How to Avoid Excessive Executor Fees: What Every South African Needs to Know Before Drafting a Will

When drafting a will, the focus is usually on deciding who should inherit assets, who should care for minor children, and how wealth should be distributed among family members.

Yet one of the most important decisions in any will often receives the least attention: choosing an executor. For many people, this decision is made almost automatically.

A bank offers a free will. A financial institution provides a complimentary estate planning service. A fiduciary company promises professional administration of the estate. The paperwork is signed and filed away, often without much thought.

Years later, when the estate is wound up, loved ones may discover that the “free” will came with a very expensive price tag.

The reason is executor fees.

While these fees are entirely legitimate and compensate executors for important work, many consumers don’t fully understand how they are calculated or how significantly they can reduce the value of an estate.

Understanding executor fees and planning for them properly can help preserve more wealth for your beneficiaries and prevent unpleasant surprises during an already difficult time.

What Does an Executor Actually Do?

Before discussing fees, it is important to understand the role of an executor. When a person dies, their estate must be administered according to legal procedures before assets can be transferred to beneficiaries. The executor is responsible for managing this process. Their duties typically include:

• Registering the estate with the Master of the High Court
• Locating assets and liabilities
• Notifying creditors
• Settling outstanding debts
• Collecting money owed to the estate
• Preparing estate accounts
• Managing tax matters
• Distributing assets to heirs
• Transferring ownership of property where necessary

These responsibilities are important and often involve dealing with multiple stakeholders, including banks, attorneys, SARS, insurers, and the Master’s Office.

The work can be technical and sometimes time-consuming. For this reason, executors are entitled to be compensated for their services. The issue is not whether executors should be paid. The issue is how they are paid.

How Executor Fees Are Calculated

Many people assume executor fees are based on the amount of work performed. That would seem reasonable. After all, most professionals charge according to the time they spend on a matter, their expertise, or the complexity of the work involved. Executor fees often work differently.

In South Africa, executor remuneration is generally calculated as a percentage of the gross value of the estate. The statutory maximum fee is:

• 3.5% of the gross value of assets in the estate
• Plus VAT

In practical terms, this amounts to roughly 4% of the estate’s value. Executors may also be entitled to additional fees on income that accrues in the estate while it is being administered. This includes income such as:

• Interest earned
• Rental income
• Dividends received

This additional fee can substantially increase the overall cost in larger estates. On paper, the percentage may not seem excessive. In practice, however, it can result in surprisingly large amounts of money leaving the estate.

Why Percentage-Based Fees Can Be Problematic

The controversy surrounding executor fees is not necessarily the fee itself. It is the relationship between the fee and the actual work involved. Consider two estates. The first estate consists of:

• A family home
• A few unit trust investments
• A bank account

The total estate value is R4 million. The second estate contains exactly the same types of assets but is worth R10 million. The administration process may be very similar in both cases. The paperwork is largely the same.

The legal requirements remain similar. The number of hours spent may not differ significantly. Yet the fee in the larger estate could be more than double the amount charged in the smaller estate because the fee is linked to value rather than effort.

Many consumers only discover this after calculating the actual amount that could be payable. For a wealthy family, executor fees can reach hundreds of thousands of rand. That money comes directly from the estate before beneficiaries receive their inheritance.

The “Free Will” That Isn’t Really Free

One of the most common estate planning traps stems from free will services. Banks, insurers, and fiduciary companies frequently offer complimentary will drafting. For consumers, this appears attractive. A professionally drafted will at no upfront cost sounds like a sensible opportunity. The catch often appears in the executor nomination clause.

Many institutions that draft a free will nominate themselves as executor. At first glance, this may not seem problematic. After all, they are professionals experienced in estate administration. The concern is that many consumers do not realize they are effectively agreeing to future executor fees that could run into hundreds of thousands of rand.

The will may have cost nothing today. The estate could pay substantially later. This doesn’t mean these services should be avoided altogether. Professional executors play an important role. The key is understanding what you are agreeing to before signing.

Why Executor Appointments Matter

One of the most overlooked aspects of estate planning is that an executor appointment carries significant authority. Once an executor is appointed under a valid will and confirmed by the Master, changing that appointment is not simple. Many people assume their family will be able to replace an executor if they believe the fees are unreasonable. In reality, removing a nominated executor can be a complex process requiring substantial grounds.

Family members generally cannot simply decide they would prefer someone cheaper. This means decisions made when drafting the will can have lasting financial consequences.

Appointing a Spouse as Executor

Many financial planners recommend naming a spouse as the primary executor, especially when the estate is relatively straightforward. This approach can offer several advantages. First, it allows the surviving spouse greater control over how the estate is administered.

Rather than being locked into a specific firm’s fee structure, the spouse can decide whether professional assistance is required.

Second, it creates flexibility. The spouse can:

• Administer simpler aspects personally
• Engage professionals only when needed
• Negotiate fees
• Shop around for better pricing

This flexibility can potentially reduce overall costs significantly. However, this approach is not suitable for every family. The surviving spouse must be willing and capable of fulfilling the role or coordinating the process with professional assistance.

The Value of Backup Executors

Life is unpredictable. The spouse who appears to be the obvious executor today may not be willing or able to fulfil that role when the time comes. Age, health issues, or other circumstances may intervene. This is why estate planners often recommend naming successor executors. For example:

• Primary executor: Spouse
• Alternate executor: Adult child
• Second alternate: Professional fiduciary company

This layered approach provides flexibility while preserving options for the family.

Negotiating Executor Fees Before It’s Too Late

One of the biggest mistakes people make is assuming executor fees are fixed.In many cases, they are negotiable. The best time to negotiate is before death, not afterward. Once a professional executor has been nominated in a will, negotiating becomes considerably more difficult. Many people never ask whether discounts are available.

They simply accept the standard terms. However, several firms may be willing to negotiate reduced fees depending on:

• Estate value
• Complexity
• Existing client relationships
• Asset structure
• Additional products held with the institution

Asking the question may save beneficiaries a considerable amount of money in the future.

Consider a Pre-Agreed Fee Structure
Some families choose to incorporate fee agreements into their estate planning strategy. This can involve:

• Negotiating fees upfront
• Recording agreed arrangements
• Including references within estate planning documents

The objective is to create certainty and remove ambiguity. Knowing exactly what will be charged allows families to make informed decisions.

How Organisation Can Reduce Costs

Estate administration becomes significantly easier when financial affairs are organised. Imagine two scenarios. In the first, the executor receives:

• A list of all assets
• Bank account details
• Property information
• Investment statements
• Insurance information
• Contact details for advisers

Everything is neatly documented. In the second scenario, the executor receives:

• Boxes of paperwork
• Missing account numbers
• Outdated documents
• Unknown investments
• Little guidance

The difference in time and effort can be enormous. The easier it is to identify assets and liabilities, the more efficient the administration process becomes. Organisation often translates directly into lower professional costs.

The Importance of a “When I’m Gone” File

One of the most practical estate planning tools is a comprehensive information file. This document should contain:

• Asset lists
• Debt information
• Bank accounts
• Investment details
• Insurance policies
• Property ownership records
• Adviser contact details
• Digital account information
• Location of the original will

A well-prepared file can save executors countless hours and significantly reduce stress for family members. More importantly, it reduces the likelihood that assets are overlooked or difficult to access.

When a Professional Executor Makes Sense

Despite concerns about costs, there are many situations where a professional executor remains the best choice. These include estates involving:

• Complex family structures
• Business interests
• Trusts
• Overseas assets
• Significant tax issues
• Family disputes
• Large property portfolios

In such cases, the expertise of an experienced professional may save the estate money by avoiding delays, disputes, or costly mistakes. The objective should not be choosing the cheapest executor. The objective should be finding the most appropriate executor at a fair fee.

Executor Insurance and Estate Cost Protection

As awareness of executor costs has increased, some insurers have developed products designed to assist with estate administration expenses. These products may help cover:

• Executor fees
• Testamentary trust costs
• Legal expenses
• Estate administration expenses

Such products are most suitable for individuals who:

• Do not have a trusted family member to act as executor
• Have complex estates
• Want certainty regarding estate administration costs

As with all financial products, costs, benefits, and limitations should be evaluated carefully.

Estate Planning Is About More Than a Will

Many people believe estate planning begins and ends with drafting a will. In reality, a will is only one component of a broader estate plan. A comprehensive estate plan considers:

• Asset ownership
• Tax implications
• Estate duty
• Liquidity requirements
• Family protection
• Guardianship
• Executor appointments

The executor plays a central role in ensuring these plans become reality. Choosing the right person or institution to fulfil that role is therefore one of the most important financial decisions you can make.

Questions to Ask Before Naming an Executor

Before signing your will, consider asking:

• How are executor fees calculated?
• Can the fee be negotiated?
• What services are included?
• What services are excluded?
• Will additional legal fees apply?
• What happens if beneficiaries wish to use another executor?
• Are there discounts for simple estates?
• Is there a cap on fees?

The answers may influence your decision significantly.

The Bottom Line

Executor fees are one of the most overlooked costs in estate planning. Because they are only paid after death, many people fail to appreciate how dramatically they can reduce the value of an estate.

A “free” will may come with a costly long-term commitment. A percentage-based fee structure may result in substantial charges even when the administration process is relatively simple. And once an executor is appointed, changing that appointment may not be easy.

The good news is that with proper planning, families have options.

By understanding how executor fees work, carefully considering who should serve as executor, keeping financial affairs well organised, negotiating fees where possible, and reviewing estate plans regularly, individuals can help ensure that more of their hard-earned wealth reaches the people they intended to benefit.

Estate planning is ultimately about protecting your loved ones. Taking the time to understand executor fees today could save your family a significant amount of money tomorrow.

References

1. South African Administration of Estates Act 66 of 1965.
2. Department of Justice and Constitutional Development, Master’s Office Guidelines.
3. Financial Planning Institute of Southern Africa (FPI) estate planning guidance.
4. Fiduciary Institute of Southern Africa (FISA) estate administration resources.
5. Fisher-French, M. “How to avoid excessive executor fees”, News24.
6. SARS Estate Duty and Deceased Estate guidance.