When drafting your Will, one of the key decisions you need to make is that of your executor nomination as the person you choose will essentially step into your shoes in the event of your passing, take control of your financial affairs and ensure that your estate is wound up. The enormity of your executor’s role cannot be overstated and, as such, it is vital that one fully understands the scope of the executor’s job before choosing a suitable person for the task.
An executor is appointed by the Master of the High Court in terms of the Administration of Estates Act which also sets out the rights and responsibilities of an executor, her remuneration, those excluded from being appointed, as well as the consequences of an executor not fulfilling her duties. In respect of deceased estates with a value in excess of R250 000, an executor will be appointed to oversee the administration process regardless of whether the deceased died testate or intestate. Where the person died without a valid Will, the Master will appoint an executor-dative to administer the estate, whereas if the person died with a valid Will and a duly nominated executor, the Master will appoint that person (if satisfied that she has the requisite skill, acumen, or expertise to do the job) as the executor testamentary to the deceased estate. Remember, as a testator you are able to nominate an executor in your Will, but that nomination must still be confirmed by the Master in the event of your passing through the issuing of letters of executorship.
When contemplating your executor, keep in mind that the Act disqualifies certain people from being appointed as executor, including minor children, a mentally unsound person, anyone who is insolvent, companies, partnerships, and anyone who signed as a witness to your Will. The Act also sets out the remuneration that an executor is entitled to charge so, ideally, when having your Will drafted be sure to understand how your executor will be remunerated, keeping in mind that you can negotiate a fee lower than the legislated tariff. As it currently stands, an executor is entitled to charge up to 3.5% of the gross value of assets in the estate as well as 6% on any income accrued and collected after your death although, as mentioned above, you can negotiate a reduced fee when drafting your Will. In this regard, it is advisable to have a comprehensive estate plan drafted to ensure that you understand which assets fall in your deceased estate and therefore subject to executor’s fees, and which assets (such as retirement funds) will be excluded for these purposes.
Once the Master has issued the letters of executorship, the executor is formally mandated to act on behalf of your deceased estate and bring it to closure. Some of the first tasks facing your executor are to open a bank account in the name of your deceased estate, draw up an inventory of your assets and liabilities, advise your respective banks and institutions of your passing, and do a valuation of your various assets and liabilities. Once finalised, your executor will need to prepare a Liquidation and Distribution Account (L&D account) for submission to the Master which, while it may sound relatively easy, can be a fairly complex exercise depending on the nature and type of the asset, the ownership structure, whether the asset is co-owned with other parties, the nature of your matrimonial property regime, and the location of the asset. In advertising the Liquidation and Distribution Account, your executor will need to liaise with the relevant publications and ensure timeous advertising as per the strictly regulated time frames. Your executor will also need to liaise regularly with the Master’s Office and SARS to ensure that all forms are duly completed and submitted on time, keeping in mind that he will often need to attend these offices in person which can be time-consuming and frustrating, especially if your executor has other work commitments. Once the Liquidation and Distribution Account has been finalised, the executor will be responsible for settling the estate taxes with SARS, paying all estate costs and any claims against the estate such as an accrual claim by your surviving spouse. If there are liquidity shortfalls in your estate, your executor may need to make decisions regarding the sale of certain assets in order to meet the estate’s obligations and will likely need to liaise with your heirs and beneficiaries in this regard. Keeping in mind that most families have relationship dynamics and tensions that need to be carefully navigated, particularly when emotions are running high, it is advisable to appoint an executor who can confidently navigate these relationships and communicate effectively.
Besides the financial and legal acumen required by your executor, bear in mind that the role necessitates strong secretarial and administrative skills from start to finish, and it’s important to make sure that the person you nominate has not only the expertise but also the capacity for this onerous undertaking. Besides opening a bank account, attending to matters at the Master’s Office and SARS, and ensuring the timeous advertising of the L&D Account, your executor will need to collate all documents pertaining to your deceased estate, ensure the validity of your Will, ensure compliance with the FIC Act, dealing with municipalities in respect of utility bills, liaising with Home Affairs, responding in writing to claimants, signing contracts, transferring assets, and drafting reports.
In addition to the strong financial acumen, a good understanding of the legislative environment, and excellent administrative skills, it is advisable that your nominated executor is able to remain completely impartial and act at all times in the best interest of your deceased estate. Any delay or tardiness on the part of your executor will have a direct impact on the time it takes to wind up your estate and subsequently on the financial well-being of your loved ones. While legislation makes provision for an executor to be removed from office for failing to perform her duties, this process in itself can be time-consuming and can result in further delays. Sections 54(1) and (2) of the Administration of Deceased Estates Act set out the requirements that need to be followed by the Master to have an executor removed from office for non-performance of her duties or, for instance, if the executor is found to have a criminal record or becomes insolvent.
Another factor which is often overlooked when a testator nominates their executor is the enormous personal risk that an executor takes on, bearing in mind that she can be penalised and/or imprisoned for failing to comply with the Administration of Estates Act. Examples of instances where your executor can be held personally liable include losing the original Will, failing to lodge the Will with the Master’s Office timeously, not publishing the L&D Account in the Government Gazette on time, late submission of claims, taking unnecessary investment risk with estate funds, or failing to subject tax returns to SARS on time.
Finally, it is important that you discuss your intention to nominate someone as your executor before including the nomination in your Will. As indicated above, it is a huge undertaking for anyone to commit to and should therefore be discussed and agreed to in advance. While you may be tempted to appoint your spouse or loved one to the role, you may want to consider appointing a specialist fiduciary company or financial advisory to formally wind up your estate.