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- An executor needs to have legal and financial knowledge and enough time for the task.
- The Master of the High Court must approve the executor you nominated after your death.
- Executors may charge a fee of up to 3.5% (excluding VAT) to finalise an estate.
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When you die, all your debts must be settled, your final taxes paid and your assets distributed according to your wishes or, if you haven’t written a will, in terms of the law of intestate succession. This process is known as the administration of your estate.
The executor of your estate is responsible for this entire process, which can take up to two years or more. Choosing the right person for this position can save your heirs time and money.
How and when is an executor appointed?
When you draft your will, you should nominate or indicate who you would like to be appointed as the executor of your estate.
If your estate is likely to be worth R250 000 or more, the Master of the High Court must confirm the appointment of the executor via a letter of executorship after your death.
If the value of your estate is likely to be less than R250 000, a representative – typically a family member – is appointed to administer your estate and the master will issue a letter of authority to confirm this appointment.
If you die without a will, then your family can appoint someone that they believe is qualified and suitable to be the executor of your estate.
If the nominated executor is not a close relative, the master will require a bond of security from the executor.
What are the executor’s duties?
- The duties of an executor are set out in the Administration of Estates Act (Act 66 of 1965). The Act states that an executor must:
- Obtain a letter of executorship or authority from the Master of the High Court.
- Obtain the death certificate and all relevant information about the deceased’s assets (property and investments) and liabilities (debts) from the deceased’s family.
- Advertise the deceased’s death in the local newspaper and Government Gazette and allow creditors to submit claims against the estate.
- Close all the deceased’s bank accounts and open a separate bank account to manage the estate’s funds.
- Collect rent or other income from immovable assets such as property. Defend the estate or take legal action if money is owed by or to the deceased.
- Take control of all the assets and settle the deceased’s debts, selling assets if necessary if there isn’t enough liquidity to settle the debts. Submit the necessary tax returns for the deceased and for the estate.
- Draft a liquidation and distribution agreement and submit it to the Master’s office for approval.
- Once approved, pay all creditors and distribute the assets according to the provisions of the will.
If there is no valid will in place, the assets are distributed according to the Intestate Succession Act.
How do I decide who to appoint as my executor?
Many banks and other financial institutions will draft your will for free, in exchange for the bank’s estate or trust division being appointed as the executor.
You can, however, draft your own will or hire an attorney or fiduciary or estates expert to do so, so you can choose your own executor.
Appointing an attorney or fiduciary expert as your executor makes sense, as they are knowledgeable and experienced.
You can, however, nominate a family member or friend to be your executor, if you believe they can manage the job. Another option is to nominate a family member as a co-executor with an experienced fiduciary or to let the family member engage a professional to assist them after your death.
Some aspects to consider when deciding on whom to appoint as your executor:
- The executor must have a solid understanding of accounting and finance, tax, and the law around estate administration and succession.
- The executor will be expected to comply with the law and can be held personally liable if they are negligent.
- The executor should be based in South Africa to avoid delays and extra expenses for the estate, such as notarising foreign documents.
- The executor must have the time and flexibility to attend lengthy meetings if required.
Can my nominated executor be rejected?
Almost anyone can be appointed as an executor, except for certain individuals and entities, including:
- A minor child;
- Anyone who is not of sound mind;
- A company or partnership;
- Anyone who handwrote the deceased’s will; and
- Anyone who is under curatorship or insolvent.
However, your nominated executor must be approved by the Master of the High Court. If the master believes that the person you nominated is not qualified to do the job, the master will require them to be assisted by an attorney, accountant, or fiduciary expert.
You can avoid this situation by nominating a legal or fiduciary firm as a co-executor alongside your nominated family member executor.
How much are executor fees?
The Administration of Estates Act governs executor fees, which are limited to a maximum of 3.5 percent of the gross value of the estate (before the debts are settled) and six percent on income accrued and collected after the death of the deceased until the estate is finalised.
These are the maximum fees and you can negotiate the fees when you appoint an executor depending on the complexity of the estate and how much time will be required to administer it.
At all times, fees should be justifiable and reasonable and disclosed to estate’s heirs and beneficiaries.
Be aware that the maximum fee excludes VAT.
Additional legal or conveyancing work, such as high court applications or transfers of immovable property, are billed for separately.
If you appoint a family member as an executor, they are also entitled to these fees, and if you appoint an attorney or fiduciary expert as a co-executor, they can share these fees, which must be agreed upon upfront.
Remember
Certain proceeds fall outside of the estate and are excluded from the executor fee calculation:- Policies paid directly to beneficiaries- Retirement proceeds paid directly to beneficiaries- Policies where the deceased is not the owner
This article was first publish on SmartAboutMoney.co.za, an initiative by the Association for Savings and Investment South Africa (ASISA).
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