Small Estates Under R250,000: The Section 18(3) Simplified Process

What section 18(3) does

Where the gross value of a deceased estate is less than R250,000, section 18(3) of the Administration of Estates Act allows the Master to dispense with Letters of Executorship and instead appoint a Master's Representative, who receives Letters of Authority.

The threshold is set by the Minister of Justice by notice in the Gazette and was raised from R125,000 to R250,000 in 2014. It is measured on the GROSS value, before debts are subtracted, so an estate with a R400,000 house and a R300,000 bond is not a small estate.

What falls away

• No advertising. Neither the section 29 creditors notice nor the section 35 inspection notice is required, which saves both the cost and about two months of waiting.
• No liquidation and distribution account. The Master gives directions instead, and the representative reports back.
• No Master's fee, because the fee only applies from a gross value of R250,000.
• Usually no bond of security.
• In practice, no professional executor's fee either, because these estates are normally handled by a family member.

The combined effect is dramatic. The same estate, handled under the full procedure, could easily lose R30,000 or more to fees and advertising that simply do not arise here.

How to do it

1. Report the estate at the Master's office or a designated magistrate's office service point, using the section 18(3) document set: Death Notice (J294), death certificate, marriage proof, Declaration of Subsisting Marriages, the original will if there is one, Next-of-Kin Affidavit (J192) if there is not, Inventory (J243) with proof of asset values, a list of creditors, the heirs' nominations, Acceptance of Master's Directions (J155) and a certified copy of the representative's ID.
2. The Master issues Letters of Authority naming the Master's Representative.
3. The representative collects the assets, pays the debts, and distributes to the heirs under the will or the Intestate Succession Act.
4. The representative reports back to the Master as directed and the estate is closed.

The limits of a Letter of Authority

This is where families get caught, and it is worth knowing before you start rather than after a sale has fallen through.

• A Master's Representative does not automatically have every power an executor has. The appointment is narrower by design.
• Some banks will not open a full estate account on Letters of Authority, or will limit what can be done on it.
• Transferring or selling immovable property under section 18(3) needs care. The Deeds Office or the buyer's conveyancer will often want the Master to confirm the representative's authority to sign specifically. Raise it with the Master at the outset, not at the deed of sale.
• If assets turn up that push the gross value over R250,000, the estate has to convert to the full procedure and Letters of Executorship must be issued.
• The Master retains a discretion. Even below the threshold, a complicated estate can be directed onto the full procedure.

Where most small estates go wrong

• Valuing the assets low to stay under the threshold. The Master asks for proof of value, and understating it is a serious thing to do.
• Netting off the debts to get under R250,000. The test is gross value.
• Assuming a Letter of Authority is a Letter of Executorship with a different name.
• Distributing before the debts are settled. Even without an advertising requirement, creditors still come first.
• Paying a service provider several thousand rand to do something the Master's office will walk you through for free. For a straightforward small estate, this is genuinely a do-it-yourself process.

Frequently asked questions

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