Make sure you choose the executor of your estate with care, because executors need specific skills, knowledge and experience to wind up your estate properly and within a reasonable time, fiduciary experts say.
An inexperienced executor can sabotage your estate plan.
An independent executor may also prove invaluable in families that are prone to disputes, they say.
Angelique Visser, the chairperson of the Fiduciary Institute of Southern Africa, says family feuds can often be prevented if the testator or testatrix identifies and addresses problems before his or her death.
She suggests that you go through an estate planning exercise and ascertain the possible challenges in winding up your estate. An estate planner should be able to guide you to ensure that you leave a legacy of love and not a nightmare, she says.
Tanya Lochner, a fiduciary specialist at Glacier by Sanlam, says that, apart from litigation caused by disputes over the will, complications can arise if there is insufficient cash in the estate to cover all the liabilities.
The process can be further complicated when your estate includes business assets, she says, and industry-specific knowledge may be required to deal with such assets.
Bheki Khenisa, the chief executive officer of Sanlam Trust, says a well-qualified, independent executor can make crucial financial decisions and wind up an estate quickly, but nominating an executor without the necessary expertise – or failing to nominate one at all – can lead to much valuable time being lost before your loved ones receive their inheritance.
David Knott, of Private Client Holdings Trust, says that when you choose an executor, you would do well to have an understanding of the complex role that the executor is required to fulfil.
If your estate is worth more than R125 000, the executor will have to obtain Letters of Executorship from the Master of the High Court to act as the legal representative of the deceased, Knott says.
Executors should be nominated in your will, and your will should exempt the executor from providing security. If it does not, the executor may have to lodge security with the Master of the High Court to the full value of the estate. This is to ensure that the estate’s assets are not abused or misappropriated.
If you die without a will, your heirs can nominate a person or company to act as the executor, subject to approval by the Master of the High Court. This may be the first point of conflict in a family prone to disputes.
To save costs, you can appoint your spouse, a relative or a friend as an executor if you think he or she is up to the job, but if your estate is worth more than R125 000, your executor must be an attorney, a trust company or an auditor, or your executor will have to appoint one of these as an agent, Lochner says.
Khenisa says if you use a reputable company that specialises in wills, estates and trusts when you nominate an executor or appoint an agent, you will benefit from their specialised experience and knowledge.
The estate will be handled deftly and professionally and you are assured of objective advice, he says.
Knott says in order to value assets for estate purposes, an executor needs information from other institutions and government departments. An experienced executor will know exactly who to contact and what questions to ask, Knott says.
The law requires that the deceased’s bank accounts are closed and the proceeds are paid into the estate’s bank account.
It is the executor’s duty to reconcile the account statements from date of death until the closure of the estate in order to make sure that no unauthorised payments were made from the account. The executor must account for any differences, Visser says.
With the necessary information, the executor can assess the liquidity of the estate, because cash will be required to settle debts, income and capital gains tax, cash bequests and possibly estate duty. It may be that certain assets need to be sold and the executor will need the heirs’ agreement if they are unable or unwilling to contribute the cash shortfall, Knott says.
Visser says it is important that an executor has a very sound knowledge of the law, because he or she will have to comply with various Acts.
For example, she says, the Administration of Estates Act requires the executor to obtain the consent of all the heirs before disposing of estate assets.
Visser says the amount for which the asset is sold must be reflected in the liquidation and distribution account which has to be lodged with the Master of the High Court within six months after the executor’s appointment.
The liquidation and distribution account must be submitted for approval to the Master's office and advertisements must be placed to call for creditors to come forward.
Only if the liquidation and distribution account is approved by the Master, can the executor proceed to transfer assets to heirs and to distribute cash, Knott says.
Visser says when the executor is aware of possible objections, he or she should try to resolve the problems before lodging the account with the Master, and again an experienced executor may be invaluable here.
If an objection to the liquidation and distribution account is lodged with the Master, the Master has to give the executor 14 days to respond, she says.
After considering all the facts, the Master can find that the objection is well founded and order the executor to amend the liquidation and distribution account and re-advertise it.
Any person aggrieved by the Master’s decision or refusal to sustain an objection may apply to the court within 30 days of the decision.
Khenisa says the administration of an estate can take between six and 13 months, depending on the complexity of the estate.
If the deceased was involved in litigation before his or her death, or he or she died of unnatural causes, this can slow down the process, he says.
Lochner says the Master of the High Court does impose certain timelines on executors, but these timelines can no longer apply when litigation is involved.
Lochner warns of the risks of appointing an individual specialist, who may die before you do or be unable to administer your estate by the time you pass away. For this reason, you should consider naming an alternative executor, she says.
Delays in estates often have their roots in the absence of a will or a badly written will. Less than 30 percent of people who die every year leave a valid will that stipulates how their estate should be distributed.
Visser says that, of the minority of people who take the trouble to draw up a will, many think it is an easy “do-it- yourself” project or approach someone who is unqualified or inexperienced in the fiduciary field. One of the pitfalls of doing this is that the will does not express your wishes clearly.
An ambiguously worded will can cause friction between family members and unnecessary delays, and result in high legal costs, she says.