The following creditors have proved claims against Sarah's insolvent estate: SARS a claim of R120 000 (One hundred and twenty thousand rand) for income tax before sequestration; Best Funerals a claim of R6 000 (Six thousand rand) for death bed expenses of Sarah's wife who passed away one month before sequestration of her estate; her employee Sam had a claim of R40 000.00 (Forty thousand rand) for four month's salary for the period before sequestration, and sheriff's charges for a claim of R1 200.00 (One thousand two hundred rand) for making an inventory of the estate assets after sequestration.

Q.3.1 Identify the preferment creditors in the scenario above.

(5)

Q3.2

With reference to the set of facts, explain the order in which the free residue of the estate will be paid to the creditors in the scenario.

(10)

Q3.3	Sarah is concerned that she will remain insolvent indefinitely. Advise Sarah of the legal position in this respect.