The costs involved in administering a deceased estate: Can you afford to die?
Danny Beukes
Sanlam Financial Adviser
The administration of a deceased estate can be very overwhelming for the grieving family. What seems like an easy process is unfortunately a very complex and lengthy one and unfortunately one that includes several, and often hidden and unexpected, costs.
Regardless of whether the deceased left behind a will or died intestate (i.e. without a will), the arduous process of administering the deceased estate starts immediately after the death of the deceased. For simplification, a deceased estate refers to the money and/or property that the deceased person leaves behind.
In recent months, I have been inundated with requests from clients and the public requesting me to assist them with the facilitation of administering the estate of a deceased parent or spouse. In instances where the bereaved individual who has lost a loved one approaches me, but is not a client of mine, the situation becomes very tricky. This is because I normally make sure that I provide my clients with sufficient life assurance to cover all major expenses that come after the death of a loved one. And there are many other expenses that we don’t foresee, plan for or expect that comes with the loss of a loved one. Unfortunately, many people only make provision for the funeral and fail to consider the huge surprise that awaits them a year after the passing away of their loved ones, following the finalisation of the administration of the estate. The executor, with the knowledge and approval of the Master of the High Court, can instruct the selling of property in order to cover for those expenses. One of the major expense items that many people don’t provide for is estate fees.
In illustrating this point, I use an accurate calculator, from Sanlam’s legal department, to calculate the estimated estate fees, based on the size of your estate, that breaks down the estimated cost of administering an estate. Many people are caught off guard when they are presented with the distribution account balance, as they were not aware of this.
These costs mainly comprise of the following:
· Executor’s fee (at 3.5% of the value of the estate) plus VAT (15% of executor’s fee)
· Valuation fees
· Master’s fee
· Property transfer costs plus VAT (15%)
· Deeds office sundry expenses
· Advertisement costs
It is important to note that everyone’s situation differs based on the amount of assets and liabilities in their estate, and Sanlam helps based on our clients’ unique situation. Many people are of the opinion that they will administer it cheaper if they act as executors of a loved one’s estate in their personal capacity, but if the estate is worth more than N$100 000, you need to be recognised by the Master of the High Court as an estate administrator, or you may be requested to provide security for acting as executor of the estate. Once many people realise this, they end up having to seek a company to assist in administering the estate, effectively defeating the idea of “doing it for cheaper” completely. An example of the approximate costs you may need to provide for, based on an average example of assets, is shown below for your consideration, however it remains important to do proper estate planning and know for sure and also to know what your executor can offer you.
Assets example:
House N$1 500 000
Car: N$400 000
Other: N$60 000
Total assets: N$1 960 000
Estimated estate fees: N$107 000
From the above, it is evident that planning and thinking of estate fees is a very real consideration and a very real concern which deserves discussion and understanding. None of us want to see our loved ones burdened by serious cash shortfalls during the administration of our deceased estate. I am sure you can understand and agree that the estate fees can be quite a large sum and needs to be provided for in the financial planning process. To expertly assist you with financial planning and calculate your unique expected estate fees you can send me an email at [email protected].
Sanlam Financial Adviser
The administration of a deceased estate can be very overwhelming for the grieving family. What seems like an easy process is unfortunately a very complex and lengthy one and unfortunately one that includes several, and often hidden and unexpected, costs.
Regardless of whether the deceased left behind a will or died intestate (i.e. without a will), the arduous process of administering the deceased estate starts immediately after the death of the deceased. For simplification, a deceased estate refers to the money and/or property that the deceased person leaves behind.
In recent months, I have been inundated with requests from clients and the public requesting me to assist them with the facilitation of administering the estate of a deceased parent or spouse. In instances where the bereaved individual who has lost a loved one approaches me, but is not a client of mine, the situation becomes very tricky. This is because I normally make sure that I provide my clients with sufficient life assurance to cover all major expenses that come after the death of a loved one. And there are many other expenses that we don’t foresee, plan for or expect that comes with the loss of a loved one. Unfortunately, many people only make provision for the funeral and fail to consider the huge surprise that awaits them a year after the passing away of their loved ones, following the finalisation of the administration of the estate. The executor, with the knowledge and approval of the Master of the High Court, can instruct the selling of property in order to cover for those expenses. One of the major expense items that many people don’t provide for is estate fees.
In illustrating this point, I use an accurate calculator, from Sanlam’s legal department, to calculate the estimated estate fees, based on the size of your estate, that breaks down the estimated cost of administering an estate. Many people are caught off guard when they are presented with the distribution account balance, as they were not aware of this.
These costs mainly comprise of the following:
· Executor’s fee (at 3.5% of the value of the estate) plus VAT (15% of executor’s fee)
· Valuation fees
· Master’s fee
· Property transfer costs plus VAT (15%)
· Deeds office sundry expenses
· Advertisement costs
It is important to note that everyone’s situation differs based on the amount of assets and liabilities in their estate, and Sanlam helps based on our clients’ unique situation. Many people are of the opinion that they will administer it cheaper if they act as executors of a loved one’s estate in their personal capacity, but if the estate is worth more than N$100 000, you need to be recognised by the Master of the High Court as an estate administrator, or you may be requested to provide security for acting as executor of the estate. Once many people realise this, they end up having to seek a company to assist in administering the estate, effectively defeating the idea of “doing it for cheaper” completely. An example of the approximate costs you may need to provide for, based on an average example of assets, is shown below for your consideration, however it remains important to do proper estate planning and know for sure and also to know what your executor can offer you.
Assets example:
House N$1 500 000
Car: N$400 000
Other: N$60 000
Total assets: N$1 960 000
Estimated estate fees: N$107 000
From the above, it is evident that planning and thinking of estate fees is a very real consideration and a very real concern which deserves discussion and understanding. None of us want to see our loved ones burdened by serious cash shortfalls during the administration of our deceased estate. I am sure you can understand and agree that the estate fees can be quite a large sum and needs to be provided for in the financial planning process. To expertly assist you with financial planning and calculate your unique expected estate fees you can send me an email at [email protected].
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