In terms of Section 23 of the Administration of Estates Act No.66 of 1965 (hereinafter referred to as “the Act”), before someone is appointed as an Executor in a deceased estate, the Master of the High Court has the right to call for security for the proper performance of their duties.
The amount of security that will be required is determined by the Master at his own discretion, however, it is typically based on the value of the assets within the estate, as per the preliminary inventory submitted by the person who had reported the estate.
Furthermore, in terms of the Act and unless directed otherwise by the Master, the following persons are exempt from furnishing security, namely: the surviving spouse(s), parents and/or children of the deceased, as well as any person nominated by the deceased in their Will to be an Executor.
Nevertheless, even if a person is exempt in the Will from furnishing security, it is common practice that, unless such a person has the expertise to administer an estate, or appoints an expert, such as an attorney, to oversee the administration process, the Master still has the right to call for security.
To this end, security is usually given in the form of a written bond of security, which can either be acquired from specific financial institutions or from the majority of insurance companies, who will usually require the payment of a premium.
Any costs associated with the provision of security are also regarded as administration expenses, which are payable from the estate upon finalization. Additionally, any premiums in respect of a bond of security are usually payable on an annual basis, which means that costs can still be saved on the payment of such premiums, provided that the estate is finalized as soon as possible.
If such a person is then not able to provide security, as aforesaid, and there is no substitution for the appointment of another Executor by the Will, and/or no surviving spouse(s), parents or children of the deceased to accept the nomination, then the Master will not grant a Letter of Executorship. In such an instance, the remaining heirs will have to nominate an Executor dative.
Should the nominee then be unwilling and/or unable to deliver security, as foresaid, the Master of the High Court may, in terms of Section 18 of the Act, if deemed necessary, publish a notice in the Government Gazette calling upon the surviving spouse (if any) and the heirs of the estate, as well all persons having claims against the estate, to attend before the Master at a time and place specified in the notice, in order to recommend a person for the office of Executor.
However, should the heirs nominate an attorney as the Executor dative for the estate, then the attorney must provide security, as explained above. To this end, the Legal Practitioners Indemnity Insurance Fund (hereinafter referred to as the “LPIIF”) usually provides bonds of security to practicing attorneys who are appointed as Executors, at no cost, up to the value of R5,000,000.00 (Five Million Rand) per estate, provided that the cumulative bonds issued to any one firm does not exceed R20,000,000.00 (Twenty Million Rand) at any given time. In the event that the required security exceeds the LPIIF’s limit, then the attorney concerned will need to procure the additional security in the commercial market.
Notwithstanding the above, Section 24 of the Act allows for the potential reduction of the amount of security, in that; if the Executor had already furnished security and had satisfactorily accounted to the Master for any property which had been considered in the initial assessment, the Master may lower the security to an amount deemed adequate to cover the value of the unaccounted property.
Lastly, Section 18(3) of the Act also provides that, if the value of the estate does not exceed an amount of R250,000.00 (Two Hundred and Fifty Thousand Rand), then the Master of the High Court may dispense with the appointment of an Executor, as well as the need for security, and give direction as to the manner in which the estate shall be liquidated and distributed.
In light of the above, the process of having to obtain a bond of security can introduce complexities and potential delays in the administration procedure and result in additional expenses being incurred by the estate. As such, the importance of having a well – drafted Will, which provides for the appointment of a reliable Executor and a standard clause for the exemption of security, cannot be overstated.
JW Wessels and Partners Incorporated
Kindly be advised that we assist with the drafting and subsequent safekeeping of Wills, amongst a wide array of other professional legal services, such as the administration and distribution of deceased estates. Should you have any additional questions, please do not hesitate to contact us for more information.
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