Deceased Estates, Trusts and Planning Committee meeting summary

November 1st, 2023
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By Kevin O’Reilly

The Law Society of South Africa’s (LSSA) Deceased Estates, Trusts and Planning Committee (the Committee) met on 19 September 2023 to discuss various matters within its field of expertise. Some of the topics considered were the following:

Letter addressed to the Minister of Justice and Correctional Services

The LSSA addressed a letter to the Minister, requesting a meeting to discuss, inter alia, the following issues –

  • the LSSA Electricity Task Team, which seeks to find sustainable solutions to address the negative effects of loadshedding on access to justice;
  • the state of affairs at the Masters’ offices, including substantial backlogs, unanswered correspondence and phone calls, and misplaced files; and
  • legislation regulating enduring powers of attorneys.
  • The LSSA received an acknowledgement of receipt from the Minister but was unable to secure a meeting. The LSSA has several matters it wishes to discuss with the Minister and periodically sends follow-up letters. The LSSA will continue to follow up on these matters.
Performance Plan Statistics and Reports

The Committee acknowledged the importance of obtaining these statistics and reports consistently from the Office of the Chief Master. It was suggested that as soon as these reports are received by the Chief Master’s Office, they should be shared with the LSSA as well. While recognising that these reports may not be entirely accurate, they do provide some insight into the turnaround times at the Masters’ offices. The Committee will request these reports on a continuous basis.

Appointment of independent trustees

The Committee noted the former Chief Master’s undertaking to revise Chief Master’s Directive 2 of 2017, specifically regarding the exclusion of the provision that an independent trustee has no family relation or connection, blood or other, to any of the existing or proposed trustees, beneficiaries or founder of the trust. The Committee recalled that this issue originated from the Land and Agricultural Development Bank of SA v Parker and Others 2005 (2) SA 77 (SCA) judgment and subsequent developments. However, it was noted that if one interprets Chief Master’s Directive 2 of 2017 (Trusts: Dealing with Various Trust Matters) correctly, there might not be a requirement for an independent trustee, especially in the case of a family trust not engaging in business activities, or if the trust was established before February 2017. Therefore, the ‘independent trustee’ is a fiction created by the industry and is not necessary in each and every family trust. The Committee resolved to follow up on this issue with the Chief Master’s Office.

Enduring powers of attorney

The Committee noted that the South African Law Reform Commission (SALRC) published Project 122 Assisted Decision-Making Report, 2015, which also deals with enduring powers of attorney. However, nothing further had transpired. Upon follow up, the SALRC informed the LSSA that it had completed its mandate and the responsibility now lies with the Minister. The Committee is of the view that legislation should urgently be introduced to provide for enduring powers of attorney and included this issue on the agenda of the meeting with the Minister.

Relationship with deposit taking institutions

The Committee noted a letter had been sent to the Banking Association of South Africa (BASA) expressing dissatisfaction with the quality-of-service levels of the banks.

The issues raised included the following:

  • The lack of response when dealing with deceased estates matters. The response provided is that the bank is conducting the necessary due diligence. Practitioners may sometimes have to wait up to a year and a half for a response.
  • Another concern raised was that of special powers of attorney to act on behalf of an executor. Some banks are now unwilling to accept the special power of attorney and insist that the executor must personally handle the matter, which may not always be feasible.
  • A further issue raised was that of closing out an account, which may take six to eight months. The only option left available to practitioners is to initiate legal proceedings.

Noting that BASA is not the regulatory body for the banks, the LSSA requested BASA to bring the concerns to their attention.

The Committee resolved to schedule another meeting with BASA to address these issues and engage in discussion with them.

Tax compliance for administering deceased estates

The Committee discussed the significant challenges practitioners face when submitting tax returns for deceased estates. The submission of income tax returns for deceased estates and post-death registration on e-filing was complex and problematic. This is exacerbated by the fact that practitioners cannot go directly to the South African Revenue Service (Sars) offices anymore to try resolve the deceased’s tax issues.

The Committee intends to hold a joint meeting with the LSSA Tax and Exchange Control Committee (Tax Committee) to discuss these issues and subsequently arrange a joint meeting with Sars to seek resolutions for these problems. The Committee noted that there appears to be a system problem and an expertise problem concerning deceased estates, and these two aspects should be addressed during the meeting with Sars.

  • Practitioners who encounter similar problems are invited to send an e-mail to Lizette@lssa.org.za.
Mandamus applications for the issue of letters of executorship/letters of authority

It was noted that one Master’s office warned that any attorney that brings a mandamus application will be reported to the Legal Practice Council for unprofessional conduct. Attorneys in that area are afraid to take any steps for fear of victimisation. A proposal was made to advocate for the establishment of a dedicated court within the Master’s office, specifically for handling matters related to the Master’s office. This court would handle matters related to wills and disputed claims against estates etcetera, eliminating the need to go through the High Court for the processes.

Access to files stored at the Veritas off-site storage facility

Veritas has now become the new storage facility, replacing Metrofile. The project was piloted in March 2023, during which the files were moved to the new storage facility. Six months later, practitioners are still encountering difficulties in accessing the files stored there. It is claimed that the issue is resolved, however, when attempting to retrieve copies, amend letters of authority or to access older estate files, the response is that the files cannot be accessed because they are being processed by Veritas. It appears that there is breakdown in communication between the Master, the office manager and Veritas. This is also having an impact on registration of beneficial ownership.

It was suggested that the LSSA, in collaboration with the provincial associations and other affected stakeholders, address a letter to the Chief Master requesting an official response. The Committee decided to request one of the provincial associations to draft such a letter. If the LSSA is satisfied with the terms, it will support the letter.

Judicial Matters Amendment Bill – for comment

On 13 June 2023, the LSSA had the opportunity to meet with the Parliamentary Portfolio Committee on Justice and Correctional Services to make verbal representation on the Judicial Matters Amendment Bill B7 of 2023. One of the issues that came up during the hearing, was the state of affairs at the Masters’ offices throughout the country. The LSSA was requested to submit a memorandum to the Portfolio Committee, including the problem statement and recommendations, whereafter the LSSA was invited to address the Committee on the issue. The memorandum was submitted, and on 20 October 2023, the LSSA appeared before Parliament to present on a number of concerning issues relating to the Master’s Office. The LSSA put forth recommendations which were well received, and the Portfolio Committee undertook to engage with the LSSA again. See Mapula Oliphant ‘Problems at the Master’s office’ 2023 (Nov) DR 3.

General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022

The Committee’s attention was drawn to a TSAR article (Francois du Toit, Bradley Smith and Louis Janse van Vuren ‘“Beneficial owner” and “beneficial ownership” in South African trust law: troublesome aspects of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022’ (2023) 3 TSAR 387), dealing with the Financial Action Task Force’s (FATF’s) Recommendation 25 in the Act. In relation to ownership, this introduced terminology foreign to South African trust law. The Committee was of the view that the FATF Recommendation 25 is primarily intended for inter vivos trusts and not testamentary trusts.

As a way forward, it was suggested that the Committee members familiarise themselves with the TSAR article before coming to a resolution.

The Committee discussed the importance of addressing the broader compliance issues concerning the General Laws Amendment Act. The Financial Intelligence Centre (FIC) recently advised that attorneys who are also providing advice and assistance on the setting up and management of trusts and companies must register as Trust and Company Service Providers, notwithstanding that they are already registered as legal practitioners rendering such services.

The lack of proper implementation of Risk Management and Compliance Programmes (RMCP) within the legal profession is a growing concern.

  • The LSSA has drafted guidelines aimed at assisting practitioners to prepare their own RMCPs. Click here to view the guidelines: www.LSSA.org.za.

Kevin O’Reilly MA (NMU) is a sub-editor at De Rebus.

This article was first published in De Rebus in 2023 (Nov) DR 5.

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