This week, the YourProperty experts assist a reader who is the beneficiary of a property in a deceased estate, which is now being administered by an executor.
The reader explains that he took his ill aunt in a year ago and that she recently passed away while in his care.
She owned a flat that she inherited some 15 years ago and bequeathed this flat to her nephew. To help her financially, the reader placed tenants in the flat.
The aunt’s estate is now being wound up by an attorney and the reader has a number of questions as a result.
He would like to know whether the attorney has any rights over the monthly rental paid by the tenants, what the total cost of transferring the flat to the reader should be and, finally, what recourse he has should he feel that the attorney is over-charging him.
See the reader’s question here.
At the outset, it should be clarified that the attorney has no real right to the rental, or anything else in the estate for that matter.
As the executor, he has a temporary right to administer the assets of the estate and technically therefore has a measure of control over these assets.
Simply put, the attorney’s obligation is to pay the debts of the estate, liquidate assets to do so if required, and to see to the income of the estate during the winding up period.
Once the administration process is finalised, he will also see to the transfer of the bequeathed assets to the relevant heirs.
The rental income is considered income of the estate as it is generated by an asset of the estate.
As the property has not yet been transferred to our reader, he has no immediate right to the income although he has an interest in the property, the rental and the eventual transfer of the asset to him.
From the reader’s mail, it appears that the estate is not particularly liquid.
If this is the case and the estate has debts to settle, the attorney may intend to gather the rental income to be in a position to settle debts that the estate currently can’t settle.
If there is no cash in the estate to settle debts, assets may have to be sold to do so.
If the reader is in a position to do so, he may assist the estate to ensure that the flat is not sold for this reason.
Debts of the estate may be both historical such as medical expenses as well as expenses incurred in the administration of the estate.
For example, the executor’s fee, costs for the transfer of the property, advertising and banking fees are all expenses of the estate.
The rental income will form part of the estate as it accrues and the heir of the residue of the estate – the person who inherits the assets that are not specifically bequeathed to a particular heir – will benefit from the income and any remaining cash.
This person may, of course, also be the reader.
The reader gives a valuation of R140 000 for the property, but it is unclear whether this was at the time of transfer to his aunt.
This value seems low, so this is probably an outdated evaluation.
If one bases the calculations on this figure, the fee payable to effect the transfer would be approximately R5 500, as no transfer duty is payable on the property.
If we work on a very conservative market-related value of R300 000 for the flat, the fee would be around R8 500.
If any bond exists on the property, this will have to be settled and cancelled.
Should the reader feel that something untoward is happening and that the executor is misappropriating or misusing any money, he could approach the master of the high court for assistance.
The estate falls within the master’s jurisdiction and he or she could call on the executor to explain his actions.
The relevant law society could also be approached for assistance.
Something to consider is that the executor is required to prepare a liquidation and distribution account before finalising the administration process.
This sets out all income received and expenses paid and is scrutinised by the master. Any discrepancies may also be raised by the master at this stage.
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