A testator may nominate any natural person, including a spouse or a child, but should not underestimate the complexity of the process and the pressure and responsibility that place on someone who is grieving the loss of a loved one, says Eben Nel, national chair of the Fiduciary Institute of Southern Africa (Fisa).
It is a legal process that involves several pieces of legislation, in particular, the Administration of Estates Act, which is a voluminous piece of legislation.
He adds that an estate must be reported within 14 days. If a family member has been nominated as the executor that individual must start dealing with legal matters almost a week after the funeral. “I think it is unfair to expect that from someone who has just lost a loved one,” says Nel.
“History has also shown that family members appointed as executors often experience discontent from their siblings, which may result in major family disputes.”
The appointment process
The testator may nominate an executor, but it is the Master of the High Court that makes the appointment. Although the master will lean in favour of the nominated person, they may refuse to appoint them if the person has been declared insolvent, has a criminal record, or if a family member objects to the appointment.
The master will appoint an executor if no nomination was made, or if the nominated person refuses to accept the appointment or is pre-deceased (a master-appointed executor is known as the ‘executor dative’).
In this instance, the master will consult with the heirs to decide on an appropriate appointment. This alone may take weeks to finalise. “In our legal system, the estate is frozen until an appointment is made. Nobody has the authority to deal with any of the assets until an appointment has been made.”
When an executor dative is appointed the master also has no discretion regarding surety and must ask for security, except if a close family member is appointed.
This literally means that the master can ask for security equal to the value of the estate.
It may be difficult to find an executor in cases like this, says Nel. Attorneys can rely on the Legal Practitioners’ Fidelity Fund when they act as executor or administrator in a deceased estate but may be hesitant when they are involved in a number of estates requiring security.
In practice, the master may appoint a close family member as the executor, such as a spouse or a child, in which case he will not require security. However, he may require the appointment of an agent. The agent will have the same powers as the executor as he will be acting in terms of a power of attorney from the person so appointed.
The ideal situation is where the company or institution that drafts the will is nominated as the executor of the estate, as they will be in possession of the required information regarding the estate, understand the family dynamics, and have contact details of the heirs.
“The administration of a deceased estate is time-consuming and even a so-called simple estate may be fraught with various unforeseen complexities.”
The wrong punctuation in a will can create a legal issue, warns Nel.
The executor must also deal with third parties, such as the Master’s Office, the South African Revenue Service (Sars) and the Department of Home Affairs.
The legislation and required processes were not created with the novice in mind and even an experienced professional executor has various challenges to overcome in the administrative process, says Nel.
Penny wise, pound foolish
“People try to save costs by not appointing professional executors. However, it is a legally complex process and nobody will be doing the amount of work required for free.”
The prescribed fee is 3.5% of the gross assets, but when the testator nominates the business who is also drafting their will as the executor, they will be in a better position to negotiate an appropriate fee upfront. The negotiated fee should be stipulated in the will.
Whether the estate is worth R500 000 or R10 million, the process remains the same.
A large estate is not necessarily a complex estate, and a small estate is not necessarily a simple estate. “In practice, we have often found the contrary to be true.”
Nel says the best safeguard is to nominate a reputable firm or institution. If the executor is also a member of a professional body such as Fisa, it offers further reassurance that the estate will be dealt with in a responsible and professional manner.
Brought to you by the Fiduciary Institute of Southern Africa (Fisa).