Care, diligence and skill – also required from an Executor

by | Jun 11, 2015 | Advisory Services

Section 9.1 of the Trust Property Control Act 57 of 1988 states: “A trustee shall in the performance of his duties and the exercise of his powers act with care, diligence and skill which can be reasonably expected of a person who manages the affairs of another”

Although the Administration of Estates Act 66 of 1965 is not so vocal on this requirement, it is of paramount importance that an executor shall perform his duties based on this principal. Any good executor will do so as a matter of course.

Some years ago we “inherited” an estate GW Hilse. The circumstances were as follows:

The deceased was believed to have died without a will, thus “intestate” and the Master of the High Court appointed an attorney as executor to attend to the winding up of the estate. The estate consisted of two properties next to each other, a vehicle, odds and ends, shares and cash.

The only heir to the estate was the deceased’s frail sister that resided in Germany.

The assets in the estate had to be reduced to cash to enable the then executor to make a practical distribution to the heir. Two prospective purchasers contacted the executor and made offers to purchase the properties. The executor accepted one offer to the amount of around R680 000 and sent a consent form to the heir in Germany for her signature and return as was required in terms of section 42(2) of the Estates Act. The executor later communicated with an attorney in Germany who assisted the heir.

BoE Trust then found a will for the deceased and lodged it with the Master of the High Court who then rightly proceeded to remove the attorney as executor and appointed the trust company in this regard. BoE decided to employ Sentinel as their agents to attend to the estate due to the time delay and expected problems of the estate.

Sentinel received the estate and we immediately went through the whole file with a fine comb, making sure that all aspects are thoroughly investigated and recorded. Just after receiving the estate we were continuously contacted by both the parties interested in the properties. They were putting us under huge pressure to resolve the issue pertaining to the sale of the properties.

The words of care, diligence and skill in the Trust Property Control Act, one of our adopted mottos, came to the fore once again and reminded us what will be required in this delicate matter. Apart from this the executor has a huge responsibility towards the creditors and beneficiaries in an estate.

Text books were revisited, case law was sought and extensive consultations were entered into between us, the previous executor, other experts of law and our learned colleagues to ensure that we make the right decisions, the right decision for the estate, its creditors and heirs.

All the facts and circumstances were investigated and assessed and the decision was made to advise all parties that the agreement of purchase and sale was not perfected due to the consent not being signed by the sole heir in the estate and the absence thereof (the essence of our argument), the “sale” was therefore null and void, the property will be auctioned and dates of the auction will be communicated to them.

After a month we placed the properties on auction and advised the interested parties accordingly.

The auction was attended by both parties as well as others and the bidding started slowly. Much to everybody’s absolute surprise the properties were sold for a combined value of R2.7 million!

Summons were issued citing the original attorney as first respondent, the current executor as second respondent, in which the original interested party claims the amount of R2 000 000 for damages due to negligence.

The matter was placed on the roll of the High Court and over the course of a couple of days the Judge sifted through a huge number of documents and heard witness.  After considering all the evidence the Court found in favour of the respondents because the sale was not perfected due to the beneficiary failing or refusing to give written consent to the sale as dictated by section 42(2) mentioned above.

We were then placed in a position to finalise the estate that has been delayed for several years.

The lessons to be learned:

–          Ensure that you know your executor or that you can trust your executor.

–          Ensure that you have a valid will in place;

–          Ensure that your family and beneficiaries are aware of the whereabouts of your will;

A grieving family is often led to the task of finding somebody who will act as an executor and there will always be somebody that will undercut when it comes to fees. A testator has spent his (or her) whole life to build up his legacy. Rather make sure you have an executor who holds the words “Care, Diligence and Skill” close to its heart and an executor that will make sure that your beneficiaries receive their inheritance, your legacy, intact and in due time.

Dirk van Ryneveld

Chief Operating Officer – Trust

Sentinel International Trust Company (Pty) Ltd.