This week is National Wills Weeks: Do you know what happens to your money if you die unexpectedly without an up-to-date will? There is no guarantee that all the money will automatically go to your spouse because others may have a claim. What is even more frightening is that if you have no family, the State could take it all after a certain period of time. Law decides on where your assets go Whether you are single, married and have few assets, if you die without a will then the law decides on how your possessions devolve. There will also be delays while the courts decide on the appointment of an executor. Lengthy process before beneficiaries receive anything Your executor is the person who will be responsible for winding up your estate on your death. He/she is tasked with taking control of all your assets, collecting any funds owing to you, redeeming investments and selling assets where necessary. They also need to obtain valuations on assets that will not be sold. Once he/she has done this he/she must see that all debts and liabilities are paid and that your final tax returns are completed. This is all documented in a Liquidation and Distribution Account (L&D Account) which needs to be submitted to the Master’s office before the assets can be distributed to the beneficiaries as set out in your will. How to nominate an executor Often one feels obligated to nominate the person who draws up your will as executor but this should not be the case. You should nominate someone who has a major interest in your estate. The obvious choice for married couples is to nominate each other as executor to the others will. After all, the surviving spouse is likely to know more about your financial position than anyone else you may appoint. Executor gets a cut Appointing your spouse could also lead to a reduction in the executors remuneration which is payable on your estate. Currently the laid down tariff is a maximum amount of 3,5% + VAT if applicable. If you have appointed a professional person then expect to pay this amount in full. An estate of R2 million will create a maximum charge of R70 000 and if one projects the value forward by 20 years, the fee could be as high as R280 000 based on assets increasing by only 7% per annum and assuming that the statutory costs for winding up an estate will not increase. The obvious choice for married couples is to nominate each other as executor to the others will. If your spouse is appointed, the chances are that they will not have any experience of how to administer an estate. This is not critical as they would be free to request a professional executor to wind up the estate if they are finding it too difficult and would negotiate a fair fee for their services. Nominate your spouse or child as executor In my opinion, it is advantageous having a spouse or a major child as ones executor because this gives greater control over the process. Far too often professional appointments drag their heels and take a long time to wind up the estate. Negotiate fees if you appoint a professional There are many reasons why some people prefer to appoint a professional. If you choose to go this route, you need to negotiate and agree on a fee at the time of them accepting the appointment and whilst you are still alive. It is far easier for you to negotiate the costs prior to your death rather than leave this to your spouse or children. I can assure you that this approach will save your loved ones a great deal of time and money.
Posted on: Mon, 15 Sep 2014 10:05:04 +0000
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