Requesting rebates on estate admin fees

Sanlam Trust’s Estates Division regularly receives requests from intermediaries for rebates on estate administration fees. Here are some key questions and answers about requesting rebates and addressing cash shortfalls.

Having paid R7,2 million in rebates in 2018, Sanlam Trust continues to consider all requests for rebates where it makes business sense.

What are the discounts, or rebates, associated with executor fees?

All safe-custody clients receive a 5% discount on their executor’s fees where Sanlam Trust is the nominated executor, subject to the applicable terms and conditions. For example, on an estate with a value of R3 million, the executor’s fee will be 3,33% plus VAT. The executor’s fee will therefore be R99 900 – a saving of R5 100. Note that Sanlam Trust pays commission and DIF on executor’s fees.

What influences the rebate calculation?

There’s no rebate sliding scale according to the size of the estate. The rebate is based on the complexity of the estate and the motivation received. Make sure your clients are aware of the following to ensure a better outcome:

  • Cooperation is key: A bigger rebate can only be considered if the clients are cooperating with the administrator to ensure quick and efficient winding up of the estate. For this Sanlam Trust also needs the support of the intermediary involved to fast-track the process.
  • Resolve family issues as swiftly as possible: Conflict between heirs could also be detrimental to the turnaround time of the estate. The quicker Sanlam Trust can finalise the estate, the more favourable the rebate that could be considered.
  • Finalise financials fast: Where a business entity is involved, the quicker Sanlam Trust receives the business’s financials for the past three years, the more efficiently it can finalise the estate. Obtaining these financials have proven to be a huge stumbling block in winding up estates effectively.
  • Be on top of tax matters: It’s imperative that all tax-related matters are up to date before requesting a rebate as it might have a real impact on whether Sanlam Trust can grant the rebate.
  • Ensure there are no cash shortfalls: Cash shortfalls are the biggest culprits in negotiating for any rebate, so try to ensure there are none or that the cash shortfall is paid without delay when requested by the executor.

Cash shortfalls are detrimental to negotiating rebates. How can this be addressed?

  • Cash is king: Heirs may pay in the cash when requested.
  • Finance may be a possibility: Where appropriate, some clients may opt for a financing option if cash isn’t available. Sanlam offers a finance solution.
  • Equity on the bond: In other cases, clients may have to apply for a bond on the fixed property or access their existing equity. The applicant’s age and income play a big role in this.
  • Redistribution: Heirs sometimes opt to enter into a redistribution agreement if applicable.
  • Sale of the estate assets: Permission may be granted to the executor to proceed to sell estate assets to cover the shortfall.
  • The best option, however, is to do proper estate planning when drafting the will, identify the cash shortfall and put a policy in place. Please note that if a policy is opted for and the policy number is mentioned in the will, a rebate on the value of the policy is given and an executor’s fee of only 1,5% is collected on the proceeds of the policy instead of 3,5%.

How can intermediaries help clients where rebate requests are unsuccessful?

If the request is turned down, intermediaries have the option to sacrifice a percentage of their commission to offer such a rebate to ensure client retention and promote goodwill. This is solely at the discretion of the intermediary.

From a business perspective, why are rebates not guaranteed?

Aside from the factors mentioned above, there are also business reasons that rebates are not guaranteed. While Sanlam Trust considers all rebate requests, it has to manage its costs appropriately by being discerning when granting rebates.

As a business, Sanlam Trust must ensure that it only has the best-qualified administrators to attend to the administration of the estates as well as technology to support its services. To ensure efficient service, Sanlam Trust may not compromise on quality of staff and systems. Business finances must be used appropriately.

In addition, executor’s fees were last increased during the 1980s, while all related expenses have increased exponentially over the years. Sanlam Trust has to absorb these rising costs and their impact on the bottom line while delivering the best possible service to clients and intermediaries.

Because rebates aren’t guaranteed, be careful not to mention the possible rebate to clients before Sanlam Trust has confirmed final approval.

How do I request a rebate?

Send the motivation to the operations manager and the estate administrator.

For further enquiries: Email Elna Pieterse, National Manager: Estates, at elna.pieterse@sanlam.co.za.