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In recent weeks our practice has been besieged by questions regarding estates.

 

An estate is the assets and debts built up by a person throughout his life, therefore, the solvency of the person and estate depends on the assets being more than the debts.

 

We would take this moment to point out that estates can be found in various forms and for the purposes of this post we will stick to the following:

 

1. Solvent Estates - Estates that have enough assets to offset any debts

2. Insolvent estates - Estates that have been sequestrated by a higher court due to assets being less than debts and applications            being brought for sequestration.

3. Deceased estates - Estates of deceased persons that must go through liquidation and distribution.

4. joint estates - estates that are deemed to be one due to matrimonial regime.

 

The first and fourth of the above is very clear and well known. We have however been racked with questions regarding insolvency and sequestration of estates and processes thereof. 

 

Sequestration is governed by the insolvency act and procedures therein must be followed and notices given to all creditors of the sequestration application. A sequestration order effectively takes all assets in the insolvent estate and divides them among creditors and leaves the sequestrated person free of debt. Creditors, more often than not, really write off huge amounts of monies due to this process.

 

The high court has found that the process must be deemed to be in favour and in the best interest of the creditors and that such a sequestration can only be set aside when the debtor has followed the process with the sole intention of prejudicing a creditor. 

This creates a very big hurdle to any creditor that was not included in the sequestration. proving intentions on a balance of probabilities is not exactly an easy process and being high court orders means that costs of such applications are drafted in terms of High Court Costs.

 

Any sequestrations may be challenged and should your debtor follow the process of sequestration, we would advise that you seek legal advice immediately in order to avoid losing the lions share of your claim to this procedure.

 

Our offices are always willing to assist.

 

Have a nice week :)

 

- Du Bruyn Attorneys