The month the bond nearly cost the house

The home was a four-bedroom in a suburb the family had lived in for nineteen years. The market value at the time of death sat around R3.5 million. The bond, after years of careful overpayments, was down to R2 million.

What the surviving spouse did not know (what almost nobody knows until they need to) is that South African executor's remuneration is calculated on the gross asset value of the estate. Not the equity. The full R3.5 million.

At 3.5% plus VAT, the statutory executor's fee on the house alone came to just over R140,000. The firm administering the estate was professional, careful and well-priced, and the fee was simply what the law allows.

But the estate's liquid assets (two transactional bank accounts and a small money-market account) totalled R86,000. The retirement annuity was paid directly to the spouse outside the estate. There was no life cover that paid into the estate.

For three weeks, the family seriously considered selling the house to settle the executor's fee, the outstanding bond, the rates clearance figure and the SARS clearance. The children offered to lend money. The spouse hesitated to borrow against a home she would shortly own outright.

The story has a softer ending than it could have had. The executing firm agreed in writing to defer its fee until the bond was settled and the house transferred. A short-term loan from a sibling covered the rates and SARS. The house was kept.

Every estate plan that depends on a bonded family home for its largest asset needs a plan for liquidity. That can be a deliberately structured life cover that pays into the estate, a written agreement up front with the nominated executor about the fee, or simply a frank family conversation about who can lend what and for how long.

It almost never works to assume it will all sort itself out. The Master, the bank, SARS and the conveyancer do not wait.