Aspects to bear in mind when compiling a Will

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Aspects to bear in mind when compiling a Will

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During the month of September, Wills Week was held across the country. We recently chatted to Suné van Schalkwyk, who joined Milpark Education as a lecturer in the School of Financial Planning and Insurance, about some of the aspects one needs to bear in mind regarding one’s Will.

Suné says, "When a person dies, their loved ones are in mourning and are not thinking about costs or fees. They need guidance, and they need it quickly, as things need to happen at a relatively fast pace. The family, friends and acquaintances of the deceased are notified, and then the fact the person is gone all of a sudden hits like a snowball. The search for the original Last Will and Testament begins. The death certificate is issued, and soon the deceased’s loved ones will learn that in order for the deceased’s estate to be finalised, they may need an executor to be appointed to administer the estate.”

She explains that in South Africa, upon reporting a death to the Master, an executor is to be appointed in estates where the asset value exceeds R250 000; for estates with an asset value of less than R250 000, a Master’s Representative is appointed.

Having set the scene, Suné adds that an often overlooked aspect of the process is the fee charged by the one who will walk your last steps, the one making sure your estate is administrated correctly, and the one who will finalise your last wishes by transferring your estate to your beneficiaries: the executor.

Certainly, it is no easy task the executor faces. The executor is, therefore, allowed to charge a fee for the service rendered, according to the Administration of Estates Act, 66 of 1965. Depending on the complexity of a deceased’s estate, we find that in some cases there is more than one executor working on a deceased’s estate, and an application may also be made to the Master to increase or reduce the fee.

This fee has a direct link to the liquidity and final distribution of your estate. With the recent increase in Value Added Tax (VAT), your executor can charge up to 4.025% on your assets (an executor fee is 3.5% excluding VAT). This, Suné explains, is levied on the gross assets, and not the net estate. The executor’s fee forms part of the liabilities; this person is paid in a similar way to all other debts, except that is usually the last fee to be paid (i.e. at the end of the administration of the estate). Thereafter, the balance (residue) of your estate is distributed in terms of your wishes as recorded in your Will, or if there is no Will, according to the rules of intestate succession. (Note: there are certain assets that fall outside the estate; for example, a life policy with a nominated beneficiary.)

As with any service, you need to know what the fee entails. Make sure that you have a clear understanding of the fee that will be charged before nominating the executor in your Last Will and Testament. Suné confirms that one may negotiate the executor’s fee. During a person’s life, this is a task he or she can still attend to. Where a specific percentage or a fee is agreed upon, ask your executor whether it is noted, and if so, where it is noted in your Last Will and Testament.

So today, make sure you have properly read your Last Will and Testament and that your last wishes are noted in writing therein. Where you have nominated an executor, know the estimated fee calculated on the value of your assets.

Suné concludes, “Make sure it is not too late and not unnecessarily expensive to be the very last one to step into your shoes. See a professional today to analyse your estate in the event of your death. Know your worth, the costs payable at your death, and the estimated amounts available to the legatees/balances for distribution.”

We thank Suné for sharing her insights in relation to Wills, and her tips on an issue that is not often discussed. We wish her a warm welcome and happy tenure at Milpark Education!

 

03 Oct 2019