Few people are ever ready for this tragic event. Not only is it a emotional time but there are important financial matters that must also be dealt with. We believe that being informed about what must be done can help relieve some of the stress and uncertainty experienced during this difficult time.
Collection All Relevant Documentation
An important element of responsible financial planning is to ensure that documents that are important in the event of death are stored in a safe, known and readily accessible location. A list of such documents could include:
- Insurance policies
- Marriage Certificate
- Children Birth Certificates/ Identity Documents
- List of assets
- Tax Returns
- Partnership or any other business agreements, as applicable
- Bank Statements
- Current billing statements
- Furthermore, to start the process of winding up the estate a death certificate must be obtained.
More information About A Deceased Spouse
Reporting The Estate
In terms of the Administration of Deceased Estates Act 66 of 1965, the estate must to be formally reported to the Master of the High Court in order for it to be wound up.
After the estate has been reported, the Master appoints an Executor by issuing a Letter of Executorship (if the deceased’s assets have a gross value of more than R125, 000) or a Letter of Authority (if the deceased’s assets have a gross value of less than R125, 000). The role of the executor is to gather in the assets of the deceased in order to pay any taxes and other debts and liabilities left by the deceased. The balance of the estate will be distributed in accordance with the Will or in accordance with the provisions of the Act.
How The Estate Will Be Managed
The manner in which the estate will be administered will depend on whether the deceased had a valid Will in place:
- If there is Will the estate will be wound up in accordance with the terms of the Will.
- Alternatively, if there is no valid Will, the estate will be regarded as an Intestate Estate and will be wound up in accordance with the provisions of the Administration of Deceased Estates Act.
The Financial Position Of The Estate
“Benefits” to the estate will strengthen its financial position which consequently will allow the estate to settle any outstanding claims that creditors may have. Examples include life insurance policies, credit life cover and pension or provident fund pay-outs.
The Benefit Of Life Cover
An important factor that influences the administration of a deceased estate is whether the home loan was secured with life cover or not.
If valid life cover is in place at the time of death, the proceeds of the policy may fully or partially settle the outstanding home loan balance. If no life cover is in place the balance on the bond as at date of death becomes due and payable. If the surviving spouse or remaining bond holders are unable to settle the full balance owing, one of the following three options will generally available:
- The surviving spouse or remaining bond holder/s makes an application to take over the bond;
- The surviving spouse or remaining bond holder/s may not qualify for a new bond and may require adding a surety to the application;
- If none of the above options are viable it may be necessary to sell the property. The proceeds from the sale will then be used to settle the balance of the bond outstanding.
At SA Home Loans we understand how difficult a time this is for the family and surviving bondholders. We encourage you to contact us on 086 188 8777 so that we can discuss the options that are available to you.