Trust Companies and Bank Fiduciary Services: How to Compare Them

Who the main players are

The large fiduciary businesses in South Africa are mostly attached to the banks and the life insurers. FNB, Standard Bank, Nedbank, Absa, Old Mutual and Sanlam all run fiduciary or trust operations that draft wills and act as executor. Alongside them sit independent fiduciary practitioners and law firms doing the same work.

We do not publish a fee table comparing them, and you should be sceptical of any site that does. Fee schedules change, they differ by product and by estate, and a table that is six months old will cost you more than it saves. What we can tell you is what the ceiling is and what to ask.

They are all capped by the same tariff

This is the fact that changes the conversation. Executor's remuneration is capped by the prescribed tariff under section 51 of the Administration of Estates Act at 3.5% of the gross value of assets, plus 6% of income accrued and collected after the date of death, plus VAT where the executor is a registered VAT vendor. Every one of these institutions is a VAT vendor.

Institutional executors generally quote at or close to the full tariff. That is not overcharging, it is the maximum the law permits and they are entitled to it. What people miss is that the tariff is a ceiling, not a fixed price, and it is negotiable.

The moment to negotiate is when the will is being drafted, not after the death. Once the institution is nominated in the will and the person who signed it has died, your leverage is gone. Ask for a reduced rate in writing at drafting stage and ask for it to be recorded.

Work out what the tariff actually comes to on your estate first: /tools/deceased-estates/executor-fees-calculator

The free will is not free

Almost all of these institutions will draft a will at no charge. The commercial logic is straightforward: the will nominates them as executor, and the executor's fee on the eventual estate is worth vastly more than a drafting fee.

That is a legitimate business model and the wills are usually competently drafted. But understand the trade you are making. A free will today is typically paid for by the full tariff on the estate later, which on a R3 million estate is over R100,000 including VAT.

You are also free to take the free will and then change the executor nomination. It is your will.

What institutional executors are genuinely good at

• Continuity. They do not retire, emigrate or die mid-estate, which is a real risk with an individual named as executor.
• Process. They do this every day, they know what each Master's office wants, and the file does not stall because someone did not know a form existed.
• Complexity. Trusts, offshore assets, business interests and estate duty planning are handled routinely.
• Indemnity. There is a large institution behind any mistake, and professional indemnity cover.
• Neutrality in a divided family. An institution has no side to take, which is sometimes worth the fee on its own.

What people complain about

• Responsiveness. Estates get allocated to a consultant with a large portfolio, and families frequently report struggling to get updates.
• Being a small file in a big queue. A modest, simple estate is not a priority for a business that also handles very large ones.
• Fee inflexibility after the death, which is precisely why the negotiation has to happen at drafting.
• Being routed into the group's other products, since the fiduciary business sits next to investment and insurance businesses that would like the beneficiaries' money.

The questions to ask, in writing, before you nominate anyone

1. What executor's fee will you charge, as a percentage, and is it at the full tariff or reduced? Get the answer in writing and keep it with the will.
2. Is VAT charged on top of that fee?
3. Are there any additional fees beyond the executor's remuneration, for example an administration fee, a trust administration fee, or fees for handling property transfer or tax returns?
4. Who will actually handle the estate, and what happens if that person leaves?
5. How often will the beneficiaries be updated, and by whom?
6. Will you use your own in-house conveyancer for property transfer, and at what cost?
7. Can the fee agreement be recorded in the will itself so it binds you later?
8. What happens if the family wants to remove you as executor after the death?

Frequently asked questions

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