Perhaps the last thing anyone contemplates are the costs associated with administering their estate. However, the administration of a deceased estate involves much more than just paperwork. From the executor’s fee to estate duty, the process can be surprisingly costly. As such, anticipating and understanding these expenses early is essential to structure our estates accordingly and ensure there is sufficient liquidity available to make an already difficult time less stressful for our loved ones.
Below is a brief rundown of various administration-related expenses that may be charged over and above one’s estate liabilities. Crucially, these costs serve as a guideline and may not be the total expense.
Executor’s fee
The executor is authorised to administer the estate. Their prescribed tariff fee may not exceed 3.5% (plus VAT), which is calculated on the gross value of the estate. For individuals married in community of property, this fee is calculated on the value of the joint estate.
Executor’s collection
This fee is calculated on income, such as interest earned, which accrues to the estate and is collected after the deceased’s death.
Master’s fee
An administrative fee of R600 to R7 000 (including VAT) is payable to the Office of the Master of the High Court, depending on the value of the estate. For estates valued at less than R250 000, no Master’s fees are payable.
Advertisement costs
Estate advertisements must be placed in a digital or print newspaper and the Government Gazette. Depending on the platform, advertisement costs are approximately R2 300 plus VAT.
Bond of security
The Master requires a bond of security to be registered to cover the value of the assets disclosed in an inventory, unless the executor is the parent, child, or surviving spouse of the deceased. Security is not required in instances where the deceased’s will directs the Master to exempt the nominated executor from providing security.
The bond of security amounts to 0.5% of the gross asset value of the estate and is calculated per annum until such time as the estate is finalised.
Transfer costs
If a property is sold, transfer costs, including the attending conveyancer’s fee, are calculated on a sliding scale and based on the value of the property, as per the latest Guideline of Fees published by the Law Society of South Africa (‘LSSA’) plus VAT.
Municipal rates and services
Generally, municipalities require payment of all municipal service fees, property rates, and other charges incurred during the 24 months prior to application for a rates clearance certificate, as well as 120 days’ advance payment of rates and service charges.
Estate agent’s commission
If an estate agent markets the property, commission is payable on registration of transfer. Commission is negotiable, but generally falls between 3-5% plus VAT.
Bond cancellation costs
In instances where a mortgage bond over a property must be cancelled, bond cancellation costs, including the conveyancer’s fee, are payable in accordance with the tariff under the latest Guideline of Fees published by the LSSA.
Sworn valuation fee
A sworn valuation is a legally binding report of an asset’s value. This fee is based on the value of the items appraised in an estate valued in excess of R3.5 million plus VAT.
Capital gains tax
Capital gains tax is payable to SARS on the gain generated from the sale or transfer of any secondary properties and other assets in the estate.
Tax consultant fee
Pre- and post-death tax returns are submitted to SARS at an average cost of R2 000 per return (including VAT).
Estate duty
Typically the largest expense, estate duty is a special tax payable to SARS if the net value of an estate exceeds R3.5 million. It is levied at 20% of the dutiable amount up to R30 million, or 25% if over R30 million.
Legal costs
If the estate is involved in litigation, legal fees will be payable at an agreed rate plus VAT.
Postage and petties
This fee accounts for any administrative costs incurred during the administration of the estate, and varies depending on the value of the estate.
For further information or expert legal assistance with all your estate planning and administration needs, contact our experts at estates@stbb.co.za.
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