If you do not make provision for sufficient cash in your estate, the executor of your estate does not have funds to pay your estate liabilities and your will becomes not executable. This results in your assets being sold and your beneficiaries can not enjoy maximum benefits after your death. Estate liabilities include but are not limited to the following : outstanding debt, child maintenance claims due to a divorce agreement, claims due to the accrual system, surety ship, income tax, rates and taxes, unpaid medical expenses not payable by your medical aid, funeral expenses, transfer costs of fixed property, transfer costs of shares, transfer costs of timeshare, mortgage bonds on fixed property, mortgage bond cancellation costs, interest on mortgage bonds, costs on valuation of assets, insurance over assets, bank charges, postage, advertisements, agents commission, master’s fees, capital gains tax, estate duty, executor’s fee and executor’s security costs if not exempted. Your appointed executor is allowed a maximum fee of 3.5% plus VAT on the gross value of all assets inside your estate. Your executor is also entitled to a fee of 6% plus VAT on all income earned after date of death. Executor fees are payable upon death of the first spouse and again on death on the surviving spouse. Estate duty is calculated at a rate of 20% on the value of all assets inside your estate plus the value of all assets outside your estate minus the value of your liabilities, subject to an abatement. Your pension, provident and retirement annuity funds are normally approved funds and are exempt from estate duty. Estate duty and capital gains tax is only payable upon death of the surviving spouse, under condition that the surviving spouse is the sole heir. The most efficient way to make provision for your estate expenses is by means of a life insurance policy payable to your estate to provide liquidity / cash.
