By Hannah Myburgh
The role of an executor is to step into your shoes after your death to ensure that your assets are distributed in the best interests of your estate and those that you love. In this article, we unpack a number of factors to consider when making this all-important decision.
Special combination of skills: An executor must possess a solid understanding of business, finance, accounting, tax, and relevant estate administration and succession law. This role demands excellent time management skills, the ability to multitask, and the capability to meet various deadlines set by Sars and the Master’s Office. Further, it is a highly administratively demanding position.
Interpersonal skills: An executor serves a key role in communication and relationship management, working closely with various parties, including heirs, beneficiaries, creditors, debtors, and even those excluded from your Will. The executor may also need to negotiate with multiple stakeholders, consult family members, and make decisions about the sale of assets within the estate when necessary.
Location and physical ability: Although a non-resident can be appointed as the executor of your estate, this may lead to delays and added costs. Typically, when a non-resident is nominated, the Master requires the executor to provide a bond of security for the full value of the estate before confirming the appointment. Additionally, the process of notarising foreign documents incurs further expenses. To avoid these unnecessary costs, consider amending your Will if your nominated executor has emigrated, and appoint someone based locally to handle the estate more efficiently.
Appointing a family member or beneficiary: While it is possible to appoint a beneficiary as the executor of your estate, it is crucial to consider the potential challenges this may create. Appointing a family member or someone who stands to benefit from your Will could lead to family tensions or conflicts.
For example, naming your current spouse as executor may put her in a difficult position if your ex-spouse or children from a previous marriage claim maintenance from your estate. It is often advisable to appoint an executor who has no personal stake in your estate, ensuring they can act impartially and objectively when distributing your assets. Additionally, grief can impact a family member's ability to manage the complexities of estate administration effectively. For this reason, you may want to nominate someone outside of your immediate family or inner circle to ensure a more focused and unbiased approach to the task.
Costs: Executor's fees are regulated by law and are capped at a maximum of 3.5% (plus VAT) of the gross value of your estate’s assets, along with 6% of any income accrued and collected after your death. However, these fees are often negotiable, depending on the size and complexity of the estate. If cost is a concern, keep in mind that appointing a friend or family member as executor does not automatically reduce these fees, as they are entitled to charge the same rate as a professional firm.
You may, however, specify in your Will that the executor's fee be charged at a discounted rate. It is also important to note that if a friend or family member is appointed executor and is required by the Master to appoint a professional firm as a co-executor, the executor’s fee will be divided between the two parties. This could result in reduced incentives for the professional firm to expedite the process.
Multiple executors: Appointing multiple executors can create complexities and challenges, so careful consideration is required. If one of the nominated executors stands to benefit from the estate, the others may perceive a conflict of interest. Additionally, tensions could arise if the executors have differing views or interpretations of your wishes. Logistically, coordinating schedules between multiple executors to represent your estate at Sars or the Master’s Office can also prove difficult and inefficient. It is essential to weigh the potential benefits and drawbacks before deciding to appoint more than one person as executor.
One’s personal circumstances can change rapidly, so be sure to review your executor nomination in your Will on a regular basis to ensure that you remain comfortable with your choice.
* Myburgh CFP is a financial planner at Crue Invest (Pty) Ltd.
PERSONAL FINANCE