The Importance of a Professional Executor
Why do you need a professional executor to wind up an estate?
When someone dies, an executor needs to wind up their estate. Having the right executor assist, means a smooth and painless process to wind up an estate. Someone without the right skill set, could delay this process by years.
Having a professional, knowledgeable and competent person to help, makes the world of a difference.
What does a professional executor do?
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 in this field? 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 because people are not aware of what the role of an executor is.
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 administration in your life, in a way that is quickest and most beneficial for the beneficiaries of your estate. They do this whilst working within the guidelines of your will wishes and national legislation.
Their job, in broad brush strokes, is as follows: the executor gathers information regarding all the assets in your estate, as well as any liabilities. If the testator/testatrix 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, 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 a letter of executorship and then communicate 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 for any person who has an interest in your estate. The Master’s Office is the government institution that manages deceased estates and holds the executor accountable.
As you can see, the role of an executor requires a lot of legal and financial knowledge, which is very overwhelming for most people especially in a time of mourning. Learning this executor knowledge as you go or having to source personal information about the deceased person, also slows down the wrapping up 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 total value of your assets, regardless of any debt you have.
So, if you own a house worth R 1 million, and a bond with your bank of R 900 000, the executors 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.
The choice of executor is not one that you should make without giving proper consideration. 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, as estates can take years to wind up!
Need help or want to draft a will with a professional executor?
Rich Ideas has partenered with two great companies and two independent executors to assist.
If you draft your will with us, you are able to use our 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.
If you have a shortfall of cash, we have many solutions and ideas to share wtih you.
Send us an email for further info and help.