I am mediating in an Estate dispute at t...

Asked by JasonP on 21-01-2021 03:06:25
Question posted in the Family Law category relating to Gauteng

I am mediating in an Estate dispute at the moment and I would like to get some information/clarity.

There are 2 beneficiaries to this Will. Mrs I and Ms R.

The deceased had a property overseas. This property was sold and the money was transferred from overseas to the personal account of the Lawyer, Ms Y, that is currently the executor of the estate. When she received the money into her personal account, she almost immediately transferred, from this personal account, the share of Ms R to Ms R herself. This transfer we think was not authorised by the Master of the Court under section 26(1A) of the Administration of Estate Act. We don't think permission was ever given by the Master for this to happen. The rest of the money she, the Lawyer, Ms Y, then took and opened another account in her own name and put the rest of the money, Mrs I's share of this sale of the property, into it. It was not opened as an Estate Late account. She is now stalling (for the last 5 years at least) to finalise the estate and give Mrs I what was bequeathed to her in the Will, the rest of the money from the sale of the property. We think that she is delaying this closure in the hope that Mrs I will die and the rest of the money would then be bequeathed to Ms R (as stated in the Will).

I have some questions:

1. Ms Y, the Lawyer, is saying that the monies received from the sale of the property overseas, that is now currently residing in an account in South Africa, is not under the jurisdiction of the Master of the Court and as such the Master of the Court has no ruling over this money. Is she correct in this statement?

2. If she is correct in saying that the Master has no ruling over this then I assume that it does not need to be shown in the L&D Account and therefore can be transferred over as soon as possible to Mrs I?

3. If or when she creates an L&D Account to present to the Master of the Court, and the said monies are under the jurisdiction of the Master of the Court, does she need enclose in the L&D Account the share that she has already given to Ms R? If so, then if the monies are not there (within the account) is she liable for penalties with regards to failure of duties as an executor of the estate?

4. Going on further to point 3. If Ms Y needs to enclose details of Ms R's share and at the same time failed to open the account under the name of the Estate as stated by 28(1a), then all interest that would have accumulated on Ms R's share would then be owing to the Law Society of South Africa (as we have been told this is the case for an account not open in the name of the Estate)? Who would be liable for this lack of accumulated interest owing?

Thank you 

Answer to the Question

Posted by Att. Patrick on 21-01-2021 11:30:21

Hi there and thank you for your question, 

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread. 

The rest of the money which was bequeathed in the Will can only go to Ms R if that’s what Mrs I’s Will states. I don’t know why you think that if Mrs I dies, before the estate is wound up, that Ms R would get that money.

Re 1) If the property which was sold was owned by the deceased, then the property and any money which came from the sale of the property, forms part of the deceased’s estate and is therefore under the control of the executor, who needs to report to the Master.

Re 2) It must be shown as an asset in the L&D account and must be dealt with in accordance with the Will.

Re 3) She needs to deal with the FULL proceeds realised from the sale. So, record the property, and then that it was sold, and then how the proceeds were distributed. i.e. some to Ms R and the balance owing to Mrs I.  She does not appear to be acting correctly, and I think that the Master needs to instruct her to wind up the estate as a matter of urgency, or be removed as executor.

Re 4) There could very well be a claim for the lost interest by Mrs I against the executor for failing to put the money into an estate late account, where the interest would automatically accrue to the estate.

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question. 

Att. Patrick 

Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.

Information provided by client

Att Patrick,

Mrs I is not the deceased. Mrs I is one of the beneficiaries of the Will of the deceased. The deceased is Mr M.

Ms R is the other beneficiary on the Will

Information provided by client

Att. Patrick,

What recourse is there for the fact the Ms Y gave Ms R's share of the monies as soon as she received it without contacting the Master of the court for permission to do so?
Also in 26(1A) it states if monies was given it would be to a family member or household. Ms R, is not a family member. Mrs I is the only living family member.

Information provided by client

Att. Patrick,

To clarify point 4.

Seeing that the Ms R already received the monies for her share of the Will about 5 years ago.
1. Is the executor allowed to distribute monies from the estate prior to putting in an L&D Account ?
2.If Ms Y was not allowed to give Ms R the monies at that time, then that money technically would have still been in the account an accumulated interest. This interest would then have to be given to the Law Society. Would the Law Society seek action against Ms Y for loss of interest under these circumstances? I understand that Mrs I could sue for her share of the loss of interest.

Thanks

Answer to the Question

Posted by Att. Patrick on 21-01-2021 12:47:57

"Mrs I is not the deceased. Mrs I is one of the beneficiaries of the Will of the deceased. The deceased is Mr M." --> Yes, I know. 

"What recourse is there for the fact the Ms Y gave Ms R's share of the monies as soon as she received it without contacting the Master of the court for permission to do so?" --> You can complain to the Master, and the Master might sanction the executor, but ultimately Ms R received her entitlement, so there isn't really a loss which can be complained of. 

"Also in 26(1A) it states if monies was given it would be to a family member or household. Ms R, is not a family member." --> Further evidence that the executor is not doing her job correctly.

"Is the executor allowed to distribute monies from the estate prior to putting in an L&D Account ?" --> No. The executor needs permission from the Master before the executor can distribute monies from the estate.

"If Ms Y was not allowed to give Ms R the monies at that time, then that money technically would have still been in the account an accumulated interest." --> Yes, if the money had been in an attorney's trust account. But it wasn't in an attorney's trust account, so there is no interest, which means that there is no claim by the Law Society. 

"Would the Law Society seek action against Ms Y for loss of interest under these circumstances? " --> No. Simply because there is no actual interest. The Law Society can't say "there would have been interest, so you must pay us".

Information provided by client

Thanks Att Patrick,

I am representing Mrs I in this manner, and it is her inheritance that is being held and not being payed out, and we are being delayed at every step (In Ms Y's hope that Mrs I will die and the rest of the inheritance will be passed on to Ms R)

Answer to the Question

Posted by Att. Patrick on 21-01-2021 14:57:37

Understood, but I don't understand why you think that the money (which is to be inherited by Mrs I) will go to Ms R if Mrs I dies before the L&D account is finalised.

In my opinion, the money is owing to Mrs I. 

If Mrs I dies, then the money would go to Mrs I's estate to be dealt with in terms of Mrs I's Will.

Information provided by client

I think in the Will it states that should either of the beneficiaries die before the estate is wound up the other beneficiary would get the full share of the estate.

Answer to the Question

Posted by Att. Patrick on 21-01-2021 15:40:09

That's a very weird clause to include! I would check the wording because that would infringe on the heir's rights if the executor delays the winding up of the estate!

Information provided by client

Att Patrick,

I have looked over the will again, and you are correct. The property was left to Ms R, but it stipulates that should either of them die then the property (not the money) would be passed over to the remaining beneficiary.

It does mention should the property be sold that the money is split between the beneficiaries.
So it looks like you are correct in that the neither of the beneficiaries have a claim to the money should one of them die.

So there should be no delay in winding up this estate then by the looks of it if this is the case. This whole time I think both sides have been thinking that delaying would benefit them in some way or another, but clearly it does not. It still does not account for the current Lawyer's bad conduct in this manner.

Answer to the Question

Posted by Att. Patrick on 21-01-2021 16:26:56

It still does not account for the current Lawyer's bad conduct in this manner. --> Exactly!

Answer Accepted

This answer was accepted on 21-01-2021 16:32:49

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