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The certainty of an executor in uncertain times

23 June 2020 Sanlam Personal Finance
David Thomson, Senior Legal Advisor at Sanlam Personal Finance

David Thomson, Senior Legal Advisor at Sanlam Personal Finance

While the COVID-19 pandemic has made many people reflect on their estate planning, it’s also added some complications to this process. Estate executors may have a tough task ahead, this will make it critical to nominate the right person to act in a way that will protect your legacy.

David Thomson, Senior Legal Advisor at Sanlam Personal Finance: Fiduciary Services, says that the national lockdown can make being an executor a difficult task. While the Masters Office has reopened with skeleton staff, it still requires hard copy documents such as the original will and the death certificate. If the executor is a family friend, he or she may struggle to get these documents given social distancing rules right now.

Thomson notes that being an executor comes with many responsibilities and it should not be taken for granted. “The administration of a deceased estate often involves a highly technical process, so the executor you appoint needs to have the requisite knowledge and experience for the role.”

Closing the deceased’s bank accounts, collecting the assets, and advertising for debtors and creditors of the estate are among the responsibilities expected to be completed by the appointed executor.
Below, Thomson explains two executor scenarios:

1. Not appointing an executor:


If you choose not to appoint an executor in your will (or leave no valid will), the Master of the High Court will appoint one for you, based on the recommendations of interested parties (surviving spouse; heirs & creditors) , which could be a long, onerous process. The Master may call a meeting to decide on the appointment, but still has the right to appoint a total outsider.

2. Appointing a family member as the executor of your estate:

Often the nominated executor is a family member who lacks sufficient knowledge to be an executor. Should the nominated executor not be suitable, the High Court may nominate an attorney of their choice or appoint the surviving spouse. Unless you are acquainted with your responsibilities as an executor and how to execute them, nothing will happen to the estate. An agent would then have to be appointed to administer the estate on behalf of the nominated executor.

Sometimes, the Masters Office may ask a seemingly inexperienced executor to provide security as insurance for the estate assets. Thomson notes that security is quite onerous and means that if you were to be nominated as an executor, you may be required to take out an expensive insurance policy for the estate in case the assets are stolen or paid to the wrong person. When your nominated executor is a trust company, it does not require an insurance policy. The trust company has the capacity to put up a bond and the financial strength to meet any claims should mistakes be made.

Should you want peace of mind, ensure that there is a clause that allows the executor to consult and appoint an attorney or a company like Sanlam Trust as their substitute, who would be legally able to take over the executor’s duties if required.

Appointing a trust or attorney

Another option is for you to nominate your own attorney or a company like Sanlam Trust directly- in your will. If you so wish, you can nominate joint executors- for example your spouse and the professional. Thomson concludes this as an extremely reassuring option, “The executor you appoint should be the person you are willing to give your bank cards, insurance policies and most personal information to. It is important that you make the right choice and make provision for the cost implications that will be involved, whether or not you nominate an executor for your estate.”

Quick Polls

QUESTION

How to give affordable and appropriate financial advice to the low income market segment. There is little room on a R50 pm policy for advisers to be remunerated for the time it would it would take to educate & fulfil admin function. What is the solution?

ANSWER

[a] Eliminate non-advice sales / telesales
[b] Implement industry standards for non-advice information
[c] Introduce an insurer-funded pro-bono advice network to low income earners
[d] Reinforce the Policyholder Protection Rules
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