Newsletter 10 (Mar 2017)
It is said that change is as good as a holiday!
We are excited about all the interesting developments and strategic planning in the Efficient Group. This presents challenges and opportunities that we are all looking forward to with enthusiasm.
We trust that Efficient Board of Executors and the Efficient Group will work even closer together to the benefit of all parties and be successful in making the best of the opportunities that lie ahead.
”: Just a reminder that you can earn commission when you refer a “buite boedel” to EFBOE.
Just to re-cap from our October 2016 newsletter: It is a deceased estate where there is no Will (intestate) or where a natural person such as a spouse, family member or friend was nominated as Executor. If there ís a Will with a nominated Executor, i.e. another trust company, an attorney or an institution like a bank, etc. and the appointment is renounced, it can also become a “buite boedel”. Feel free to contact your EFBOE marketer if you would like to discuss this matter with him/her.
Efficient Advise advisors can contact Marietjie van Zyl at email@example.com
for more information on commission structures and Efficient Wealth advisors can contact Lize-Marié te Roller at firstname.lastname@example.org
. Please check your Advisor Portal on www.efgroup.co.za
for more information.
A PRACTICAL GUIDELINE FOR A DECEASED'S NEXT OF KIN
Read more in the upcoming edition!
COSTS INVOLVED IN A DECEASED ESTATE
As promised in Newsletter 9, we continue on the subject of costs involved in the administration of a deceased estate.
The administration of a deceased estate
This is the process of distributing the deceased’s assets and paying the debts. All deceased estate administration must comply with the procedures prescribed in the Administration of Estates Act 66 of 1965, as amended. Laws are subject to revisions and are adapted from time to time. The value of Section 18(3) estates was revised and since 24 November 2014, an estate with a gross asset value of up to R250 000 falls in this category. For Section 18(3) estates Letters of Authority is issued by the Master of the High Court and an informal administration process is followed by the Executor. If the deceased passed away on 24 November 2014 or later, leaving an estate with a gross asset value exceeding R250 000 Letters of Executorship is issued by the Master of the High Court and a formal administration process is followed by the Executor. In this process advertisements are placed, Master’s Fees are payable and a Liquidation and Distribution Account has to be submitted to the Master of the High Court for examination.
Here is a guideline for estimating the costs involved and gives you the opportunity to budget for the needs of the estate:
Executor’s fees: 3,5% plus VAT on the gross value of the estate as per the liquidation and distribution account. This is a set percentage laid down by law. Should a trust company be prepared to assist with a Section 18(3) estate (value up to R250 000) ascertain what the cost will be; a set minimum fee may be charged.
Inventory value of estate: This is the value of immovable property, moveable property and claims in favour of the estate. These assets are recorded on an inventory and the value calculated. The inventory value will indicate whether it is a Section 18(3) estate or not.
Now, let’s have a closer look at the main three types of assets which comprise the inventory:
Immovable property: These are usually assets held by title deed or share title, for instance a stand, house, town house, flat, farm, agricultural holding, fixed property abroad or certificate of mineral rights.
Moveable property: Here we look at licensed assets like a motor vehicle, caravan, trailer, boat, fire arm, but also furniture and household effects, jewellery, livestock, tools, implements, shares and businesses.
Claims in favour of the estate: These areHh normally assets that can be liquidated, like a bank account, current and credit card accounts in credit, fixed deposits, investments, policies payable to the estate, time share, salary and/or leave pay. Other claims in favour of an estate may be accrual, usufruct, tax rebates, the balance of a medical aid savings account, offshore investments, royalties, copyrights and trademarks.
Claims against the estate are not recorded in the inventory. Any current account or credit card which is in debit, as well as outstanding balances on loans/bonds, conveyance costs, municipal/levy clearance costs, valuation costs, unpaid accounts (i.e. cell phone, telephone, medical costs, etc.), funeral expenses and such. Administration cost and claims against the estate will include the following (if applicable):
Executor’s fees, postage & petties;
Banking fees and cost to open an account for the deceased estate;
Advertisements in the Government Gazette and other publications;
Costs for certified copies of documents from the Master of the Court’s estate files, like a Death Notice and Will;
Master’s fees, which, like the executor’s fees, are prescribed by law;
Taxes, as applicable: for instance personal, business, VAT, CGT, estate duty;
Transfer cost of any fixed properties;
Possible maintenance claim for minor children and/or a divorce settlement;
Final medical expenses and/or exhausted medical aid fund:
Suretyship signed during the deceased’s life.
It would be wise to provide for the general living expenses for surviving spouse/dependants during the administration of an estate.
This list is not exhaustive as there may be other costs involved.
Normally pensions and retirement annuities do not form part of a deceased estate as such, although the Executor will need this information when compiling the Estate Duty Return and for income tax purposes. Keep up to date with the rules of a particular pension fund, ensure that nominations are in place and keep in mind that taxes may be payable on such policies or pensions. Take note that despite the nomination of beneficiaries, retirement annuity and pension payments are subject to Section 37C of the Pension Fund Act of 1956, which in short means that dependants as well as nominations will be taken into account by the relevant company.
After discussion with a reputable estate and trust company like EFBOE, you should be fully informed of what the administration of a deceased estate will cost.
So it is safe to say that it costs money to die. Being informed about this aspect of deceased estates makes it possible to provide for these costs in the estate.
THE LAST WISHES OF POET HEINRICH HEINE
Born in Germany in 1797, Christian Johann Heinrich Heine was destined to gain fame as a poet and essayist, although his route to greatness was long-winded. After earning a law degree in 1831, he moved to Paris and began a successful writing career. He wrote with authority and panache and over years became prosperous and content.
In the late 1840’s he was diagnosed with spinal tuberculosis, eventually became paralyzed and spent the last eight years of his life on his “mattress grave”, as he called it. He married Mathilde in 1841 and she cared for him faithfully until his death. It was said that in their 15 years of marriage their relationship was quite unstable, but Heinrich’s declining health seemed to bond them together, knowing he had little time left.
Heinrich prepared his last Will and Testament shortly before he died and left his entire estate to Mathilde. On one condition though: she was required to be remarried to receive her inheritance. The reasoning behind his stipulation was: “Because then, at least one man will regret my death.” He died in 1856, Mathilde remarried, inherited the estate and lived comfortably until her death in 1883. Whether his wish was granted? That was not recorded.
Until next time!
The “Let’s Talk EFBOE” Team