You must know the following about estate liquidity when you do your estate planning and drafting your will. When married in community of property, only 50% of the joint estate belong to you; When you calculate the estate costs and liabilities, do not forget about SARS as they has the first claim against your estate. No beneficiary or heir may receive their inheritance until SARS has been paid all outstanding taxes.
Furthermore your estate must cover all outstanding pre-death medical expenses, your funeral, burial and tombstone and / or cremation costs. Your estate will be responsible for the executor’s fees, which is currently 3.5% of the value of the estate and a further 6% on all income earned after the date of death. Bank Charges on estate account, transfer and conveyancing costs, bond cancellation fees and estate agency commission when there is a fixed property that needs to be realised, must also be paid from your estate.
Further costs are the valuation and the appraisal fees and the advertising costs of the estate in the newspaper and government gazette. If your estate is liable for estate duty, this must also be covered. This is currently 20% when your estate exceeds R3.5 million up to R30 million. When making bequests in your will, the value of the assets or bequests made to legatees are included when you do your calculations for estate duty. The estate duty get paid from the residue of your estate, which mean after the legatees also received their bequests, the inheritance to your heirs is getting less. What is important to remember, is that complex estates can take up to two years to finalize the process. In the meanwhile your family must continue paying the bond, rates and taxes.
As it is clear from above, there are many expenses with any death and the administration of the estate, so when drafting your will or doing estate planning, ensure that there will be sufficient liquid assets. Many companies sell you a policy to cover these fees, with which they benefit in receiving the monthly premiums and the final policy amount that get paid out on your death, they will use to cover their executor fees and costs mention above. If not sufficient, they will pay the excess from your estate. (We are not selling policies)
Please ensure you do proper estate planning and that your loved ones are well looked after and that your executor can finalize the administration of your estate as quick as possible.