At my age I do what Mark Twain did. I get my daily paper, look at the obituaries page and if I am not there I carry on as usual.
– Patrick Moore
But if your name is included in the obituary column, hopefully you would have made adequate arrangements – in order that your surviving spouse is able to just carry on as usual. And pre-eminent in such arrangements would have been the appointment of an efficient and reliable executor.
I was recently reminded of the importance of executors; it happened as follows: I was managing a retirement village, and the resale of a deceased resident’s cottage was halted due to the unexpected death of the executor. The death and incumbent delay meant that their family would have to continue paying monthly levies until such time as a new executor was appointed. But more importantly the estate’s share of the resale price would also be delayed. This experience lead me to realise just how important the appointment of a reliable executor really is?
What does an executor do?
Understanding the role of the executor may assist you to decide who to choose. Normally the executor’s role includes:
– Organising the funeral.
– Applying for grant of probate authorizing them to manage the estate of a deceased, within the provisions of the will.
– Managing the identification / collection of the deceased’s assets.
– The estate must be advertised in order that creditors being made aware of the death, may register their claims against the estate. In order for this to be achieved, advertisements must be placed in government gazettes, as well as in local newspapers (those papers in the area where the deceased used to live).
– Creditors then have 30 days in which to lodge any claims against the estate.
– Deal with claims and potential creditor claims.
– The executor needs to ascertain what ongoing monthly payments are due. These will need to be settled and closed, e.g. telephone accounts, credit cards, DSTV, accounts, etc. (These can normally be established by examining the deceased’s bank account statements, etc.).
– The deceased’s bank account needs thereafter to be closed and, as soon as at least R100 has been received from debtors, or with any residual money left in the account, a new current account entitled the “estate of the late John Smith“ must be opened. All investments will be paid into this new account and all creditors and beneficiaries will be paid from this account.
– Notice needs to be given in respect of investments, shares, annuities, policies, etc., that monies owing to the deceased are to be paid into the ‘Estate Account’. If however, beneficiaries have been nominated in policies, they will bypass the estate and be transferred directly to the nominated beneficiary.
– Distributing or otherwise managing assets in accordance with the deceased’s Will.
– Accounting to beneficiaries for funds collected, payments made and transactions undertaken.
– Attending to final tax matters for the deceased, including estate tax compliance.
– Communicating with the deceased’s banks, insurers, investment/share registries, utility providers etc., in order that the relevant accounts can be dealt with; and where applicable closed.
Family squabbles over deceased estates, can sometimes make World War 1 seem like a walk in the park!
On some occasions the executors are also tasked with the onerous undertaking of helping to manage and resolve family tensions and disputes often arising following the death of family member, sadly especially in respect of the terms of their wills (or bluntly put – who gets what!)
Documents required by the executor
The following documents are required by an executor in order for him to carry out his task of winding up the estate:
– Original death certificate and identity documents of the deceased.
– Copy of the deceased’s Will.
– Where applicable, marriage certificate, ante-nuptial contract and divorce papers.
– Copy of first page of the surviving spouses’ identity document.
– Full names and addresses of the heirs, and copies of the first page of their identity documents.
– Original title deeds of fixed properties/certificate of registered sectional title documents.
– Estimated value of the property at the date of death. (An appraiser will be sent by the executor to evaluate the property for estate purposes).
– Bond holders name, address and account number.
– Television license.
– Paid electricity account receipt.
– Rates reference number / body corporate address and account number.
– Names of insurance companies, and policy numbers.
What qualities should the executor possess?
In light of the above, the executor should possess the following abilities and attributes:
– not be too old ( i.e. be unlikely to die before the will-maker).
– be trustworthy, and possess the skills necessary to deal with the role (dependability, well organised, and competent in accounting and correspondence related tasks).
– be capable of engaging and liaising with professionals, such as attorneys, whose assistance will be required in the administration of the estate.
– Have both the time and ability to deal with the process of winding up the estate– and preferably reside in the proximity of where the will-maker lives. (The process sometimes necessitates face –to-face meetings and visits).
– be unlikely to go overseas, or be hard to track down following the will-maker’s death. (Avoid fly-by-nights!)
Appointing an executor
Choosing an executor is a topic much debated, with the choice normally evolving around two concerns, i.e. which will be the most cost-effective, and which will be the most reliable choice? The following comparative matrix may assist you in making an informed decision:
Advantages and Disadvantages of various Executor Options
Appointing your own bank as executor
Fee – Usually 3% of the estate’s value.
Advantage – At least the process gets done – instead of being left unattended, or delayed by for instance, the unexpected death of a family; or individual executor.
Disadvantage – Bank executors are sometimes impersonal, uncaring and difficult to communicate with. (Banks are no longer the caring family friend of yesteryear. Sadly today it is all about money).
Appointing your financial advisor as executor
Fee – negotiable but probably an hourly fee.
Advantage – They normally know you well and are consequently more familiar with you family, as well as your circumstances.
Disadvantages – An FA’s business is to earn money so look out for “tainted advice”. (i.e. they may favour one or other investment company depending on the fee structure, or perks).
Comment – The FA will be placed in a position of power over the heirs and as he will have to call in a lawyer anyway, why not go straight to a lawyer?
Appointing a surviving spouse
Fee – There is no fee; but a professional will still have to do the legal work and will charge on a time and expenses basi.s
Advantage – The surviving spouse will be in control of the process and may be able to influence legal costs and consequently time by selecting a user friendly professional, negotiating fees, and by managing the process.
Disadvantage – The surviving spouse will need to be emotionally strong at a difficult time.
Comment – The average person’s estate will be modest and fairly simple to wind up provided a Will is in place; a letter of personal wishes has been provided and important papers are available. If minor children are involved there may be the added complication of setting up a testamentary trust.
Appointing a legal firm
Fees – Full legal Fee rates and expenses
Advantage – firm which specializes in winding up estates and creating trusts should both simplify and speed-up the process.
Disadvantage – Caution is necessary in selecting a legal firm. There have been some (albeit it admittedly rare) experiences where firms draw out the process to maximize fees, and in so doing impoverish the estates.
Comment – It is therefore advisable to make this selection while still hale and hearty; when emotions are stable. The worst case occurs when both spouses unexpectantly die simultaneously (such as for example in a motor vehicle accident) and minors are involved. Parents of young children therefore have a special responsibility to make adequate arrangements while alive, including the appointment of responsible God- parents.
It is not possible to address this complex and emotive matter in a superficial manner as too much is at stake, but some considerations are as follows:
An organization or an individual?
Individuals often come with baggage – some with their own agendas; others with a history of family feuds. And unless the will-maker’s disbursements of assets are squeaky clean, after the will is read, they run the risk of never again enjoying quite the same relationships… and this is a legacy you don’t want to be remembered for.
Large or small organizations?
And it pays to remember that the choice is often a trade- off between the officialdom of large corporates’ and personal relationship often found in small user-friendly type firms – often a choice between official dependability, or friendly flexibility.
The risk of choosing an individual as the executor?
When choosing an individual, rather than a firm or organization (and here I include independent single attorney type firms; as apart from their wigs and black angel of death cloaks, from a risk perspective, they differ little from an individual family member or friend), their age and health should be considered. As were they to precede you on that Divine Airways Flight to… “Who the hell-knows-where” they too, rather than providing executor services, would be in need of them?
The choice is yours
Personally, I would choose a smaller, reliable legal firm, where I could deal with a single person, yet be confident in the fact that in the event of that person moving on, or dying, there would be other capable people mandated to assume the reins. Each option needs to be dealt with on its own merits. Suffice to say that choosing a responsible executor is one of the best acts of care and compassion that a person can achieve while alive.
By Henry Spencer