Who is lawfully entitled to administer, liquidate, and distribute a deceased estate?

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BUSINESS NEWS -In light of the upcoming National Wills Week, we urge you to take note of this important case recently heard and decided on by the Western Cape High Court, on who will one day administer, liquidate and distribute your estate, lawfully.

The plaintiff in this case, K, sued the first defendant, W. W was the daughter of the deceased and the nominated and appointed executrix of the deceased estate nominated as such by her late father in terms of his will.

K’s claim was for an amount of approximately R1.3 million based on the prescribed rate of executor’s remuneration being 3.5% of the gross value of the estate. At the time of the early termination of the agreement by K, W had already completed 90% of the administration.

W had appointed K as her agent, to attend to the administration, liquidation, and distribution of the estate. W excepted to K’s claim based on that K failed to disclose a cause of action in his particulars of claim.

W argued that in terms of the Regulations prohibiting the liquidation or distribution of deceased estates by any person other than an attorney, notary, conveyancer or law agent, K was prohibited from administering W’s late father’s estate unless he fell into one of the categories of persons allowed to do so or was otherwise exempted from the ambit of the Regulations.

The following persons or classes of persons are exempt from the ambit of the Regulations:

any board of executors as defined, any trust company as defined, any person or broker licensed under the Licenses Act 1962, any natural person nominated by the will of the deceased and subsequently appointed by the Master of the High Court in so far as he/she is personally liquidating and distributing the estate, the surviving spouse, child, grandchild or sibling of a deceased in so far as he/she is personally liquidating and distributing the estate, banks under certain circumstances, any person assisting a person lawfully liquidating and distributing an estate, any person who is in the full time service of a trade union under certain circumstances, any person liquidating or distributing an estate under the instructions of an attorney, notary, conveyancer or law agent and any person liquidating and distributing an estate in terms of section 18(3) of the Administration of Estates Act 1965.

The Western Cape High Court had to decide firstly on the issue of whether the Regulations are still in force, and secondly whether they apply to the plaintiff’s case.

The regulations originally having been promulgated under the Attorneys, Notaries and Conveyancers Admissions Act 1934 were retained by the Attorneys Act 1979 and being consistent with the Legal Practice Act (which Act repealed the former) therefor continue to remain valid under the Legal Practice Act.

An executor cannot substitute another person to act in his place nor grant an irrevocable power of attorney, but he or she can appoint an agent to attend to the administration of the estate on his or her behalf as W did in this case appoint K to do, provided that person meets the requirements of the Regulations.

Although it did not appear from the facts before the Court that K fell into one of the classes of persons entitled to liquidate and administer the estate in terms of the Regulations or that he was exempt from the ambit of the Regulations, K argued that the Regulations were not applicable to him because he acted under the power of attorney granted to him and his actions were therefor attributable to W.

The Court held that the Regulations are about who is entitled to administer a deceased estate, not about who is entitled to be appointed as an executor and agreed further that the grant of a power of attorney, without regard to the Regulations, allows the Regulations to be sidestepped and enables a disqualified person to administer an estate.

The Court therefore concluded that the Regulations did apply to the plaintiff, K, albeit that he acted in the name of defendant, W. So, unless the K was able to allege and prove that he was lawfully entitled to administer, liquidate, and distribute the estate in terms of the Regulations, he had no cause of action against W, and W’s exception was upheld. K was given time to amend his particulars of claim to prove cause of action, failing which, W was granted leave to apply for the dismissal of K’s claim.

The Western Cape High court in this case, was amenable with the view of the Supreme Court of Appeal in the 2012 case of Natal Joint Municipal Pension Fund v Endumeni Municipality where the latter set out that the Regulations were promulgated to protect the public and to ensure that the administration of deceased estates was done in an orderly and lawful manner.

In conclusion, when you are deciding who to nominate as your executor or when you yourself are a nominated and appointed executor and are deciding who to appoint as your agent to administer, liquidate and distribute a deceased estate, you must give due regard to the Regulations and whether such person is in fact lawfully entitled to liquidate and distribute the estate in terms of the Regulations.

Article by Kelly Fourie-Barnard (LLB) – Senior Associate

For more information kindly contact Kelly at kelly@rgprok.com or 044 601 9900. www.rgprok.co.za.