When you loved one passes away and you have been bequeathed an asset in their will that does not mean you automatically become the owner of the inherited asset or have a right to the inherited asset on date of their death.
Section 35(12) of the Administration of Estates Act 66 of 1965 states that once the Liquidation and Distribution Account has lain for inspection with no objections lodged against it, the executor shall pay the creditors and distribute the estate amongst the heirs in accordance with the Liquidation and Distribution Account.
The court in Britz NO v Strydom and Another [2019] ZAECPEHC 17 confirmed this and stated that the executor of the estate, in their fiduciary capacity, is the owner of all assets during the administration of the estate and takes into their custody and control all the assets in the estate. The heir will only have a right to take possession of the assets once the Liquidation and Distribution Account has lain open for inspection, there have been no objections against it, and the Master has approved the Liquidation and Distribution Account.
SARS has also confirmed this stance in that beneficiaries will only be taxed on the income earned on the assets they are inheriting once the Liquidation and Distribution Account has been approved by the Master.
If you are inheriting assets you need to make sure that you include any income earned thereon in your personal tax return from the date of the Master’s approval of the Liquidation and Distribution Account.
Kindly contact Tamryn de Villiers at tamryn@fidelisvox.co.za for further information on the above or if you would like assistance with any aspect thereof.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)