Section 18(3) of the Administration of Estates Act, 66 of 1965 (“the Act”) sets out:
“If the value of an estate does not exceed the amount determined by the Minister by notice in the Gazette, the Master may dispense with the appointment of an executor and give directions as to the manner in which any such estate shall be liquidated and distributed.”
The purpose of this section is to streamline the administration process by providing a quicker and cheaper procedure for estates which are of a nominal value.
Previously, in order to benefit from the section, the gross value of the estate could not exceed R125 000.00. Recently the threshold in respect of the gross value of an estate has been increased to R250 000.00.
The use of this section speeds up the process of winding up an estate as a Master’s Representative appointed in accordance with section 18(3) of the Act does not have to comply with all of the provisions and processes of the Act that an Executor of an estate would normally have to comply with.
The use of section 18(3) not only speeds up the process but reduces the costs of winding up an estate.
The procedure followed in a section 18(3) scenario basically flows as follows:
- Report the estate to the Master of the High Court. It is of the utmost importance that all the required Master’s forms are correctly and fully completed and that all supporting documentation is provided.
- The Master will issue the Letters of Authority which give clear directions as to:
- who the Master has appointed as the Master’s Representative to administer the estate;
- the assets which make up the estate together with their respective values;
- payment of any liabilities of the estate; and
- distribution of the residue of the estate to the heirs.
- It must be noted that it is the general practice of the Master to issue the Letters of Authority 21 days after the date on which the estate was reported.
- Thereafter, the time frames in the process will be dictated by the institutions with whom the monetary assets are held, the collection of the funds and the payment of the liabilities. The above mentioned increase of the threshold is fantastic news as it will benefit smaller estates which do not have the affordability of incurring additional costs of administering the estate.