If you’re planning your estate from abroad, there are a lot of factors to consider. One of the biggest things that often gets overlooked? Executor’s fees. Executor’s fees in South Africa can be a significant expense when administering a deceased estate, especially for expats. This article will explain what executor’s fees are, how much they cost in South Africa, and explore legal strategies you can use to minimise or even avoid them altogether.
What are executor’s fees in South Africa?
When you pass away in South Africa, someone needs to handle the legal and financial affairs of your estate – this person is called an executor. They’ll be responsible for tasks like:
- Gathering information about your assets and liabilities
- Paying any outstanding debts and taxes
- Distributing your remaining assets to your beneficiaries according to your will
This is no straightforward task, so it makes sense that executors would be entitled to compensation for their time and effort. The executor’s fees in South Africa are typically calculated as a percentage of the total value of your estate. This can be a substantial amount, especially for larger estates.
So what is the cost of executor’s fees in South Africa?
- Standard fee: 3.5% of the gross value of your estate (excluding VAT)
- Income fee: 6% on any income generated by the estate after your death (e.g., interest from bank accounts).
Example: If your South African estate is worth R5 million and generates R2 million in income after your death, the executor’s fees could be:
- 3.5% of R5 million = R175,000
- 6% of R2 million = R120,000
- Total executor’s fees: R295,000
Note: All the above fees are Excluding VAT
It is important to note that this does not include other administration costs like advertising the estate in newspapers or property valuation fees.
Who pays the estate fees in South Africa?
The estate itself pays the estate fees in South Africa. This includes various costs associated with administering the deceased’s estate, such as:
- Executor’s fees: Paid to the person or institution responsible for managing the estate.
- Master’s fees: A fee charged by the Master of the High Court for overseeing the estate administration process.
- Advertising costs: Costs associated with placing notices in newspapers to notify creditors and beneficiaries.
- Legal fees: Fees charged by lawyers for legal services related to the estate.
- Valuation fees: Fees for valuing assets in the estate.
- Transfer costs: Costs associated with transferring property ownership.
- Other miscellaneous costs: Such as bank charges, courier fees, and other administrative expenses.
These fees are typically deducted from the total value of the estate before the remaining assets are distributed to the beneficiaries.
Minimising or avoiding executor’s fees in South Africa as an expat
There are a number of ways to potentially reduce or eliminate executor’s fees in South Africa. You could try:
- Appointing a family member or trusted individual: Consider naming a reliable family member or friend as your executor. They may be willing to handle the responsibilities for free or for a lower fee than a professional executor. However, ensure they have the time, skills, and knowledge to manage the estate effectively.
- Utilising a trust structure: Setting up a trust during your lifetime allows you to transfer assets to it, potentially bypassing probate and executor’s fees altogether. Discuss the pros and cons of a trust structure with a South African financial advisor familiar with expat situations.
- Keeping your will simple: A complex will with numerous assets and beneficiaries can lead to a more complex probate process and higher fees. If your situation allows, create a clear and concise will that outlines your wishes and minimises the number of assets involved.
- Regularly reviewing and updating your will: Regularly revisiting and updating your will ensures it reflects your current circumstances and intentions. This can help avoid disputes and legal complexities that could increase executor’s fees during probate.
- Seek professional advice: Consulting with a South African estate planning attorney or financial advisor specialising in expat situations can be invaluable, as you can get personalised guidance on minimising executor’s fees in South Africa while ensuring your wishes are still carried out.
Read more: Protecting your assets and beneficiaries with a trust in South Africa: advice for expats.
FinGlobal: cross-border financial specialists for expats
Finding your way with the complexities of international finance can be daunting, especially for South African expats. FinGlobal is here to simplify your financial journey. Our team of experts is dedicated to providing tailored solutions for your specific circumstances. We specialise in a range of services for expats, including:
- Tax emigration: Seamlessly transition your tax residency and minimise potential tax liabilities.
- Tax refunds: Maximise your tax returns and reclaim what’s rightfully yours.
- Retirement annuity withdrawal: Strategically withdraw your retirement funds while optimising tax benefits.
- International transfers: Efficiently transfer funds across borders, ensuring compliance and minimising costs.
Ready to simplify your financial life? Contact us today for a personalised consultation to see how FinGlobal can help.
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