When a loved one has died and you have been nominated as the executor of their will, this is the start of a process that can be complex and could take from six months to just over a year or longer to complete, according to Hedley Lamarque, Certified Financial Planner® professional at BDO Wealth Advisers in Durban.
He acknowledges that this is a difficult task at a traumatic time, but advises that it should be started as soon as possible and tackled systematically, one step at a time.
According to Lamarque, the first step is to officially notify the Master of the High Court of the death and apply to be formally appointed as executor. Prescribed documents need to be sent to the Master and a list of the documents required can be obtained from his office. When the Master is satisfied that the will is valid, he appoints the executor by issuing a ‘letter of executorship’.
“This confirms you as the authorised person who has agreed to accept the job of winding up the estate,” Lamarque said. “When you receive the ‘letter of executorship’ you, as executor, may officially start administering the estate.”
Lamarque continued to say that this process could take from six to ten weeks. However, whilst waiting for the ‘letter of executorship’, this would be a good time to gather all the information needed to determine the assets and liabilities in the deceased's estate.
“This would cover bank accounts, title deeds to properties, share or other investment certificates, insurance policies, pension fund membership, details of bank safety deposit boxes, partnership agreements, lease contracts, mortgages, records of debts or any other relevant documents relating to the financial affairs of the deceased,” he said. “These will enable you to complete the official inventory of assets and property form which is obtainable from the Master’s Office or online.”
He pointed out that, if the total assets were less than R250 000, the Master could allow the estate to be wound up in a shorter, less costly manner. Where the value of the estate was less than R250 000 000 the Master could waive the official appointment of an executor, and would instead appoint a Master’s Representative.
However, Lamarque said, if the gross value of the estate was more than R250 000, a Liquidation and Distribution account would need to be compiled. This would detail all assets and liabilities in the estate, the anticipated inheritance left for distribution, the beneficiaries who would inherit, as well as the income and expenditure incurred by the estate since the deceased’s death. Numerous documents were required for this, such as death and marriage certificates, antenuptial contracts, divorce orders, income tax and VAT numbers and medical aid details - if applicable. The Master’s office or a financial advisor would be able to supply a list.
“The preparatory work for compiling a Liquidation and Distribution account takes between six and 24 weeks depending on the complexity of the estate and the accessibility of documents,” he continued. “Allow another four to eight weeks for the investigation of the Liquidation and Distribution account by the Master and a further four weeks for the inspection of the account. Finalisation of the estate after the inspection period if no objections are lodged, could take another four to eight weeks. So basically the whole process would have taken around 10 to 12 months, if 6 months were spent on the preparatory work for the Liquidation & Distribution account; and assuming that everything else went according to plan.”
He went on to say that, if documents such as property title deeds or share certificates could not be traced, the executor was required to obtain duplicate documents at the expense of the estate, which could cause delays.
There were several other factors which could affect the time taken to finalise an estate, he explains. “You have to rely on the services provided by a number of external organisations such as the South African Revenue Service (SARS), the Master's office and insurance companies, and the amount of time they take to carry out their responsibilities is out of your hands.”
He added that it was the job of the executor to deal with all taxes applicable on the date of the deceased’s death such as income tax, capital gains tax and VAT.
“If these details have not been scrupulously recorded it may take extra time to gather all the information and submit the returns. SARS is required to issue final assessments against the estate and this could also take up additional time.”
Disagreements amongst heirs could add further complications, Lamarque said and, if the deceased did not die of natural causes, an inquest would have to be held which was dependent on congested court timetables.
Another delaying factor could be the fact that the deceased had been involved in litigation. “In this case it is the responsibility of the executor to evaluate the risk to the estate and decide whether it would be worthwhile to continue with the litigation. This could be both costly and time-consuming,” Lamarque warns.
From a cost point of view, he stated that the current maximum fee payable to the executor by law is 3.5% of the gross value of the assets in the estate, and 6% of all income earned such as interest, dividends or rentals from the date of the testator’s death to the day the final execution of the estate is completed.
Various other expenses could be paid from the estate. These include bank account charges, funeral expenses, the transfer costs of fixed property, advertising costs, cancellation fees for mortgage bonds for fixed property and charges for the valuations of assets by an appraiser.
The cost of providing security to the Master could also be claimed from the estate if the executor did not qualify for an exemption. However, if the executor was the surviving spouse or a close family member, exemption was usually granted.
Lamarque said that the role of executor could be a daunting task for a grieving, surviving loved one but that the burden could be lightened considerably by seeking the help of an expert such as a financial advisor who can act as your agent in winding up the estate of your loved one. You can still remain as the appointed executor but through the agent, you are able to delegate the day to day administration of finalizing the estate.
He also strongly recommended that sound planning before one’s death could go a long way towards preventing future difficulties for the loved one chosen to execute one’s will.
“Regular and proper estate planning will highlight potential problems regarding your financial affairs in time for them to be addressed,” he concludes.
“It is also advisable to seek professional advice when drafting your will and many grateful nominated executors will attest to the fact that appointing a professional to assist with the execution of a will ensures a smooth and stress-free process.”
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