Cost Of Death

Very few people realise the financial implications of dying. Many South Africans who die have insufficient cash in their estates to pay for the estate costs and debts.

The following are examples of the type of costs that are typically payable when a person dies.

Advertising costs

During the administration of an estate, two sets of legal notices must be placed in a local newspaper and the Government Gazette. The rates for these advertisements differ from newspaper to newspaper, but are usually around R350 per notice.

Master’s fees

Master’s fees are payable as a revenue to the South African Revenue Service. The amount of Master’s fees payable depends on the value of the estate and starts at a minimum of R600 up to a maximum of R7 000.

Executor’s fees

The executor is entitled to a fee to administer the estate. The prescribed tariff is currently 3,5% plus VAT of the gross value of the assets. If the estate is worth R1 000,000 the executor’s fee will be R35 000 + VAT of R5 250 = R40 250.

Transfer costs of fixed property

Where an heir inherits immovable property from an estate, it must be transferred to him in terms of the Deeds Registries Act. The transfer costs payable to the conveyancer and the Deeds Office fees are a charge against the Estate.

Mortgage bond cancellation costs

If any property is bonded to the bank as security, the bond has to be cancelled. The bond cancellation attorney’s fee can vary between R3 500 and R5 500 plus VAT.

Valuation costs

The account rendered by an appraiser for a valuation of the assets is payable out of the assets of the estate. Fees can vary between R2 000 and R5 000 plus travelling costs.

Costs to obtain duplicate motor vehicle registration certificates

Where the original certificate is lost, the executor has to apply for a duplicate original from the provincial registration authority where the vehicle was registered. The cost of this varies from traffic department to traffic department.

Bank charges

Service fees are debited by the bank to the estate late bank account opened in the name of the estate. These fees and charges vary from bank to bank and can range between R300 to R500 per month.

Municipal charges

Outstanding municipal rates and taxes and utility accounts are claims against the estate and need to be paid before any immovable property can be transferred out of the estate. It is important to keep these accounts up to date.

What it all means

It often happens that an estate has insufficient cash to settle the debts and administration expenses. This is referred to as a cash shortfall. In such an event, the executor will approach the heirs to see if they are in a position to pay the cash shortfall into the estate to avoid a sale of the assets. If the heirs are not able or willing to pay the cash shortfall, the executor will have no choice but to sell estate assets to raise the cash to pay the shortfall. This is far from ideal as the executor may be forced to sell a valuable asset, such as a vehicle or even a family home, to raise the cash.

 

Compiled by:
Wim Visser is an attorney of the High Court of South Africa, specializing in the drafting of wills, set up of trusts and the administration of deceased estates.