The challenges of winding up asset-rich, cash-poor estates

IN SOUTH Africa, the admin of winding up a deceased estate takes around a year — and sometimes several years — before assets are transferred to heirs. These delays can sometimes determine if heirs can keep a family business running, or if it will be another story of wealth that dissipated after the first generation.

- NOKUZOLA COSSIE

While there are various reasons for delays, the common cause is a lack of liquidity in the estate to settle debts or pay administration expenses.

Many affluent clients own a range of high-value assets — from holiday homes to farms, and have interests in various businesses. Yet despite their wealth, estate planning is often limited to a single document: a Will.

A valid Will is important as it gives clear instructions on who should inherit which assets. However, to ensure that wishes are effective, it is vital to determine how practical those intentions are. Asset-rich, cash-poor: a common pattern

Cossie estimates that nearly 90% of the estates she deals with are asset-rich but cash-poor. It's easy to see why — people invest in assets they believe will grow in comparison to cash, leading to a lack of liquidity in many estates.