Very few people realise the financial implications of dying.
The cost of dying and winding up your estate will reduce the inheritance your loved ones receive. The below costs should be considered to ensure that your deceased estate will have sufficient funds to pay costs and to distribute the assets to your heirs.
- Funeral Costs
- Funeral services
- Memorials
A funeral policy with a nominated beneficiary is a policy to consider. Having the funds payable to a beneficiary will ensure that the claim can be finalised quickly and the benefit received. If there is no beneficiary, then the benefit would be paid to the estate, which can only occur once Letters of Executorship have been issued and an estate bank account opened.
- Estate administration costs
- Executor’s fees
- Executor’s remuneration is calculated according to the prescribed tariff which is currently 3.5% of the gross value of the assets plus VAT if the executor is VAT registered.
- The executor is also entitled to a fee on all income earned after date of death, the current tariff rate is 6% plus VAT, if applicable.
- Advertising costs
Two notices are placed in a local newspaper in the area in which the deceased resided and the Government Gazette:
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- A notice to creditors to lodge their claims against the estate, (Section 29)
- A notice to interested parties that the liquidation and distribution account is lying for inspection, (Section 35)
- Master’s fees
The tariff for calculating Master’s fees is as follows:
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- Estates between R250 000 and R400 000 a fee of R600 is payable
- Estates between R400 000 and more, for each completed R100 000 with which it exceeds R400 000 a further R200, subject to a maximum of R7 000 is payable.
- Attorneys/Conveyancers fee
- Transfer of fixed property in terms of the provision of the Deeds Registries Act and in accordance with the Deeds Office practice and tariffs.
- Rates and levy clearance figures which are required to be paid prior to registration. Three (3) months advanced payments are requested as well as any unpaid/outstanding rates and taxes.
- Cancellation of bond costs
- Appraisement costs
Valuation of assets for estate duty purposes is a charge against the estate.
- Costs to transfer shares or timeshare
- Administration fee
- Bank charges and postage and petties
- Short term insurance
- Duplicate motor vehicle registration certificate and outstanding licence fees
- where the original certificate is not available the executor needs to apply for a duplicate. Before a duplicate can be applied for all and any outstanding licence fees need to be paid.
- Tax fees
- Costs to be paid to person or company attending to completion and submission of any outstanding tax return and for registration of post death tax and attending to submission of returns.
- Claims against the estate/debts
- Outstanding debts, credit cards, loans owed, vehicle finance, mortgage bonds. A review of life cover is recommended to ensure that you have sufficient insurance to cover these debts.
- Medical bills
- SARS
- Income tax pre and post death tax to be finalised and any amounts owing to SARS need to be paid.
- Capital gains tax payable on gains made on assets to be sold or transferred to beneficiaries. A R300 000 exemption applies at death. 40% of the balance of the gain is included in the capital gains tax calculation and is taxed at the deceased tax rate.
- Estate duty
- Estate duty is payable on the nett estate.
- No estate duty is payable on an estate which is less than R3.5 (Section 4A)
- Estate duty is levied on the dutiable value of your estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.
- Estate duty is payable to SARS
The above costs will vary from estate to estate but every estate will have costs associated with it and those costs are payable from the estate assets.
Planning is therefore key when preparing your Will as you will need to take the above costs into consideration.