Executor remuneration is a critical aspect of estate administration in South Africa, governed by a legal framework designed to strike a balance between compensating executors for their services and preventing excessive fees that may deplete the estate. This article explores the legal considerations and nuances surrounding executor remuneration under South African law.

The authority for executor remuneration in South Africa is primarily derived from the Administration of Estates Act No. 66 of 1965 (“the Act”). Section 51 of the Act outlines the principles guiding the determination of executor fees, emphasizing fairness and reasonableness.

Executor remuneration is typically calculated as a percentage of the gross value of the deceased estate. According to the current regulations, the maximum allowable fee that an executor can charge is 3.5% of the gross value of the assets in the estate, and in addition, the executor is also entitled to a fee on all income earned after the date of death at the current tariff of 6% (plus VAT where applicable).

While the Act provides a structured approach to calculating fees, it also allows for flexibility in certain circumstances. Executors may take into account various factors, including the complexity of the estate, the nature of assets involved, and the time and effort expended in administering the estate. However, any fees must be justifiable and reasonable.

The testator has the discretion to specify the executor’s remuneration in the will, and if the will is silent on this matter, the executor and the heirs may reach an agreement, subject to the statutory limits, e.g., on an agreed time cost basis. It is crucial for such agreements to adhere to the principles outlined in the Act.

The Master of the High Court plays a supervisory role in the administration of estates, and the executor is required to submit a detailed account of the estate (i.e. the liquidation and distribution account), including the proposed remuneration.

The Master has the ultimate authority to scrutinize and, if necessary, adjust the proposed executors fees/remuneration to ensure compliance with the statutory framework.

If Heirs or beneficiaries believe the executor fees to be unreasonable or excessive, they may contest the fees. In such cases, the Master may intervene and assess the reasonableness of the remuneration. Executors should be prepared to provide detailed records justifying the time and effort expended in administering the estate.

In instances where a professional executor or a legal practitioner is appointed, the fees may be subject to additional scrutiny. The courts have emphasized the need for transparency and reasonableness in such cases, considering factors like the executor’s expertise and the complexity of the estate. In instances where professional fees are levied, this would normally be rendered on a time-cost basis.

Executors are at all times obligated to disclose their remuneration to the heirs or beneficiaries. Consequently, given the legal intricacies surrounding executor remuneration, it is advisable for executors, especially non-professionals, to seek legal advice to ensure compliance with the statutory framework and to navigate potential challenges that may arise during the estate administration process.

In conclusion, executor remuneration in South African law is a carefully regulated aspect of estate administration, balancing the interests of the executor and the estate beneficiaries. Executors must be diligent in adhering to statutory limits, justifying additional fees, and maintaining transparency throughout the process. Legal guidance is invaluable in navigating the complexities of executor remuneration to ensure a fair and lawful distribution of fees in line with the Act, and it is advisable that the matter of the fees charged by an auditor/attorney be agreed and confirmed in writing at the earliest opportunity to ensure that where such auditor/attorney is appointed as the agent of the executor, there is absolute clarity as to their charges.

By Eunice Davey (Director) | Corporate and Commercial Department