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Research shows some 70% of deceased estates may be forced to sell assets, or need contributions by beneficiaries, to discharge the attendant costs involved in winding up the estate. One shouldn’t make leaving an illiquid estate somebody else’s problem. This responsibility usually ends up on the surviving spouse or children’s shoulders. No responsible and caring ‘lost one’ wishes to burden those left behind with an unexpected administrative and financially draining burden.

On this point, it is alarming to know that less than 30% of deceased estates have sufficient liquidity to pay for the attendant costs involved in the administration process. A scary thought: the rest of the estates can be subjected to forced sale of assets, or a contribution by beneficiaries, to pay for the costs involved in winding up the estate. For some, leaving an illiquid estate is ‘somebody else’s problem’. When one considers the ‘somebody else’ is usually a surviving spouse or children. No responsible or caring person would want to saddle their partner or heirs with this administrative and financial burden.

The costs involved are not incidental and there is no way of circumventing the responsibilities associated with the administration costs of an estate …

For a start, the executor’s fees are statutorily prescribed at a maximum 3.5% plus VAT of the estate’s gross value. The fee on an estate of R5,000.000 comes to R196,000, including VAT. Will there be sufficient funds in the deceased’s bank account, or available cash, to pay for estate administration?

Should there be fixed properties in the estate that needs transferring to its beneficiaries there are conveyancing fees involved, plus bond cancellation fees should such properties be bonded.

Oftentimes there are taxes payable to SARS. Estates with a net value of R5,000,000 can attract estate duty of 20% depending on allowable deductions.  The Master of the High Court claims a statutory fee to the maximum of R7,000,000 which places yet another burden on the estate’s available cash. Winding up an estate is a long and drawn out process. In the meantime, especially in the early days after a loved ones passing, accounts payable pile up for the surviving spouse and family members to deal with. An exacerbating and traumatic situation which can be avoided by thoughtful and forward professional estate planning.

To make absolutely sure ones loved ones and family members are left to deal with a smooth winding up of your estate, calls for thorough and considered estate duty planning. For a financial review to ensure your estate is optimally structured for tax purposes with sufficient liquidity, please feel free to contact us.