Unlock deceased estates' capital

By Delroy Chuck,  Guest Columnist

Huge amounts of dormant capital exist throughout the nation. A lot of this capital belongs to beneficiaries of deceased persons whose estates have not been probated or administered according to law.

Thus, children or other relatives of the deceased continue to enjoy the deceased persons' properties but have done nothing to transfer ownership to the true beneficiaries.

Thousands, perhaps tens of thousands, of estates are in urgent need of administration, which would unlock the capital tied up in deceased persons' estates.

To be sure, the legal costs and estate duties hitherto were prohibitive and represented the major challenges to executors to have estates administered. Amazingly, close to 10,000 files remain incomplete at the Probate Division of the Supreme Court, and the primary reason was the high cost of probate and stamp duty fees.

Now, the burden has eased. Then Finance Minister Audley Shaw, during his 2011-2012 Budget presentation, reduced significantly the legal costs and estate duties. For those incomplete files at the Supreme Court, the stamping of the probate and letters of administration has been reduced to a fixed sum of $5,000 and subsequent estates will attract fees of between $5,000 and $25,000, depending on value.

Estate duties reduced

The estate duties or death duties have been reduced to 1.5 per cent, from a high of 15 per cent some time ago. It is now affordable to get estates properly administered and put the capital to work for the benefit of families and the nation.

Further, Minister Shaw, in April 2011, established an inter-agency task force chaired by then minister of state in the Ministry of Finance and the Public Service, Senator Arthur Williams, to facilitate the administration of deceased estates. The task force was charged:

A) To find ways to remove, as far as possible, the backlog of deceased estates at the departments of government concerned with the processing of administration of estate-related applications, as well as to assist executors and administrators, generally, who experience undue difficulty and significant costs in complying with the requirements; and

B) To seek to modernise and improve the legislative framework and procedures for probate and administration in the long term.

During my time as minister of justice, I had several meetings with Chief Justice Zaila McCalla, and her staff in the Probate Division of the Supreme Court, and put in place agreed arrangements to expedite the legal process to have deceased estates administered.

Unfortunately, many attorneys-at-law and, more so, potential beneficiaries of deceased estates are unaware of the reduction in legal costs and estate duties, and of the special arrangements to expedite the legal process of administration. This special arrangement at the Supreme Court will end this fiscal year but, hopefully, will continue during the next fiscal year.

Necessary campaign

Again, I had started a process to have the Administrator General's Department and the Ministry of Justice engage in a proactive advertising campaign to get potential beneficiaries to start and pursue, systematically, the administration of their deceased families' estates. This advertising campaign is absolutely necessary.

Persons are not sufficiently aware that they are sitting or living on idle capital that can be put to work to improve the quality of their lives and increase the value of their real estate. For example, many properties cannot be used to borrow from the banks or used as collateral for loans or guarantees, as legal ownership of the estates still remains in the names of the deceased. Administration of these estates is impatient of resolution, and the potential beneficiaries need to be informed and encouraged to respond.

The present Government should continue from where we left the process and urge families of deceased persons across Jamaica and abroad to administer the estates and regularise real and personal properties that are now dormant and locking up huge amounts of capital.

The previous Government wanted to unlock this dormant capital by reducing the legal costs and estate duties, as when unlocked and engaged, these properties can contribute to job creation in the country.

The Ministry of Justice, perhaps through the Administrator General's Department, should become proactive and encourage families of deceased estates across Jamaica to bring ownership of every property up to date and within the formal system. The benefits to the nation could be enormous.

Delroy Chuck, QC, is an attorney-at-law and former minister of justice. Email feedback to columns@gleanerjm.com.