What does an executor do and how much do they charge?

An executor is the person or institution that the Master of the High Court appoints to wind up a deceased estate. The executor takes control of everything the deceased owned, pays the debts and the tax, draws up an account showing what came in and where it went, and pays the heirs what is left. The job is governed by the Administration of Estates Act 66 of 1965 and the executor answers to the Master, not to the family.

The regulated fee is 3.5% of the gross value of the assets in the estate, plus 6% of any income the estate earns after death, such as rent or interest. VAT is added if the executor is VAT registered, which banks, trust companies and most attorneys are. On an estate with R2 000 000 of assets the fee is R70 000 before VAT. That tariff is a maximum, not a fixed price. The Master may reduce it, a will can set a different fee, and a professional executor can agree to charge less. Here is what you get for the money and how to keep it down.

What the executor actually does

Reports the estate. Within 14 days of death, the executor or the family lodges the death notice, the will, the inventory and the acceptance of trust with the Master. Read how to report a deceased estate to the Master.

Obtains letters of executorship. The Master issues these once satisfied with the will and the nominee. They are the executor's authority to act. Until then nobody may deal with the assets.

Secures and values the assets. The executor opens an estate bank account, writes to every bank, insurer, fund and creditor, values the house and vehicles, and takes control of anything that could be lost or damaged.

Advertises for creditors. A notice in the Government Gazette and a local newspaper gives creditors 30 days to lodge claims. The executor then decides which claims are valid.

Deals with SARS. The executor files the deceased's final income tax return, registers the estate as a taxpayer where needed, and files an estate duty return under the Estate Duty Act 45 of 1955 if the estate is large enough. The executor fees and estate duty calculator shows whether that is likely.

Draws the liquidation and distribution account. This is the central document of the estate. It lists every asset and its value, every debt and cost, the executor's fee, any estate duty, and the exact share of each heir. It is lodged with the Master, usually within six months of the letters, and then lies open for inspection for 21 days.

Pays and distributes. After the inspection period closes without objection, the executor pays the creditors, transfers the property through a conveyancer, pays the cash inheritances and files proof of every payment with the Master.

Accounts to the Master. The Master checks the proof and confirms that the estate is finalised. Only then is the executor released from the role. Read how long it takes to wind up a deceased estate for how these stages fit together.

How the fee is calculated

The 3.5% is charged on the gross value of the assets, not on what the heirs receive. Debts are not deducted first. A house worth R1 500 000 with a bond of R1 000 000 attracts a fee of R52 500 on the house, even though only R500 000 of equity reaches the heirs. Life policies paid directly to a nominated beneficiary and retirement fund benefits paid by the fund's trustees usually fall outside the estate and outside the fee, but a policy paid to the estate is inside both.

The 6% is charged on income the estate earns after death, such as rent, interest and dividends. On a small estate this is a few hundred rand. On a rental portfolio it adds up.

VAT is added on top if the executor is registered. That takes 3.5% to a little over 4% in real terms, so budget for it.

The Master may reduce the fee where the estate was simple or the executor did little of the work. In practice this rarely happens unless an heir raises it.

Who can be an executor

Anyone with capacity can be nominated in a will, including a spouse, a child, a friend, an attorney, a bank or a trust company. If there is no will or the nominee cannot act, the heirs nominate someone and the Master appoints. An executor who is not the spouse, parent or child of the deceased will usually have to provide security, which is a bond from an insurer that costs a premium every year, unless the will exempts them. Banks and attorneys are generally exempt from security.

A family member executor usually appoints an attorney or a bank as their agent. The agent does the work under a power of attorney and charges for it. The executor remains personally responsible to the Master.

How to reduce the fee

Fix it in the will. A will can say that the executor is to be paid a specific amount or a lower percentage. Banks and trust companies may decline to act at a lower rate, but many attorneys will accept a will that sets a reduced fee if the estate is straightforward.

Negotiate before appointment. If there is no will, or the will is silent, the heirs can agree the fee with a professional executor before nominating them. A written fee agreement is common, and a discount of a third or more on a simple estate is not unusual.

Appoint a family member and pay for help by the hour. A spouse or child who is exempt from security acts as executor and hires an attorney to do the paperwork at an hourly or fixed fee. On a simple estate this often costs far less than 3.5%. The risk is that the family member carries the personal liability.

Keep assets out of the estate. Policies with nominated beneficiaries and retirement benefits generally bypass the executor's fee, although the estate duty position is different, so ask an adviser first.

Ask the Master. If the fee is out of proportion to the work, object when the account lies open and ask the Master to reduce it.

A worked example

The figures are illustrative only.

Pieter dies leaving a house worth R2 400 000 with a bond of R600 000, investments of R900 000, a car worth R250 000 and a life policy of R1 000 000 paid directly to his wife as nominated beneficiary. The estate earns R30 000 in interest before it is wound up.

The gross assets in the estate are R3 550 000. The policy is excluded because it was paid to a nominated beneficiary. The executor's fee is 3.5% of R3 550 000, which is R124 250, plus 6% of R30 000, which is R1 800, giving R126 050. If the executor is VAT registered, VAT is added on top.

Option one. Pieter's will names a bank as executor with no fee clause. The bank charges the full tariff. The family pays about R126 050 plus VAT out of the estate.

Option two. Pieter's will names his wife as executor, exempts her from security, and she appoints an attorney as agent at an agreed fixed fee of R45 000 plus VAT to do everything. The saving is over R80 000 before VAT.

Option three. Pieter's will names his attorney as executor at a fee capped at 2%. The fee is R71 000 on the assets plus R1 800 on the income, plus VAT.

None of these is wrong. Option one carries no personal risk for the family. Option two saves the most but puts the responsibility on a grieving spouse. Option three sits in between.

What to do this week

1. If you are writing a will, decide who you want as executor, whether to exempt them from security, and whether to fix the fee. Read how to write a valid will.
2. If someone has died, find the will and see who is nominated. If it is a bank or attorney, phone them and ask for their fee in writing before you sign anything.
3. Ask what the fee would be on the estimated gross assets, using the calculator, so that you can compare quotes.
4. If the nominee is a family member, ask whether they are willing to act and whether they need an agent.
5. Get every ID and the death certificate certified in multiple copies. Every institution will ask.

Documents to gather

The executor will need the original will, the death certificate, the deceased's ID and tax number, the marriage certificate and antenuptial contract, title deeds and bond statements, vehicle papers, bank and investment statements, policy schedules, pension fund details, the last tax return, and a list of creditors. If you are nominating someone, they will also need the IDs and contact details of every heir.

Realistic timeline

The executor is usually appointed four to twelve weeks after the estate is reported. The account is lodged within six months of the letters unless extended. The 21 day inspection period, the Master's queries and the property transfer follow. A simple estate is finalised in about six to twelve months.

Common mistakes and what they cost

• Signing a bank's mandate before asking about the fee. The full tariff is then payable on an estate a family member could have handled with hourly help.
• Nominating an executor who then has to provide security. The premium is paid by the estate every year until it is closed.
• Distributing before creditors and SARS are paid. The executor is personally liable for the shortfall.
• Paying an heir who turns out not to be one. The executor must recover the money or make it good.
• Not lodging the account in time. The Master can remove the executor, and the estate stalls while a replacement is found.
• Treating the executor's fee as fixed. It is a ceiling that can be reduced by the will, by agreement or by the Master.

If you cannot afford an attorney

The executor's fee comes out of the estate, not from your pocket, so nobody is barred from having one. If the estate is small enough to fall under the Minister's threshold, the Master issues section 18(3) letters of authority instead, and there is no executor and no executor's fee at all. The Master's office deals with the public directly. Legal Aid South Africa on 0800 110 110 assists with estates for people who pass its means test, and university law clinics take estate matters. See what a wills and estates attorney costs for the fee ranges.

Frequently asked questions

An executor can be removed by the Master or by a court for good cause. An executor can inherit, and often does, because a spouse or child is usually both. The executor's fee is a cost of the estate and is paid before the heirs receive their shares. The answers below cover the rest.