Ending well – the importance of choosing a competent executor

By Jeffrey Wiseman, head of Fiduciary Services, Momentum Wealth

The author, Jim George, once said, “it’s not how you start that’s important, but how you finish”, a statement that applies to so many aspects of life. At Momentum, we believe that true financial wellness includes making sure that you have a will in place and that your estate will be administered efficiently when you die. After all, your will contains your instructions for the distribution of the results of your lifetime’s hard work in creating your financial net worth. It is therefore an extremely important document that ought to be given the attention it deserves.

When we talk about wills we tend to focus on the will itself and pay little attention to how it will be implemented one day when you die. A properly drafted will is only the start, and you should not underestimate the benefits of nominating a skilled executor who is able give effect to your wishes. A good executor can ensure that your beneficiaries do not endure difficulties that can easily be avoided.

Understanding the executor’s role and duties

The death of a loved one is a very emotional time that ought not to be overshadowed by complications in the estate administration process. It is therefore important to take care when having your will prepared, a process that should include selecting a competent executor and taking the time to understand the process that he will follow when winding up your estate. The administration of deceased estates is a legally regulated process that is overseen by the Master of the High Court. The Master appoints an executor to attend to the administration of the deceased estate and his responsibilities include:

• interpreting the will,
• dealing with the assets forming part of the deceased estate,
• settling debts, and
• protecting the interests of beneficiaries.

If a person has business interests, the executor must make arrangements for the continuation of the business while the estate is being administered. The executor is required to prepare a liquidation and distribution account, which details the deceased’s assets and liabilities and records how the estate is to be distributed. The liquidation and distribution account is a public document that must be advertised to lie for inspection and the estate may only be distributed once there are no outstanding objections to this account.

The executor is subject to certain time limits and it is therefore important that he takes control of the situation and works quickly and accurately. He must familiarise himself with all aspects of the deceased’s circumstances so that he is in a position to make decisions that will cause the least disruption. If the executor fails to do this, assets may be missed or businesses may experience unnecessary hardship. For example, a beneficiary may require an interim distribution from an estate to fund living expenses and, if a liquid asset is missed, the executor may mistakenly believe that he is not in a position to assist. Similarly, unless the executor familiarises himself with the specific circumstances pertaining to a deceased’s business interests, the business operations may be compromised with devastating consequences for those involved in the business and the beneficiaries of the deceased’s estate.

Helping the process when you are not there

Here are three things that you can do to assist your executor:

1. Keep all of your important documents together so that they can be presented to the executor neatly; this will shorten the time that the executor needs to familiarise himself with your affairs.
2. Ask your financial adviser to calculate how much cash your executor will need to settle outstanding bills and to pay fees, and make sure that there will be enough cash in your estate for this. Cash can be made available to your executor either by way of liquid assets in the estate or life cover that pays to your estate.
3. If you have business interests, make sure that they are structured to be able to continue as smoothly as possible without you there.

By making sure that your will is clear and easily executable, and that you choose a competent executor, you can be assured that you will end financially well.

The opinion and comment in this newsletter is opinion and comment only and does not in any way constitute personal financial advice. For all financial, fiduciary, investment decisions please consult a qualified and registered expert.

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