to the breach of his fiduciary duties. The costs were to be paid out of the estate which means that the beneficiaries inherit less.

Executors are entitled to 3.5% of the gross assets of the estate and 6% of the income of the estate as their fee.

It is imperative to be wise when appointing an executor that will wind up your estate for the best interests of the beneficiaries otherwise the estate stands to lose wasted costs in unnecessary litigation where the executor breaches their fiduciary duty.

Written and prepared by Caitlin Askew, Bouwer Kobeli Morabe Attorneys. Should you require legal advice on wills and winding up of deceased estates please do not hesitate to contact us on +27 11 788-0083 or email enquiries@bkm.co.za.

Edited by: Creamer Media Reporter
 
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