Remember the STATE-ment we covered in last week’s blog (STATE as in the Republic of SA)? Let’s add some new words to our everyday conversation.
- Estate. This is a legal entity that can be thought of as a container. At the time of my death, all my financial affairs are “frozen”, and placed into this container. What I own (my assets), and what I owe (my debt), form part of my estate. This means that, from the date of death, my bank accounts are NOT accessible to any survivor, except through the executor. (Life insurance policies with named beneficiaries, and funds that provide for my retirement, generally are NOT included in my estate.)
ALSO READ : My Money, My Business, My Death: How does the State see it?
- Residue of estate. After all debts, taxes, and duties are paid from my estate, what is left is the This is distributed to my heirs. Practically this means that I must allow for the cost of dying. I don’t leave my estate to my heirs; I leave them the residue of my estate.
- Executor. An executor is a person, or often, a person linked to a specialist company, to whom I assign the task of winding up my estate. My executor represents me, between my time of death, and winding up my estate. Our banks and other organisations will address my mail to (for example): ESTATE LATE J. PILLAY, ABC ATTORNEYS, PO Box 123, etc.
- Estate duty. This is the tax paid (to SARS) on the remainder of my estate, after all money (and other assets) due to the estate, are received, AND after debts owed by the estate are paid out. (Is there enough cash in the estate to pay estate duty? That is an important question in personal financial planning – my surviving spouse may face a huge challenge if there is no cash available to enable her to receive whatever is due to her.)
- Executor’s fees. This is the cost charged by my executor to wind up my estate. It is currently 3.5% of the gross value of my estate. This means that if all I own is a flat valued at R700,000, then the value of my estate is R700,000. The minimum executor’s fee is then R24,500 (3.5% of R700,000). There needs to be at least this amount of cash available in my estate. Executor’s fees are one of the many costs incurred when we die. Life insurance to cover the cost of death is often recommended.
- Wind up an estate. This is the complex legal/administrative process of paying all taxes, fees, and duties, and distributing the residue of my estate to my heirs in terms of my will. (Practically, winding up my estate begins at the time of my death, and ends when all I owned, has been disposed of in accordance with my will.) This process could take many The procedure to be followed is specified in law.
Let’s pause for breath. Read those six definitions again. I’ve made them specific to me, the author of this blog, Jay Pillay. Insert your name, and your face, wherever you see I, ME, or MY. Why? Because it’s simply a matter of life or death. We are not finished with the language of dying yet. A few more definitions are coming up in my next blog.
Jay Pillay’s first two critical decades were spent where his first decade began – in Pietermaritzburg. After studying at ML Sultan Technikon in Durban (anyone remember that place?), he then joined the sugar industry, working in Tongaat, Durban, and Xinavane – a sugar mill village 120km north of Maputo. Oh yes – there was a brief period of unfaithfulness, when he flirted with aluminium in Richard’s Bay. Upon retirement, he and his wife Dorothy – settled in Southport.
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