A death in the family?

Not reporting the death of a loved one to the Master of the High Court can have serious consequences further down the line with estates tied up in legal wrangling for months or even years.

Source: http://mymoney.iafrica.com

Mon, 07 Feb 2005

Although you may not think it’s not necessary to officially report the death of a loved one, especially if the deceased person didn’t really own any property, but the consequences of not doing so can be serious.

As Graham McPherson, Managing Director of First National Bank (FNB) Trust Services explains: “We often see a situation in which a family has never reported the death of, for example, the wife because the property all belongs to the husband. The house and car, as well as bank accounts and investments, are all registered in his name, so he thinks he owns all the property.

Marriage contract applies
“In fact, if the couple were married in community of property, which is how most South Africans are married, legally, the wife automatically owns half the assets, even if her name doesn’t appear on any of the documents. That’s what in community of property marriage is all about. So, when the husband subsequently dies, the process of administering the estate becomes very complicated because the half-share of the property belonging to the long-dead wife was never transferred to anyone.”

In terms of law, the surviving spouse has a duty to report the death to the Master of the High Court within 14 days after knowing about the death. The documents that are completed will allow the Master to make a decision about any assets — for instance, whether the estate is small enough to go through a simplified procedure handled by the family, or whether a full estate administration process is needed.

The consequences
But what happens if, as in our example above, the wife’s death was never reported and the husband now dies? “The first problem,” McPherson continues, “is that the winding up of the estate will take a lot longer. During the period of the delay, assets won’t be available to the beneficiaries. This could mean that the children, for example, can’t access cash from the estate or sell fixed property.”

“What really happens is that there are two estate processes that have to be followed. The Executor, who is responsible for winding up the estate, will first deal with the wife’s estate, and only then can they go ahead with the husband’s estate. For a house or other fixed property, the issue becomes quite complicated because every transfer has to be passed in the Deeds Office. The half-share of the house owned by the wife cannot be skipped in the Deeds Office.”

“What can really frustrate the family, though, is that the people who inherit may not inherit everything they were expecting to receive. Let’s say the husband has a Will in which he leaves everything to the second wife he married after his first wife died.

“She expects to receive the house, the car and all the money. But, if the first wife’s death had never been reported, her half-share of everything must first be settled. If she had children, they may be entitled to receive part of the estate, in which case only some of it would go into the husband’s estate. So, ultimately, the second wife will inherit far less than she was expecting.”

A further complication is that if there isn’t much cash in the estate, the second wife could end up losing the house she lives in because she has to share the value of the house with the first wife’s children.

“It’s really crucial that you report a death to the Master of the High Court,” McPherson concludes. “Rather go through the correct process now than ending up in a maze of problems years later.”