Frozen assets after death

Frozen assets after death
How will your family survive after you're gone?
Your estate and bank accounts can be frozen for a long time after your death. Here's how you can help your family pick up the pieces and have enough funds to live on.
Michael Visser
Michael Visser - Head of Legal - Helpline
12 July 2021 | 4 minute read
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After a death

After a death, a judicial process is undertaken, known as a probate. A Will must be proven to be valid as well as the last true testament of the deceased. This is the first step in administering the deceased estate probate, which is an extensive process that can take anything from nine months up to two years. During the first step, while the validity of the Will is being determined, the family's assets are frozen, meaning that the family does not have the ability to access any money over this period.

Life insurance policies

Life insurance policies fall outside of the estate, so these funds are payable directly to a nominated beneficiary upon death. A trust can be a nominated beneficiary. The turnaround time depends on the terms and conditions laid out in the policy. If there is a need for a post-mortem due to an unnatural death, there will be a delay in the release of funds.

Funeral policies

Even if you have life insurance or people owe you money at the time of your passing, it is good to have funeral cover. Life insurance policies take time to payout. Debts due to the estate will take even longer to be paid. Funeral policies payout almost immediately. They will take care of the immediate costs while the estate is being wound up. Legal&Tax has funeral plans to suit and your family's needs.

Spouse access to bank accounts

If your spouse has access to your bank accounts and they are the only beneficiary of your Will, they will still have access but are required to keep detailed records of withdrawals for the Executor to factor this into the distribution and liquidation account as maintenance and funeral expenses.

Marriage in community of property

A joint account falls into the joint estate, so these accounts are frozen until an Executor is appointed. All accounts in the name of the surviving spouse will remain untouched. However, each banks policy differs on how they handle accounts in the case of spouses married in community of property, therefore it is best to discuss this with your bank.

No provisions and the deceased was the sole provider

Access to funds in the case where the deceased was the sole provider is challenging, but the law does make provision for these situations. The administrator of the Estates Act makes provision for the bank or the Master of the High Court to release funds for the deceased’s dependants and for funeral expenses. This can be actioned by approaching the High Court with a letter confirming that the bank can release available funds to avoid hardship. The Master of the High Court can issue a letter requesting a bank to release stipulated amounts for funeral expenses.

Setting up a trust

To sidestep a lot of hurdles, it would be in the best interests of a family, if possible, to set up a trust where they can transfer some of their assets – not all assets can be placed in a trust. One of the advantages is that a trust is not frozen upon the death of a spouse as it is dependent on the estate and not an individual, so the surviving spouse, who would have to be a trustee, can draw from the trust as needed. The downside of a trust is the fact that it costs money to set up, payable immediately and that there are taxes involved in this process which are higher than transferring money to an individual. Trusts are taxed at 40% on their incomes.

Joint ownership and unexpected deaths

It is in your best interest to think ahead, in the event that your spouse dies unexpectedly. The probate period can create very big and real problems. Always place vehicles and property deeds into both you and your spouse's names. This way, the surviving spouse can maintain full ownership by showing a certificate of death and filling in new deeds where necessary. There is a legal process to follow when changing ownership into one of the spouse’s name. If both spouses die at the same time, the estate will have to go through the rebate process whereby an Executor must be appointed, unless your Will stipulates who the Executor should be.

An Executor

When a spouse or both spouses die, their estate needs to be reported to the office of the Master of the High Court in the regional jurisdiction where you live. At this point, all of the deceased accounts are frozen, this is required by the law and also helps to prevent fraud. An Executor is appointed by the Master of the High Court if there is no Will which would set out the Executors details. This appointment can take anything from three weeks to three months.

With Legal&Tax you're not alone

Legal&Tax is your companion when navigating the complexities of dealing with the frozen assets of a loved one after death. Your family still needs to survive when you are gone, so speak to a qualified lawyer to assist you through this matter. Legal&Tax also offers funeral cover to ensure that your family members do not have to struggle during this difficult time.

Disclaimer: The content of this article was correct at the time of publishing, but the legislation or underlying information forming the basis of this article may have changed. You should always speak to a qualified Legal&Tax advisor before making any decisions.

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