Are life policies excluded from a deceased's estate?

The long answer

I will address your questions one by one:

1. Are life policies excluded from the winding up of deceased estates?

Crue Invest says that where the surviving spouse is the named beneficiary, “the life policy proceeds are paid directly to the surviving spouse or life partner without incurring estate duty or executor’s fees”.

If no beneficiary is nominated, the proceeds of the policy form part of the deceased's estate, attracting estate duty and executor's fees. 

Being married in community of property doesn't automatically give the spouse 50% of the payout: if beneficiaries are nominated; the nomination rules apply first.

2. Should adult children get involved in the winding up of a deceased estate when there is a surviving spouse?

The surviving spouse, or the nearest relative, is responsible for reporting the estate to the Master of the High Court within 14 days of death.

If there is no will, Crue Invest points out that where the deceased was married in community of property, one half of the estate belongs to the surviving spouse and will therefore not devolve according to the rules of intestate succession. Only the deceased’s half of the joint estate will be available for distribution amongst the heirs.

A surviving spouse can be nominated as the executor in the will, or can be nominated by the heirs to be the executor if there is no will. According to Crue Invest, estate duty is not required because Section 4(q) of the Estate Duty Act allows the deduction of any property accruing to the surviving spouse from the deceased’s gross estate. This covers the money received from a domestic life insurance policy with the surviving spouse listed as the beneficiary. 

A spouse acting as executor generally doesn’t have to lodge security, which would be a requirement for other laypersons acting as executor. (But if a layperson is appointed as an executor, they often require assistance from a professional like a lawyer.) 

The only person legally authorised to wind up a deceased estate is the executor or the person with the letter of authority, once they have been appointed by the Master of the High Court.

The adult children's involvement will depend on whether they are the nominated executor, or whether they are simply beneficiaries who need to be kept informed by the appointed executor.

Freedom of testation means that a person has the right to say who should inherit their worldly goods. But this freedom of testation is limited by the 1990 Maintenance of Surviving Spouses Act, because marriage requires that partners support each other. So, a spouse who is left out of a will can claim maintenance under that Act, if he or she is unable to support themselves. 

Bregmans quotes a case where the Constitutional Court confirmed that while freedom of testation may legitimately be limited by the Maintenance of Surviving Spouses Act, no such statutory duties exist for independent adult children and excluding them from a will does not violate the Constitution.

Wishing you the best,
Athalie