Accrual claims estate administration

Accrual claims complicate estate administration significantly. When a deceased was married under ANC with accrual, the surviving spouse has an automatic legal claim on half the accrual (growth in the estate’s value during marriage). This accrual claim must be calculated, documented, and published as part of estate administration.

ALSO READ: ANC without accrual: estate administration and statutory notice requirements

Estate administration under ANC with accrual begins identically to other estates: the estate administrator notifies the Master, obtains Letters of Executorship, and advertises the estate under Section 29 of the Administration of Estates Act.

Calculating accrual claims in estate administration

But accrual claims require additional accrual calculations in estate administration. The estate administrator must determine the deceased’s estate value at death, the deceased’s estate value at marriage (or when ANC with accrual was adopted), and calculate the accrual: the increase in value.

This accrual calculation in estate administration is complex. It requires identifying which assets count toward accrual and which are excluded. Inheritances received during marriage are typically excluded from accrual calculations. Gifts may be excluded. Certain insurance proceeds may be excluded.

According to Tasneem Mahomed, director at Engelsman Magabane Incorporated, “accrual claims estate administration requires precision. A single miscalculation of the accrual can result in the surviving spouse receiving too much or too little—and subsequent litigation.”

Once accrual is calculated in estate administration, the claim must be documented. The estate administrator prepares a memo detailing the accrual calculation, supported by property valuations, bank statements, and investment records.

The surviving spouse (or their attorney) reviews this accrual claim calculation. If they agree, estate administration proceeds. If they dispute the accrual claim, estate administration stalls while the dispute is resolved—often through court proceedings.

Priority of accrual claims over beneficiary distributions

Accrual claims in estate administration must be satisfied before other distributions. If the accrual claim is R500,000 and the estate totals R1,000,000, the surviving spouse receives R500,000. Only R500,000 remains for other beneficiaries.

This priority of accrual claims in estate administration creates tension in blended families. Biological children watch as their inheritance shrinks because the surviving stepparent’s accrual claim consumes estate assets.

Accrual claims and the Liquidation and Distribution Account

Once the accrual claim is calculated and agreed, the estate administrator prepares the Liquidation and Distribution (L&D) Account. The L&D Account must show the accrual claim separately, clearly documenting that the surviving spouse receives this amount as their accrual entitlement (not as an inheritance gift).

The L&D Account is then advertised under Section 35 of the Administration of Estates Act in a newspaper and the Government Gazette. This notice must specify that accrual claims have been calculated and that beneficiaries may object within 10 days.

Statutory advertisement of accrual claims in estate administration

Statutory advertisement of accrual claims in estate administration is mandatory. The Master’s Office will not approve an L&D Account in an ANC with accrual estate without evidence of Section 35 advertisement. This publication protects beneficiaries by ensuring they’re informed of accrual calculations.

If beneficiaries object to the accrual claim calculation, estate administration halts. The court may order a hearing to determine the correct accrual. This delay extends estate administration timelines significantly.

If no objections are filed within 10 days of Section 35 advertisement, the Master’s Office approves the L&D Account. The estate administrator then settles the surviving spouse’s accrual claim and distributes remaining assets to other beneficiaries.

Tax implications of accrual claims in estate administration

Accrual claims in estate administration affect tax. The surviving spouse’s accrual claim reduces the taxable estate. If the accrual claim is R500,000, the taxable estate is reduced by R500,000. This tax reduction is automatic—no separate application is required.

However, accrual claims in estate administration create complexity in tax reporting. SARS requires separate reporting of accrual claims in the estate’s tax return. The estate administrator must clearly identify the accrual claim as a liability satisfied before other distributions.

Timelines and early settlement of accrual claims

Long estate administration timelines are common in ANC with accrual estates. The accrual calculation phase alone can consume 2–3 months. If disputes arise, administration can extend 12+ months.

Estate administrators often recommend settling accrual claims early in estate administration. If the surviving spouse and beneficiaries agree on the accrual amount before the L&D Account is prepared, subsequent steps proceed smoothly. But if accrual disputes persist, estate administration becomes protracted.

Estate administration is deadline-driven, document-heavy and detail-sensitive. Every deceased estate notice has a purpose, with dates, information and numbers that have to be correct. Every publication record must be accessible when the attorney, executor, estate administrator or Master’s Office needs to verify it. Legal Notice Publishing handles the full process. For assistance with estate administration adverts and the Government Gazette, contact estates@legalnotice.co.za.

For legal advice, contact Engelsman Magabane Incorporated: Phone: 053 832 8134 or 053 832 8135 Email: admin@engelsman.co.za