The AIIF provides bonds of security to practising attorneys appointed as executors of deceased estates. These bonds of security are granted where required by the Master of the High Court. The bonds are granted in favour of the Master in accordance with the provisions of the Administration of Estates Act 66 of 1965. The AIIF grants the bonds of security at no cost.
The AIIF grants bonds up to a maximum value of R5 million per estate. In the event that the required security exceeds the AIIF limit, the practitioner concerned will need to procure the additional security in the commercial market. The cumulative total of all bonds issued to any one firm may not exceed R20 million at any given time. The executors are obliged to keep the AIIF updated with regard to all developments relevant to such bonds and to provide the AIIF with copies of letters of executorship, provisional and final liquidation and distribution (L&D) accounts and the Master’s filing slip / release. The terms and conditions under which a bond is issued are set out in the Executor Bond Policy which can be accessed on the website.
Executors who fail to comply with applicable terms and conditions may be refused further bonds. An important condition which attaches to the granting of the bond is that the applicant takes responsibility for ensuring that the AIIF is formally released from liability when the security provided by the bond is no longer required.
The attorney applying for a bond of security will also be required to acknowledge their liability as co-principal debtor with the AIIF in writing. In the event of a claim against the executor and the AIIF being called upon to pay in terms of the bond of security, the company may then institute action against the attorney concerned in order to recover any amount paid.
Practitioners in whose favour bonds of security have been issued must notify the AIIF in the event of a change in their contact details. One of the main challenges faced in this line of business is that attorneys do not inform the AIIF when the administration of the estate has been finalised. The result is that the company has to keep the exposure associated with the bond open in its books indefinitely.
Policies, terms and conditions listed with regards to the application of a bond.
Download Executor Bonds Of Security (Bonds): Policies, Terms And Conditions