Would you ask a car mechanic to perform open heart surgery on you? I thought not. So why would you appoint an executor who’s not experienced as such? Many people take the job of appointing an executor for their estate very lightly. Not much thought is given to it and I believe that it’s mostly because people are not aware of what the impact is that the executor has.
What do executors do?
An executor is the person you appoint in your will to administer the winding up of your estate after your passing. They are, in very simple terms, tasked with wrapping up all the admin in your life in a way that is quickest and most beneficial for the beneficiaries of your estate, within the guidelines of your will and legislation.
Their job, in broad brush strokes, looks as follows. The executor gathers information regarding all the assets you have in your estate, as well as any liabilities. If the testator is diligent, there will be a file somewhere with a list of assets, liabilities and information pertaining thereto. If there are any assets which are earning an income (for instance a property being rented out), the executor has to manage that asset while they are wrapping up your estate. Once all assets and liabilities have been identified and recorded, the executor pays all debts from the proceeds of the estate and distributes the balance of your assets between your heirs as provided for in your will. Should a dispute arise between your estate and a debtor / creditor thereof, the executor will be responsible for resolving the dispute, even if it means taking the matter to court.
In order to administer a deceased estate, the executor needs to submit a list of documents to the Master’s office in order to be issued with letters of executorship and then forthwith correspond with the Master’s office during the process of winding up the estate. Certain advertisements also need to be placed in newspapers and documents need to lie open for inspection by any person who has an interest in your estate. The Master’s Office is the government institution that manages deceased estates and keeps the executor accountable.
As you can see, the role of an executor requires a lot of legal and domain knowledge, which is very overwhelming for a lay person to acquire, let alone in a time of mourning. Learning as you go also slows down the process significantly.
Who is a good person to appoint as your executor?
Make sure you choose someone who you trust, is competent and will make your family’s lives easier in a difficult time.
You could appoint a friend or family member to be the executor of your estate, but the Master of the High Court will require them to have a professional representative to help them administer your estate. The benefit of appointing a friend or family member, is that they can negotiate better executor fees on behalf of your estate when they appoint an agent, should the value of your estate warrant it.
How do executor fees work?
The standard, and legal maximum, for executor fees is 3.5% of the gross value of the estate plus VAT. That means 3.5% of the value of your assets, regardless of the debt you have. So if you own a house worth R 1 million, and a mortgage of R 900 000, the executor fees on the property alone will be R35 000 plus VAT. In addition to this, your executor can charge 6% (plus VAT) of all income generated by the estate while being managed and administered by the executor.
Suddenly your estate needs a lot of cash to cover its administration costs. If you draft your will with Quickwill, you are able to use their estate administration costs calculator to determine the approximate costs of your estate’s administration and use that as a guide to ensure that you have sufficient cash in your estate to pay for the administration, without having to sell assets you wanted your family to have.
The choice of executor is not one that you should make without giving proper consideration to it. This person can have a considerable impact on the outcome of your estate for the benefit of your family and loved ones. Think it through and pick wisely!