Don’t leave covering the costs of dying to your grieving relatives

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One of the biggest shocks and stresses following the death of a loved one is covering the immediate costs, such as funerals and burials, but also the administrative fees involved in winding up a deceased person’s estate.

“When my mom passed away, she didn’t leave any debt, but she left us with a range of legal fees and associated expenses which we weren’t prepared for.” says mother-of-two, Cloe Gentz. “I eventually had to take out a bond just to pay for them.”

CEO of Capital Legacy Alex Simeonides says apart from the emotional toll of a loved one’s death, families are often placed under great financial pressure, since they need to pay legal fees to wind up an estate, as well as continue to cover day-to-day living expenses, which they weren’t prepared for.

“Generally, life insurance policies can take anywhere from a few weeks to a few months to pay out depending on whether an individual has passed away from natural causes or not,” says Simeonides. “This means that a family is not only left with a gap in their income, but they also need to cover monthly expenses as well as the additional fees.”

Here are some of the costs involved when someone dies:

Executor’s Fees

When an estate is being administered (wound up after death) the executor may charge up to 3.5% plus VAT of the gross value of the estate. This is the remuneration percentage allowable by legislation. Although this does not sound like much, 3.5% plus VAT of the value of an estate of R 2million is approximately R 80 500.

Conveyance Fees

For any estate that has property that would need to be transferred into the name of a beneficiary, conveyance fees are applicable. Conveyance fees are charged by the attorney who ensures that property is transferred from one person to another and is based on a sliding scale determined by the value of the property. On a property of R 1.5mil, the Conveyance Fees would be approximately R 22 100.

Testamentary Trust Fees

A Testamentary Trust, established through your Will, can protect and help manage your children’s inheritance for their benefit. Testamentary Trusts include initial and ongoing fees. For a child who is ten and for whom their trust continues until they turn 25 years old, is approximately R 241 800 on a capital investment of R 2 million.

Other Fees Associated with Winding Up an Estate

Other fees involved include death-bed and funeral expenses, doctors’ fees, burial or cremation costs, as well as death notice advertisements required by law.  There are also professional fees for administering non-executable assets and Master’s fees to cover.

Taxes

When someone passes away, their estate is liable to pay their taxes. These include any amounts outstanding on their personal Income Tax returns, as well as Estate Duty, Capital Gains and Income Tax of the estate.

The solution to these fees and costs

 

“It’s never easy talking about death, but adequately planning for these costs by taking out insurance cover for them, for example, can protect your loved ones from having to take on debt to cover these fees and expenses,” says Simeonides.  “Appointing a professional service provider, who specialises in winding up estates quickly and efficiently can also ensure your beneficiaries aren’t laboured with an unnecessarily lengthy administration process. At Capital Legacy, we consistently review and enhance our insurance product offering and how we provide services to better meet the needs to people and the industry at large.”


PWG Advisory Services (Pty) Ltd FSP nr. 44152 and PWG Short Term Advisors (Pty) Ltd FSP nr. 44153 are authorised financial services providers. © 2019 PWG Group. All Rights Reserved. Powered by Creative Joggie