The real cost of death and other facts

18 September 2019

At times, our beloved planet surprises us with the most amazing fact and statistics. Here are some favorites:

  • The average cloud has a weight equal to 100 elephants;
  • For every human on earth there is about 1 000 000 million ants,
  • Wild plants can consist of up to 0.00001% gold particles, and
  • It is estimated that as many as one in four deceased estates in South Africa do not have sufficient cash to pay all death costs and taxes on death when the deceased estate is being administered by the executor. In such scenarios, the executor of the estate will sell assets in order to raise sufficient cash to cover the costs and taxes of the deceased estate.

You will agree that these facts are simply mind-blowing with the last one downright scary. One out of four could be one of your friends or even a family member. It could be you! When last did you do a liquidity test of your “deceased estate” as part of your personal financial plan? You should consider doing this on a regular basis whilst maintaining your financial plan through the ebbs and flows of life’s stages.

The importance of having a last Will and Testament

Ultimately, on death, one of the following scenarios kick in:

  • If you choose to ignore the fact that the inevitable will happen, then on death, legislation will determine who stands to inherit from you. The Intestate Succession Act stipulates how your estate will be dissolved and in what percentages. Not ideal. You might even miss the chance to say “Hi!” to your least favorite family member in your Last Will and Testament!
  • The alternative is to draw up a Last Will and Testament. A Last Will and Testament will ensure that you have control over what will happen to your assets upon your death. Do you agree? In theory, the answer is yes. When you draw up a Will and nominate your executor, the guardian of your minor children and trustees of your testamentary trust, you, after long deliberation, also determine who will inherit the Lego salt and pepper set that your aunt brought you as a gift from her last visit to Lego World in Denmark. Unfortunately, not all the time:

1. When the executor of your Will is faced with insufficient cash in the administrative process, he or she will sell assets to cover those expenses and taxes that have to be settled as part of the administration of your deceased estate. That may include the Lego salt and pepper set. Unfortunately.

2. No matter how sincere your intent is when drafting your Will, if you draft your will in isolation and not as part of your bigger financial plan, it may turn into a real disaster upon death.

3. DIY Wills is also a danger, if not executed correctly it may be invalid and then your estate planning is back to square one. Never attempt to draft a Will on your own.

Questions when drafting a Last Will and Testament

Google “drafting my own Will” and the questions are endless. Most popular are:

Can I draft my own Will?

Sure, this is an option, but why will you attempt to a DIY with one of the most important documents you will ever sign? You can buy a Will template online, but does it include all the legal jargon to make it a legal document?  Are you sure how to execute the Will in a correct manner to make it a legal and binding document? On a side note, a person whom you gave power of attorney, may not draft a Will on your behalf.

Can my nominated executor also be an heir or beneficiary in my estate?

Yes, your executor may inherit from your estate. The question should rather be: Why must a grieving family member be burdened with the administration of your estate?

How much are executor’s fees?

Executor’s fees as per legislation are 3.5% on the gross value of assets that the executor will include in your Liquidation and Distribution Account. If registered for VAT, that must be added. You are allowed to negotiate this fee upfront with your nominated executor.

What is a Last Will and Testament?

A document that allows you to decide who should be the beneficiaries of your estate once you die. It will help and guide how any property and assets must be distributed in a legal manner. It must also specify any other provisions towards your family and dependents. You must also nominate your executor to prevent any confusion.

What is an executor?

This person or institution will manage the administration and distribution of your estate. The executor becomes legally responsible regarding your estate’s finances. The executor must also make sure that all taxes, debt, and liabilities are settled. Most importantly, the executor must distribute any property and money correctly and in a legal manner. The administration process is complex with many legal requirements. Therefore, make sure you nominate someone who will be able to do what is required.

The stress test and the cost of death

When drawing up your Will, it is important to do a stress test. It simply means doing a dummy execution of your Will and distributing your estate while you are still alive. Pretend you die and test if the execution of your Will is practical and if there is sufficient cash or liquidity to ensure that your executor does not need to sell any assets. Test whether your Will fit into your greater financial plan and personal financial planning goals and whether or not you need to adjust your planning process. The following is an example of the stress test:

  • Your only asset is a house worth R5 000 000. You bequeath this property in your Will to your two grown-up children. Is it practical from an administrative point of view? Absolutely yes!
  • However, the stress test may indicate that there could be estate duty payable.
  • Do not forget about possible capital gains tax as part of the final income tax assessment, the executor’s fees and other administrative costs. What if there is still a small bond that needs to be settled? What about possible fees related to rates and taxes linked to the property?
  • A few calculations later and you will realize that death could cost you an estimated half a million rand in this scenario
  • Unless your children are willing to pay the cash and costs upfront before the property could be transferred to them, the executor could be forced to sell the property in order to cover these costs and taxes.
  • The Last Will and Testament is clearly part of your bigger financial and estate planning goals. If you draw it up in isolation, the cost of death may haunt your grieving family members.

Top reasons to have a Last Will and Testament

Top 10 reasons to have a Will:

10 Reasons why an Absa Will is the best option:


You can decide how your estate will be distributed


Reputable company and continuity – you’re not dependent on one person


You can nominate a guardian of your choice to take care of any minor children


Easy, timely and accurate winding up of an estate, thanks to highly qualified legal and fiduciary experts


Quicker winding up of your estate


Competitive rates for the set-up and administration of trusts


Minimises estate duty taxes, currently at 20% for asset value above R3,5 million


Bank account will not be frozen if there’s sufficient liquidity in the estate at death


You decide who will manage your estate (trustees)


Affordability for pensioners and competitive discounts


You can disinherit individuals who would otherwise stand to inherit if you die intestate (without a Will)


Free and unlimited consultations on your Will – no hidden costs


Make sure that you estate is properly funded


Safe and secure custody of your Will


You can change your Will if your life circumstances change


We’ll remind you every year to review your Will


You are able to decide and provide for your burial preference


Islamic Law of Succession adhered to for Islamic Wills


Tomorrow is not promised


A worldwide footprint means we can manage your foreign assets

  • Your last Will and Testament is more than just a matter of deciding who gets what upon death
  • The Will is clearly an integral part of the grand scheme of things when it comes to personal financial planning

The drawing-up process ideally should form part or your risk management plan. Your executor must settle all your debts, estate duty, capital gains tax, executor’s fees and other administrative costs on death. If your estate planning process indicates insufficient cash on death, then you really should consider life cover.

Real cost of deceased estates and the cash shortfall

  • If there is a cash shortfall in your estate, your executor will normally inform the residual heirs in your Will about the situation. Your heirs may opt to pay this shortfall, but need to pay this upfront. If not, the executor will have no choice but to sell off some or all assets. Imagine the executor having to sell off the family home because you failed to plan properly. He, who fails to plan, plans to fail.
  • There is no guarantee as to what the total costs and expenses in your estate might be. The value of your assets and the amount of all the liabilities upon death is closely related. It also interacts with the provisions in your Will and the legislation governing the different costs and taxes; whether it be income tax and/or estate duty.
  • Estate costs, taxes and liquidity will affect the distribution of your estate if you fail to plan properly. You may be leaving a family behind that is financially dependent on you. Will your dependants be provided for in case of your untimely demise? Did you consider this when drawing up your Will?

To summarise, the drawing up of your Last Will and Testament is one thing, but it remains an integral part of your personal financial plan. Do not attempt to do this on your own; the risk of getting it wrong and the consequences thereof is not the legacy that you want to leave behind.

Get your Personal Financial Plan created and managed by an ABSA insurance Financial Advisor and discuss the drawing up of your Last Will and Testament at the same time. Send an e-mail to or call 011 225 1797 to start your journey of financial planning success.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.