The costs of winding-up a deceased estate. What is the cost of dying in South Africa?
2 March 2021

– Summary

The costs of winding-up a deceased estate may affect your heirs' inheritance. It is useful to consider these costs when doing your Estate Planning.

It is uncomfortable to talk about death but it is a reality we cannot avoid and it is prudent to plan our estates so that the trauma is reduced for our loved ones.

Many people might be aware that there are costs associated with winding-up a deceased estate but you may not be aware of what those costs are or how they are calculated.

Having a better understanding of what these costs are and what is involved in the administration of the deceased estate will help further reduce stress and unpleasantness for your loved ones.

Several costs may need to be paid when winding-up a deceased estate.

Some of the possible expenses that your estate may have to pay are:

Executor’s fees

In terms of South Africa Law, Executors may change 3,5% (plus VAT) of the gross estate and 6% (plus VAT) of any income into the estate after death.

Professional’s fees

The Executor of your estate may be a family member or friend but there are often steps required, in the winding-up of a deceased estate, that are too complicated for them to handle.

For example, they may need a professional to assist with the completion of the required documents and liaising with the office of the Master of the High Court.

Master’s fees

These are fees charged by the Master of the High Court, they are set by statute and change periodically.

Estate Duty

Estates with a net value of more than R3,500,000.00 to R30,000,000.00 are subject to Estate Duty at the rate of 20% (as of 2021).  Estates with a net value over R30,000,000.00 are subject to Estate Duty at the rate of 25% (as of 2021).

Estates with a net value below R3,500,000.00 are exempt from Estate Duty.

Costs of advertising the estate

Advertising in Newspapers and the Government Gazette is required to inform possible creditors or people with a claim against the that the estate is being wound up.

Income Tax and Capital Gains Tax

Income Tax will need to be calculated from the last Tax year until the date of death.  Capital Gains Tax is calculated on the increase in the value of an asset (for more information on Capital Gains Tax, see our article Is it better to buy a property in my personal name or in the name of a trust?).

Accountant’s fees

An accountant may have to be employed to complete tax returns, to calculate Capital Gains Tax, to calculate the Accrual payable to the deceased, which arises from a married.  For more information on the Accrual System see our article What is an ante-nuptial-contract and do I need one?

Valuation fees

It is sometimes necessary to acquire valuations of assets in the deceased estate to determine the gross value of the estate.  For Example, immovable property, motor vehicles, jewellery.

Bank charges

Charges on bank accounts, from the time of death to the time the winding-up of the estate is completed, may be payable to the bank.

Security for immovable property

This mainly has to do with mortgage bonds or credit.  If an immovable property, like a house, is left of an heir by the deceased and the immovable property has a mortgage bond over it, it may be necessary for the heirs to get a new bond (particularly if there’s not enough money in the estate to settle the mortgage bond).

The beneficiaries cannot “take-over” the mortgage bond.  The contract relating to the mortgage bond will be terminated by the bank because their client has died.  The heirs would need to apply for a completely new mortgage bond on their own merits.

In addition to the above costs, several other costs would need to be paid relating to transferring immovable properties from the deceased estate in the names of the beneficiaries:

The transfer Attorney’s costs

Rates payable in advance to the municipality

Levies payable in advance to managing agents

Costs payable to the Attorneys cancelling any existing bond

Costs payable to the Attorneys registering any new bond

Immovable property to be transferred to an heir is exempt from transfer duty (payable to SARS) in certain circumstances.

All these expenses can add up to a large amount of money.  If there are sufficient funds in the estate to cover the expenses the heirs will then inherit less than what you anticipated.

If there is no cash available in the estate when winding up the estate, it is necessary to sell assets to cover these expenses.  If selling the assets does not cover these costs then the heirs might have to pay into the estate to cover the expenses.

It is therefore often advisable to have insurance that is specifically intended to cover the cost that might be payable for winding up an estate.  If you wish to be contacted by a financial adviser regarding this insurance, enter your details below and click submit.

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