Master's office applies for massive fee rises to start in January
The Master of the High Court has applied massive increases - up to more than 1,000% - to the fees on deceased estates from next year.
The new fees range from R600 to R7,000, depending on the value of the estate - and because many estates do not have sufficient cash to meet these and other costs without selling assets, the fee increase makes it a good time to check up on what will happen in your estate when you die.
After your death, the executor of your estate has to pay a once-off fee to the Master after the estate has been registered but before the Master approves the liquidation and distribution account that the executor has prepared to finalise the estate and pay the heirs.
Wouter Fourie, CEO of Ascor Independent Wealth Managers and a previous financial planner of the year, says while the Master's fee has been unchanged for a long time, the magnitude of the maximum fee increase from R600 to R7,000 is "enormous".
The new regulations under the Administration of Estates Act come into effect on January 1 next year.
Therefore they apply to everyone who dies after December 31 this year.
A recent Government Gazette notes that the Department of Justice and Constitutional Development amended regulations under the act to the effect that Master's fees will be charged according to the following scale:
• Estates that have assets valued at between R250,000 and R400,000 will be charged a fee of R600.
• For estates valued at more than R400,000, the fee is R600, plus R200 for each R100,000 above R400,000 to a maximum of R7,000.
For many South Africans who own a home, a car and some retirement savings, the value of their estate could easily be R3-million, Fourie says.
On an estate of R3-million, the fee currently is R600, but after the increases, the fee on the same value estate will be R5,800.
It is worth noting that the fee applies to the gross assets in the estate before deductions.
So, for example, it will include the market value of assets such as your house, which may be worth, say, R4-million, and the amount of the outstanding bond, which could still be quite large when you die, cannot be deducted from its value.
Under the new regulations, if one spouse of a couple who are married in community of property dies, the Master's fee is assessed on the gross assets of the joint estate.
It also applies to estates under curatorship or administration where the date of the final appointment of a curator or administrator is on or after January 1 2018.
Fourie says these new fees plus other costs that arise in your estate after your death, such as executor's fees, can be significant, and it is important that your estate has sufficient cash to pay for them.