Types of Estates
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Deceased Estates​​
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Insolvent Estates​​
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Joint Estates​
What is a Deceased Estate?
It includes everything a person owns, controls, or has an interest in at the time of their death covering all assets, liabilities, and rights. A Will is made before the Testator's passing and specifies how the Testator's assets should be managed and distributed. Following death, the entirety of assets and liabilities is known as the Deceased Estate.
What is an Insolvent Estate?
Once again it includes everything a person owns, controls, or has an interest in at the time of their death covering all assets, liabilities, and rights. That on the other hand also means any debt that has not been covered by them financially.
A person's estate can become insolvent when those debt or, liabilities are more than their assets and when they are unable to settle their debt due to a lack of finances, at the time.
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When a person's estate becomes insolvent when living, he or she is then 'sequestrated'.
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When a business lack the finances to settle their liabilities and debt, the business will be liquidated.
What are the negative effects after sequestration?
Sequestration of an individual can have the following negative effects:
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You lose control over your own estate. A Trustee is appointed to manage your estate for you.
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You lose the ability to make your own financial decisions.
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It damages your credit record, which means that you will struggle opening bank accounts, applying for a loan, and will not be able to sign a lease agreement when your credit score reflects negatively.
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You lose your ability to enter a contract.
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It inhibits your right in becoming a director of a company.
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It may possibly harm your reputation and limit your chance of being employed.
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Sequestration requires you to still settle legal costs, when given your circumstances cannot be afforded.
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Being rehabilitated takes years. Until then, sequestration not only limits your financial freedom - nevertheless make your life difficult.
What are the negative effects after liquidation?
After a business has been liquidated, the following negative effects are:
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The business cease to exist.
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Trading with others is not a possibility anymore, when the business is closed for good.
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When a business is liquidated, the employer has no choice in letting his employees go - since he cannot afford to pay them or, keep them.
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The business is then forced to sell its assets when its debt is not financially settled.
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Investors lose their investments and their previous financial contribution to the business.
What is a Joint Estate?
It is a combined estate of a couple's assets after they have been married in community of property, not out of community of property. Each person owns a half of their assets and liabilities. A joint estate is then formed after their marriage. In this type of marriage agreement, no antenuptial contract is signed, for they each own half of all assets.
Benefits of having a Joint Estate
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Since no antenuptial contract is signed, it becomes cost effective.
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Both spouses in the marriage own equal shares in their assets and liabilities.
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There is trust and transparency in the marriage due to their equal share in financial re​sponsibility.
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Both spouses are equally protected in an event of divorce or death.
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They have equal ownership in property and not only assets and liabilities.
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Great decisions that needs to be made, require permission from both partners and not just one.
Risks of having a Joint Estate
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There is a shared financial liability. One spouse may indebt the other. This becomes unfair in circumstances when they have not consulted with their partner about transactions before it was made.
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In accordance with shared financial liability, comes a lack of financial freedom. Before any financial decision or transaction is to be made, each spouse should be aware of this beforehand.
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There a risk of becoming sequestrated, which naturally has an impact on both spouses and not just the spouse who is the cause of action.
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Naturally their joint assets form part of their joint Will, unless it is stated otherwise in a very direct and specific manner.