Guest Contributor | Aug 20, 2019 | 0
The executor and your estate
By Dieter Maree
Legal Sales Consultant at the Affluent Distribution: Sanlam Namibia
No, the executor is not a distant cousin of Dwayne Johnson aka the Rock or any other aggressive, testosterone – laden action figure from WWF or an action movie where pimped up cars travel faster than the speed of light
The finalisation or winding-up of an estate requires a different set of skills and expertise and to that end an executor has to be appointed, i.e. an individual who has obtained the authority to wind-up the estate of a deceased person in accordance with the last wishes of a man or woman who was enough wise enough to convey those wishes in a valid Will.
The Master of the High Court of Namibia plays a very active role in the administration of a deceased estate by issuing letters of executorship to the executor and is also responsible for supervising and indeed approving the administration of a deceased estate by an executor.
The important powers and functions exercised solely by an executor involve a great deal of complexity, time and experience and it is for this reason that the Master is often hesitant to appoint a lay person as an executor where such an appointment is not without the capable and willing assistance of a professional person.
Furthermore, the death of a loved one is an emotional event and the surviving spouse and family members are sometimes incapable of making sound financial decisions when they are still coming to terms with the loss of a loved one.
The executor will therefore interpret the wishes contained in the Last Will and Testament of the deceased, attend to the sale of those assets which should be sold, protect the assets which may not be sold especially those assets that are to be inherited by minors subject to a condition that they may not be sold or applied as security against a loan, attend to settling all the debts and liabilities of the estate, assist in the registration and creation of a testamentary trust for the benefit of any minor heirs or beneficiaries and generally distribute all the assets or the proceeds from the sale of those assets to the heirs appointed in the Will.
The executor`s fee is determined by statute and amounts to 3, 5 % of the total value of the estate and proper financial/estate planning should anticipate an expense of this nature. The executor has the authority to sell assets (including immovable property) to recover the above remuneration.
The executor`s fee for an estate value of N$5 million may be calculated as follows:
N$5,000,000-00 x 3, 5 /100 = N$ 175,000
N$7,000,000-00 x 3,5 /100 = N$ 245,000
N$10,000,000-00 x 3, 5/100 = N$ 350,000
Policy and pension benefits are in principle excluded from a deceased estate where beneficiaries are appointed for policy benefits and nominees for pension benefits. Where no beneficiaries or nominees have been appointed, the above benefits will automatically devolve upon the estate resulting in a tremendous increase in the total value of the estate and consequently an increase in the executor`s remuneration. One can deduce from the above that an essential part of estate planning also revolves around the question as to whether beneficiaries and nominees have been appointed for policy and pension benefits.
So how should one go about in navigating the costs related to the administration of an estate including but not limited to the executor`s remuneration?
Life insurance is indeed an easy option to provide for the executor`s remuneration where the initial cover should very well exceed the executor`s remuneration in order to accommodate inflation as well as the rapid increase in immovable property (main asset in the estate) prices. Due to medical reasons, a person may also not be eligible for life cover at a later stage.
As stated earlier, there are other expenses in a deceased estate (e.g. conveyancing fees) that may also be addressed by proper estate/financial planning.
Contact your Sanlam Advisor today or our Distribution Department to assist you with the consultation and drafting of your Last Will and Testament but more importantly perhaps, to advice you on how to prevent the unfortunate situation where your immovable property such as a farm or house may be sold by an executor to cover the costs associated with the administration of your estate?
Caption: Dieter Maree BA LLB (Stell) is an Admitted Legal Practitioner of the High Court of Namibia and the Legal Sales Consultant at the Affluent Distribution Department of Sanlam Namibia Limited