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. It’s an important job that requires a unique combination of skills to ensure that the estate is administered efficiently, effectively, and timeously. While you may be tempted to appoint your favourite aunt or your best friend to administer your estate, our advice is to first consider the following:
Special combination of skills
An executor must have a good understanding of business and finance, accounting and tax, as well as the relevant legislation pertaining to estate administration and the law of succession. Being an administratively intense job, an executor needs to have excellent time management skills, be able to multi-task and meet the various deadlines issued by SARS and the Master’s Office. Some of your executor’s functions will include:
Finance and tax: Taking control of assets, preparing an inventory of assets and liabilities, drawing up a liquidation and distribution account, filing pre- and post-death tax returns, paying estate duty, calculating estate liquidity, making decisions regarding the sale of assets, and calculating accrual claims, to name just a few.
Administrative and secretarial: Collating and compiling documentation, adhering to deadlines, obtaining letters of executorship, submission of documents, opening bank accounts, communicating with debtors and creditors, and advertising in the government gazette.
Interpersonal skills
An executor plays an important communication and relationship management role in that she is required to collaborate with several different parties including your heirs and beneficiaries, creditors, debtors, business partners, and even those you may have chosen not to include in your Will. Extended family structures can be complex and difficult to navigate emotionally, and your executor will need to have strong inter-personal skills with the ability to remain impartial, objective, and sensitive at the same time. Family relationships and dynamics can be complex and somewhat difficult to navigate, especially when emotions are running high, so keep in mind the taxing job that an executor will have navigating these complexities. Remember, also, that your executor will likely need to collaborate and/or negotiate with multiple parties, seek input from family members and beneficiaries, and make decisions regarding the sale of assets in the estate, where necessary.
Professional expertise
Although our law permits you to nominate a family member or friend as executor, bear in mind that it is up to the Master of the High Court to confirm the appointment. If the Master is not satisfied that the person you have nominated is sufficiently qualified to do the job, he/she will request that your executor be assisted by a professional agent such as an attorney, accountant or fiduciary specialist. In such circumstances, your nominated executor will effectively outsource the day-to-day functions of estate administration to a professional while remaining personally responsible for finalising the estate. Unless the family member or friend you have appointed has the necessary qualifications for the job, your estate could effectively be wound up by complete strangers in an outsourced company which may be contrary to your intentions. To avoid this type of situation from arising, you may consider appointing a trusted family member as executor with a professional legal or fiduciary firm as co-executors to your Will, in doing so providing a blend of trust and knowledge together with adequate checks and balances.
Location and physical ability
While someone who is not a resident of South Africa may be appointed as executor of your estate, keep in mind that this may cause unnecessary delays and costs to your estate. In most instances where a non-resident is appointed, the Master will request that executor provide a bond of security for the value of the entire estate before such appointment is confirmed. This, together with the costs of notarising foreign documents, will incur unnecessary expenses in the estate which you may prefer to avoid. If the executor you have nominated in your Will has subsequently emigrated from the country, now is a good time to amend your Will and nominate someone who is locally based.
Appointing a family member or beneficiary
Although it is possible for a beneficiary of your estate to be nominated as executor, it is important to first understand the difficulties that may arise from such an appointment. In the same vein, appointing a family member or someone who stands to benefit from your Will as executor can give rise to family tensions and animosity. For instance, appointing your current spouse as executor might put her in a difficult position if your ex-spouse and/or children from a previous marriage lay claims for maintenance against your deceased estate. It is advisable to nominate an executor who does not stand to inherit from our estate and who can maintain a level of neutrality and objectivity when distributing your assets. It is also important to bear in mind that grief may impact a family member’s ability to do an effective job of winding up your estate, so consider nominating someone who is not a loved one or part of your inner family circle.
Costs
Executor’s fees are regulated by statute and are set at a maximum of 3.5% (plus VAT) on the value of the gross assets in your estate plus 6% of income accrued and collected after your death. However, in many instances, these fees are negotiable depending on the size and complexity of your estate. If costs are an issue, bear in mind that appointing a friend or family member does not necessarily reduce these costs as they are entitled to charge the same fee as a professional firm. You can, however, include a stipulation in your Will that your estate must be administered at a discounted fee. Another factor to consider when nominating a friend or family member as executor is that if they are required by the Master to appoint a professional firm as co-executor, the executor’s fee will essentially be split between the two parties. Earning a substantially reduced fee, the professional firm may not be adequately incentivised to expedite the winding up of your estate.
Age, health, and longevity
Other important factors worth considering are the age and health status of the person you have appointed, bearing in mind that certain functions of the executor may require him/her to attend to certain matters in person, including standing in queues at SARS and at the Master’s Office. In addition, bear in mind that when you appoint a single person as the executor, there is a risk that he/she pre-deceases you. On the other hand, appointing a firm of professionals that you can trust to wind up your affairs means that you eliminate the risk of your intended executor not being around. To safeguard against the risk of an executor pre-deceasing you, you may want to consider nominating a primary executor together with an alternate executor who can step in if your primary executor is unable to take on the role.
Multiple executors
Nominating multiple people as executors of your estate comes with its own set of challenges, so think carefully before appointing more than one person. If one of the nominated executors is set to benefit from your estate, this could cause the other executors to feel that a conflict of interest exists. It is also necessary to consider whether any tensions are likely to arise between the various personalities, bearing in mind that they may all have different views and interpretations of your wishes. From a logistical perspective, having multiple executors trying to coordinate their diaries to make personal representation at SARS or the Master’s Office may be somewhat impractical.
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.
Have a great day.
Sue
