Expenses to be considered for a deceased estate

The death of someone close to us is a traumatic experience. Knowing what is involved thereafter with regard to the winding up and administration of the deceased estate will alleviate further unpleasantness. There are many possible expenses that may be necessary for the winding up of the estate and if there is no cash available in the estate then the assets would have to be sold to cover the expenses, otherwise, the heirs would have to pay the expenses.

The possible expenses amongst others are :

· Executor’s fees – 3,5% plus VAT of the gross estate and 6% plus VAT of any income after death

· Professional’s fees – it is often advisable to employ the services of 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 – maximum R7 000,00

· Estate Duty – subject to exceptions, estates with a gross asset value in excess of R3 500 000,00 are subject to Estate Duty at the rate of 20%

· Costs of advertising

· Income Tax and Capital Gains Tax

· 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

· Valuation fees – for any immovable property, motor vehicles, jewellery

· Bank charges

· Additional security for any immovable property

· In respect of the immovable property to be transferred to an heir, transfer duty (payable to SARS) is exempt. However, there are a number of other costs which are payable, such as :

- 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

All these expenses can add up to a large amount of money. Good estate planning will ensure that there are sufficient funds in the estate to cover these expenses.