Johannesburg - The role of an estate executor has been largely misunderstood, according to Geraldine Macpherson, senior legal adviser at Liberty.
While it is true that an executor is responsible for carrying out the directives of a final will and testament, and that you can name a family member and/or beneficiary to act as executor, doing so just to save a buck, could have a financial implication to your friend or family member, not to mention undue headache, heartache, and stress.
“Executor” is the legal term for referring to the person (or people) nominated in your will to carry out the directives you set out in your will.
This means, among other things, that it is the executor’s responsibility to disburse your property to the mentioned beneficiaries, but also obtaining information on potential heirs, collecting and arranging payments, and approving or disapproving creditors’ claims.
It is the executor’s duty to calculate and pay the estate tax, and to ensure that the correct documentation is filed with the relevant authorities.
"Ultimately, the executor is the individual that represents your estate. And while the legal requirements and financial implications are daunting, it has become an established practice to appoint a friend, family member or beneficiary to act as the executor, as they most likely have intimate knowledge of your estate and your affairs, but also, they will not rack up the fees that a legal body might accrue," says Macpherson.
"The harsh reality is that executor fees are not entirely escapable. There is a misconception that you can avoid the fees by appointing a family member as the estate executor, but this could also mean that you are deferring the cost to the nominated family member."
Family members appointed as executors on larger estates immediately find themselves out of their depth, and not only end up hiring a professional executor, but may also pay more for these services than necessary.
A simple way to address this is by appointing a "professional" executor during your lifetime. This allows you to negotiate the executor fees.
“The larger your estate, the lower the fee you can negotiate,” says Macpherson. “For example, if your estate is worth R125m, you may negotiate a fee of 1.25%, which still works out to a considerable sum for the executor.
If you do negotiate a reduced fee, you should have this included in your will as a condition of the appointment of that particular executor.
Alternatively appoint a family member, but make sure that they understand that they will have to appoint a professional agent, and that they should negotiate the fee and be very cautious of agreeing to a fee arrangement in terms of which the professional agent charges their professional fee, instead of the legislated scale, cautions Macpherson.
If you are keen to appoint a family member as the executor of your will, this is a useful checklist
- The estate is worth less than R250 000, which means there is no estate duty to consider and it will be simple to wind up the estate in terms of the act;
- There are no maintenance or creditor claims;
- You have included a clause in your will that the executor is not required to provide security;
Important documents your family will need
When you die, there are several important documents your family will need to access urgently. Ideally, you should have one set of the following documents at home and one set with your financial planner:
- Your will;
- Your marriage certificate;
- Your life insurance policies;
- Your investments;
- Your bank account details;
- Contact details for your financial planner and the executor of your will;
- Proof of ownership of assets. These will include details of property you own, vehicles and investment portfolios;
- Your tax returns;
- Your retirement savings policies;
- Contact details for the human resources department at your office, along with details of any group life policies;
- Details of funeral policies;
- If you are divorced, a copy of the divorce order or maintenance order;
- Details of all your liabilities. These will include loans and accounts.
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