What are letters of executorship?

Somebody dies, and within a week the family discovers that nothing can be done. The bank account is frozen. The insurer wants a document nobody has heard of. The buyer for the car has gone elsewhere because nobody can sign the change of ownership.

What they are missing is letters of executorship, and understanding what they are explains almost everything about why estates are slow.

What they are

Letters of executorship are the instrument by which the Master of the High Court appoints an executor and confers authority to administer a deceased estate, under the Administration of Estates Act 66 of 1965.

Three things follow from that description and each surprises somebody.

The will does not appoint the executor. It nominates one. The Master appoints. A nominated executor who has not been appointed has no authority at all, and the fact that the will names them makes no practical difference until the letters issue.

Nothing can lawfully be done before they are issued. No asset may be sold, no account operated, no debt paid out of the estate, no property transferred.

They are specific to the estate. They identify the deceased, the estate number and the executor, and institutions will want to see the original or a certified copy.

How you get them

The estate must first be reported to the Master, which is the step families most often delay while waiting for something else. Our guide on reporting a deceased estate sets out the documents required, which include the death certificate, the original will if there is one, an inventory of the assets and the prescribed forms.

The Master then considers the position and, where the estate exceeds the small estate threshold, issues letters of executorship.

Security. The Master may require the executor to furnish security for the proper performance of their duties, usually in the form of a bond of security from an insurer, which carries a premium based on the value of the estate. In practice the Master commonly dispenses with security where the executor is the surviving spouse, a child or a parent of the deceased, or where the will directs that no security be furnished. Where a professional executor is appointed, the requirement is generally met through their own arrangements.

Timing. How long this takes depends on the Master's office and its current volumes, and it varies considerably. Our guide on how long it takes to wind up an estate sets out a realistic timeline, of which this is the first substantial wait.

Letters of authority, which are not the same thing

For smaller estates there is a much better route.

Where the gross value of the estate is R250 000 or less, the Master may dispense with letters of executorship and issue a letter of authority under section 18(3) instead, appointing a person to take control of and administer the estate.

The difference is substantial. A section 18(3) appointment avoids the full formal administration: no liquidation and distribution account, no advertising of the account, no inspection period. It is dramatically faster and cheaper, and our guide on section 18(3) small estates sets out how it works.

If the estate is anywhere near the threshold, establish which side of it you are on before doing anything else, because the two processes look nothing alike.

What the letters allow you to do

Once appointed, the executor has authority to administer the estate, which in practice means:

Opening an estate late bank account, into which the estate's money is collected. Estate money does not go into the executor's own account, and the Act is specific about this.

Taking control of the assets and securing them.

Advertising for creditors to lodge claims, and for the account to lie for inspection at the appropriate stage.

Dealing with SARS on the deceased's outstanding tax affairs.

Realising assets where they have to be sold to pay debts or because the will directs it.

Signing transfer documents for immovable property, which is why a conveyancer cannot proceed without the letters.

Paying creditors in the correct order, and then distributing to heirs.

Our guide on what an executor does covers the duties and the regulated fee, and the executor fees and estate duty calculator works out the cost.

Acting without authority

This happens constantly and with the best intentions, and it creates real exposure.

The commonest versions:

Drawing money from the deceased's account with a card and a PIN. The account should be frozen on notification of the death, and operating it afterwards is not administration of the estate; it is unauthorised.

Selling the vehicle to a buyer who was ready, before the letters issue. The transaction can be attacked, and the person who signed has no authority to warrant anything.

Distributing to the family because everybody has agreed and nobody is arguing. An executor who distributes before creditors have been dealt with is personally exposed, and the informal version of this is worse because there is no account and no record.

Paying a sympathetic creditor out of turn, or out of the executor's own pocket in the expectation of reimbursement.

Moving in, or letting somebody move into, immovable property in the estate.

A person who deals with estate assets without authority can be held personally liable for loss, and the transactions can be set aside. If the family is in genuine hardship, the route is an interim distribution with the Master's approval once the letters have issued, not self-help beforehand.

What to do in the meantime

There is a useful version of the waiting period.

Report the estate promptly. This is the one thing that actually shortens the wait and it is the thing most often delayed.

Notify, in writing, everybody who needs to know: the banks, the insurers, the medical scheme, the employer, the municipality, the retirement fund, the credit providers, the vehicle financier. A written notification stops interest and charges accruing in some cases, and it starts other processes running in parallel.

Secure the assets. Lock up, keep insurance in force, and do not let a vehicle sit uninsured on a street.

Gather documents. Title deeds, policies, share certificates, vehicle registration papers, bond statements, the last tax return.

Keep a record of what you spend. Funeral costs paid personally, and other necessary outlays, are claimable from the estate later if you can prove them.

Deal with the retirement fund separately. A death benefit from a retirement fund is not an estate asset and is distributed by the fund's trustees under section 37C, so it runs on its own track and does not wait for the letters. Our guide on how retirement fund benefits are paid explains why.

If the wrong person is appointed, or nobody is

Where there is no will, or the will nominates nobody who is able or willing to act, the heirs can nominate somebody and the Master appoints. Where they cannot agree, the Master decides.

Where you object to the person nominated, the objection goes to the Master, who has a discretion. Being unhappy with a sibling is not a ground; a real conflict of interest, or an inability to perform the duties, is.

Where an appointed executor is not doing the job, they can be removed. Our guide on removing an executor sets out the grounds.

Worked example

This example is illustrative. A woman dies leaving a house worth R900 000, a car worth R150 000, R40 000 in the bank and a small retirement annuity. Her will nominates her eldest son as executor.

The son assumes that the will makes him the executor and that he can get on with it. He uses his mother's card to pay the funeral parlour, sells the car to a colleague who pays cash, and tells his siblings the house will be transferred to them shortly.

None of that was authorised. The estate is well above R250 000 gross, so a section 18(3) letter of authority is not available and full letters of executorship are required, and they had not been issued. The sale of the car can be attacked, the money drawn from the account has to be accounted for, and he has exposed himself personally.

What he needed to do first was report the estate to the Master, in the prescribed form, with the death certificate, the original will and an inventory. Because he is the deceased's child, the Master would in the ordinary course dispense with security. The letters would then issue and he could open an estate late account, sell the car properly, deal with the creditors and transfer the house.

Meanwhile the retirement annuity was never his problem at all. It falls outside the estate and is distributed by the fund's trustees, on their own timetable, whether or not anybody has been appointed.

The delay he was trying to avoid was mostly the delay he created by not reporting the estate in the first week.