Dying is not cheap

Your last will and testament is the most important document you will ever sign

Most people do not realise the financial implications of dying, and many do not have enough cash in their estates to settle debts and pay for costs

Make sure your close relatives know what you budgeted for and where to collect the money from, such as a funeral policy or savings account. Picture: 123RF
Make sure your close relatives know what you budgeted for and where to collect the money from, such as a funeral policy or savings account. Picture: 123RF

Everyone will deal with the trauma of a loved one dying, but often, this trauma is compounded by complicated and expensive estate administration, liabilities and unforeseen tax burdens.

Most people do not realise the financial implications of dying, and many do not have enough cash in their estates to settle debts and pay for costs, according to Louis van Vuren, CEO of the Fiduciary Institute of Southern Africa (Fisa).

Marietjie Strauss, regional manager for Gauteng at Sentinel Trust, says the first thing that must be paid is the funeral.

“Make sure your close relatives know what you budgeted for and where to collect the money from, such as a funeral policy or savings account. You don’t want your family hosting a huge funeral chomping away on their inheritance if you planned for a small, intimate service,” Strauss says .

The next step is to report the estate to the master of the high court, where a specific legal process must be followed. The appointed executor must first settle liabilities, then attend to specific items that have been bequeathed to specific people or organisations. The balance of the estate is called the residue.

You don’t want your family hosting a huge funeral chomping away on their inheritance if you planned for a small, intimate service.
Marietjie Strauss, regional manager for Gauteng at Sentinel Trust

The residue will be transferred according to your will, and if you did not leave a will, “according to the rules of intestate succession law”, says Van Vuren. Leaving a valid will is called testate succession.

Van Vuren points out that there are two different processes for estates valued at less that R250,000 and those valued over this amount. There are not many formalities for estates below R250,000 and “most family members can attend to the process themselves”. However, for estates exceeding R250,000 an executor must be appointed – usually the person or entity nominated in your will – to administer and wind up the estate.

You can appoint a family member as your executor, but the master of the high court may demand security from the executor unless the executor is qualified to comply with all the relevant laws, Van Vuren says. Security can be obtained by way of a court bond, a type of short-term insurance, which costs extra money for the premium.

The executor must account for all assets and liabilities in the estate in a document known as the liquidation and distribution account which is lodged with the master of the high court.

“The liabilities include those amounts owing by the deceased at the time of death, as well as the administration costs resulting from the administration process,” Van Vuren says.

Fisa’s website lists some of the most common costs associated with administering an estate which you can help you budget for in your estate plan. It also highlights the importance of working closely with a trusted and registered estate planner.

Van Vuren highlights some of the administration costs (the actual costs change and evolve over time and are available on the Fisa website):

  • Advertising – your executor must advertise for creditors who want to claim against  your estate and advertise the liquidation and distribution account in the Government Gazette and in a newspaper;
  • Master’s fees - are due to the SA Revenue Service (Sars) for estates worth over R250,000 where an executor is appointed. They are calculated on a sliding scale depending on the value of the estate to a maximum of R7,000;
  • Executor’s remuneration – if your will doesn’t stipulate the fee, it is typically calculated at the highest fee allowed: 3.5% of the gross asset value of the estate plus VAT. Most trust companies will reduce the fee on estates worth more than R3m;
  • Costs of security - if the executor is required to lodge security for the administration of the estate, the cost of premium for this insurance is a charge against the estate – usually around 0.5% of the gross value of the estate plus VAT;
  • The costs of selling or transferring fixed property - your estate may incur mortgage cancellation costs. Although no transfer duties is payable when a property is transferred to a beneficiary, there are still some costs, such as attorney and Deeds Office fees. If the property must be sold, your estate will incur costs such as estate agent’s commission and brokerage fees.
  • The costs of valuing the assets for the estate liquidation and distribution account - submitted to the master and to Sars for estate duty purposes;
  • Costs to transfer shares  or timeshare;
  • Bank charges;
  • Postage and petties; 
  • Funeral expenses;
  • Maintenance of assets while the estate is wound up;
  • Tax accounting fees – a fee charged by the person preparing the tax returns; and
  • Duplicate original motor vehicle registration certificate.


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Once the administration costs are calculated, the executor will look for claims against the estate, including a claim from Sars against the estate for income tax due for the period 1 March to date of death. It is the executor's duty to give Sars a completed tax return including capital gains made on the deemed disposal from you to your estate for the relevant period; and settling bonds and overdrafts or instalment agreements.

Each estate is different, so you need to work out your own costs and make a plan to ensure there is enough cash in the estate.

Van Vuren says many estates are solvent, but still they do not have enough cash to settle the debts and administration costs. The heirs may be required to pay cash into the estate to avoid the sale of assets. If they are unable, the executor may be forced to sell a valuable asset such as a home or car to generate the cash.

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