Most people realise that it is important to have a well put together Will which clearly sets out how your estate is to be divided amongst your beneficiaries after your death. What is equally important – but often not well considered - is for a suitable executor to be chosen to administer your wishes.
“It is the executor who is responsible for ensuring the efficient administration of the estate,” explains David Knott, a director of Private Client Trust, a division of Private Client Holdings. “The executor effectively steps into your “financial shoes”. Unfortunately choosing the wrong person can cause excessive costs and lengthy delays before estates are settled.”
Not a job for family and friends
“To avoid paying executor fees, many people nominate a spouse, good friend or family member to be their executors. In theory there is nothing wrong with this but in practise the Master will not issue Letters of Executorship to a person unless they are satisfied that the person is properly skilled and competent to administer an estate.”
Knott explains that an executor must comply with the provisions of the Administration of Estates Act, 66 of 1965. Under this Act, a nominated executor must provide the Master of the High Court with a series of required documentation within a certain time period – and the executor is restricted from proceeding with their role until he has the Master’s approval.
“That person would need to intimately know the entire administration process involved as well as the income tax, capital gains tax and estate duty implications,” says Knott. “Obviously if there are complications, for example a disputed claim against the estate or a disgruntled beneficiary, any number of other laws could apply and the executor would need to navigate through these problems. If that person was a practising attorney or accountant the Master may consider him/her suitable and even then, the Master could require them to prove their credentials.”
Why it is worth paying executor fees
For this reason it is important to identify and nominate a trusted executor already known and acceptable to the Master. There are any number of trust companies, firms of attorneys or accountants with dedicated fiduciary personnel (many such personnel recognised by the Fiduciary Institute of South Africa (FISA) as Fiduciary Practitioners https://www.fisa.net.za/) who can adeptly handle the administration of estates.
“Most estate administrations proceed smoothly, albeit in a lengthier than expected time, although a competent executor will regularly keep interested parties informed as to the progress and when finalisation may be expected. Such an executor will be worth their fee,” concludes Knott.