At LegalWills.co.za we have decided not to allow you to specify Executor fees in your Will. This is because of the complexity of Executor fees and how they are calculated.
What are Executor Fees in a Person’s Estate
When you make a Will you appoint an Executor. This person has a big job to do. They have to manage your estate. Their duties include looking after your assets and distributing them according to your Will. The executor’s duties also involve arranging your funeral, filing your final tax returns, applying for probate, and dealing with all the businesses you have dealt with to settle your accounts. They must manage the deceased’s financial affairs, including processing income tax returns and settling any owed taxes before distributing inheritances to heirs. Recently a new role has emerged, the Digital Executor. This person has to manage your digital assets, close your online accounts, memorialize them or transfer them to your beneficiaries.
Considering the big job an Executor has to do, it’s only fair they get some compensation for doing it. The Executor must also locate the last will, administer the estate, and ensure that the instructions within the will are properly followed.
Types of Executors and Their Duties
In your Will you can appoint a single Executor or “joint Executors” so you have options. If more than one person is appointed as joint Executors, the Will should clearly outline their roles and responsibilities. It’s also a good idea to appoint at least one “alternate Executor” to step in if the primary Executor can’t or won’t serve. Most people preparing their Will through LegalWills.co.za appoint a trusted friend or family member as their Executor. It’s okay for your chosen Executor to also be a beneficiary.
In many cases the Executor is the main beneficiary – such as a spouse – so the asset transfer is simplified. Naming a spouse makes the transition smoother as they can transfer assets into their own name if named as Executor. Children are often appointed as backup Executors or as joint alternates to step in if needed. Not all services allow joint Executors but LegalWills.co.za allows up to 3 initial joint Executors and up to 3 alternates who can either assume the role sequentially or together if the primary can’t do the job.
Or you can choose a professional Executor. Options are banks, law firms or trust companies. Major banks offer Executor services but not all lawyers do. Some lawyers specialise in estate administration and will draft a Will for a minimal fee if appointed as Executor. A drawback with professional Executors is they may charge extra fees over and above what the courts allow.
How Executor Fees are Calculated
Executor fees in South Africa are generally controlled at a provincial level and are based on the size and complexity of the estate, with the money for these fees coming from the estate’s funds. These fees are added to other costs of estate administration.
Executor fees can be around 3-5% of the total estate but this can vary depending on:
- Size and value of the estate
- Level of care and responsibility required
- Time involved
- Expertise and ability of the Executor
- Outcomes achieved in managing the estate
These parameters ensure the Executor is fairly paid for their work but the structures and calculations of these fees can differ across South Africa.
Setting Your Own Executor Fees as a Family Member
You can set your own Executor fees in your Will but this is usually only the case when a friend or family member is appointed as Executor. The executor is also responsible for locating the original will, which is crucial for the legal administration of the estate. Professional Executors like banks have specific clauses in their agreements regarding fees and won’t allow the author of the Will to set their own fees. The fees charged by these professional Executors may include extra administrative costs beyond what the courts allow.
Why LegalWills.co.za doesn’t allow custom Executor fees
Executor compensation is based on the future size and complexity of the estate, which are impossible to predict now. You may estimate the current size of your estate but future changes can greatly impact its value and complexity before your Will is executed. Specifying a fixed fee now may not be enough to compensate Executors for the unforeseen complexity down the line and may discourage them from taking on the role.
Consider an unexpected scenario, a legal claim or a sudden increase in the value of the estate. If your Will specifies a fixed fee of R10,000 but the responsibilities increase significantly, the Executors may not get enough. This inadequacy may lead to refusals to take on the Executor role especially if the Will only kicks in many years later when the fee has been eroded by inflation.
Can an Executor Waive Fees if There is More Than One Person?
Executors, especially friends or family, may choose not to take fees for their services. This may be because they feel it’s not right to take a percentage of the estate for simple tasks like overseeing a real estate transaction. In these cases, Executors may waive their fee especially if the tasks are straightforward and don’t require much effort.
Bequests to Executors
Interestingly, an Executor can also be a beneficiary in the Will. For example, a spouse may be both Executor and primary beneficiary. If you want to leave a financial gift or bequest to your Executor, you need to make it clear that this is separate from the Executor’s fee.
Make sure to separate these two in the Will. For example, if you’ve left R10,000 to your Executor brother, this bequest should not be seen as their Executor fee. Keeping these roles and rewards separate avoids any confusion and means accepting the bequest does not mean they have to waive their right to be paid for their Executor duties.
Remember, an Executor can still decline the role but this shouldn’t affect any separate bequest made to them in the Will.
Conclusion
Executor fees require careful thought and understanding of the legal and practical implications. Not setting specific fees in your Will is because of the uncertainty of the size and complexity of your estate in the future. By preparing for the variables and acknowledging the demands of the role, you can ensure the Executor’s tasks can be managed without financial confusion.
Such planning in your Will means those responsible will be paid properly even as things change. Whether you choose a friend, family member or professional Executor, being informed of the process means your estate will be administered smoothly and according to your wishes.
He has over 20 years of experience helping people to write their Will and other estate planning documents. He has been interviewed by many of the major news media outlets and has contributed to articles in most leading publications. He has also contributed to a number of financial planning books.
Throughout his career, Tim has written extensively on the subject of Will writing and estate planning.
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