“Change” in the Administration of Estates – a Reflection

by | Jun 11, 2015 | Advisory Services

When I was approached to write a few words on “change” insofar as it applies to any fiduciary matter, I thought …great, what an opportunity to force myself to take some time to reflect, take some old notes, read some old articles and see what pops out.

I have been involved in deceased estates in some form or manner since 1980, so sure I have seen many changes come along that affected our industry…..but with these changes also come the memories. I joined the Master’s Office in Cape Town in 1980 and at one stage, I think we were in group 5, we were Piet Gouws (past Master at Cape Town), who was our Assistant Master, Tony Hoogendijk (current Deputy Master), who was our Administrative Official or group supervisor, myself as A examiner, Adrian Harrison (current Assistant Master ) as the B Examiner and Alan Margolin (current Assistant Master ) as the C examiner …we were one mean (in the good sense of the word) team… distinct memory I have is that of Mr. Gouws describing in very colourful language how one of the banks was giving him major grief by not sending in his requirements. ….another was that of a chap who was famed for issuing double page preliminary query sheets, who had then resigned and gone to Syfrets Trust where he was then given an estate to finalise and deal with 19 preliminary queries that he himself had raised…Meaker was his surname, but I forget his name now…..think it was Ron.

Anyway, enough reminiscence…let’s look at some things that changed insofar as the Administration of Estates is concerned.

Does anyone still remember that back in the eighties it was still necessary to lodge vouchers for each and every asset and liability? The younger estate practitioners do not realize how fortunate they are to not have to go through that. And boy, were these vouchers scrutinized with care…every single thing had to be 100% correct, or a query would follow. I recall the rumour that went around about one of the assistant Masters who had an estate where the deceased committed suicide by tying a typewriter around his neck and jumping into a swimming pool. The query was duly raised as to why no typewriter was reflected on the inventory.

One thing that has certainly changed is the volume of paper required to administer an estate….and we are supposed to be moving to a paperless society…hah!  I recall an average estate file in the eighties was around 5cm thick…these days change has happened….FICA has been introduced, FAIS has been introduced, The Firearm Control Act has been introduced and our files are now on average 12cm thick. We could in those days rely on someone actually having the courtesy of acknowledging a letter and responding to it within a reasonable time period. The two major insurance companies let you have benefit certificates within three weeks and one month respectively….like clockwork and could be relied upon.

We could get answers based on the exhibiting of a death certificate only, but sadly…change has happened yet again and because of corruption and fraud within our society, a ream of paperwork now has to accompany any basic request to deal with an asset.

….but enough of my gripes now…let us look at some other changes that affected the industry.

I am sure some of our more mature readers will recall the devolution of the section 4A rebate, where from 1955 up to 31 March 1971 the rebate increased annually from a base of R4000 per child and R10 000 per spouse to R12500 per child and R25000 per spouse until March 1971, and in those days, the rebate was not deductible for estate duty purposes, but only the duty that was calculated on the rebate was deductible.  From April 1971 to 15 March 1987 the rebate was R100 000 for a spouse and R80 000 per child and then….16 March 1988 the rebate increased to R1million rand and many a soul thought no estate duty would ever be paid again because of this massive increase. Well, inflation crept up and today…say no more, it is still worth a few bob in Treasury’s coffers. So, on 1 March 2002 the primary rebate went up to R1 500 000, on 1 March 2006 to R2 500 000 and on 1 March 2007 to date, R3 500 000

And then of course, there is the recent roll-over of the abatement allowing the effective carry- over of any portion of the section 4A abatement not required in the first dying’s estate to the survivor’s estate, making it possible to have a rebate of R7million in the survivor’s estate.

Does anyone still remember having to apply for a release by the Master before being able to sell any shares in an estate? …Section 21 of the Estate Duty Act required all estate duty to have been paid or secured attributable to quoted shares before the Master could release them for the executor to be able to deal with them. Luckily this was repealed in 1985.

Municipal and Eskom Stocks were deductible; policy proceeds were deductible; massing was the flavour of the day; Master’s fees in the early days consisted of an Estate Fee, a Binding Fee and a Taxing Fee; Landbank Valuations had to be obtained; Mineral Rights had to be valued; share valuations still automatically declared  whether the valuation was cum dividend or ex dividend; tombstone costs were not allowed as a deduction for estate duty …so much has changed in our work since then…a new companies act, the introduction of the spousal deduction ( section 4(q) of the estate duty act, the introduction of Capital Gains, FICA, FAIS, Close Corporations came and went, the well published Frith case put an end to the step-by step calculation of estate duty etc etc and to reflect on it all would require more space than I have available for this article.  So let me conclude by quoting ( as well as my memory allows me after 30 odd years) from a letter one of the old and wise attorneys wrote to the Master’s Office in Cape Town back in the 80’s when the examiner incorrectly insisted that Kensington fell under the Wynberg magisterial district:

In the Bible, Moses parted the Red Sea;  In the Koran, the mountain came to Mohammed…..In Macbeth, Birnam Wood came to Dunsinane Castle, but even with all the Master’s powers, he cannot make Kensington move to Wynberg

Ulrich Hoffmann    29 April 2013