How to Save Thousands on Estate Administration Fees

Estate administration is a task that’s often overlooked when putting together an estate plan, or more specifically making a Will.  In fact, in a 2018 survey, 74% of Kiwis said they thought it would cost less than $1000 to administer their estate, when actually, a more accurate estimate would be adding another 0 at the end of that number (yes $10,000!). 

If getting your Will sorted has been on your to-do list for a while but you haven’t quite gotten around to it, or you want to learn more about estate administration, this blog is for you.

Writing a Will is only one piece of the puzzle, and if you have $15000 worth of personal assets then you are going to need estate administration.

In this post, we’ll tell you what estate administration is, what’s involved, and how planning ahead can save you thousands, leaving more behind for those you care about. Let’s dive in.

What is estate administration?

Estate administration is the admin behind distributing your estate. If you think of your Will as an instruction book, estate administration would be the process of following out those instructions and the conclusion is your beneficiaries receiving their inheritance. However, it pays to keep in mind that all bills, debts and liabilities are paid before your loved ones receive anything, they basically get whatever is left over after everything else has been sorted which is why the inheritance piece is the last chapter.

Once your chosen executor has been granted probate they are then able to start the activities involved in administering (aka settling) your estate.  Depending on the size and complexity, the administration could take an average of 6-12 months if you have a Will in place. If you don’t, the time is estimated to increase by 50% meaning it could be 18 months or more before your beneficiaries receive anything at all (that includes your group life insurance, and any personal assets or bank accounts under your sole name). If there are people in your life that depend on funds that right now only sit in your name, this amount of time could have a significant impact on their day-to-day life.

What is the process of estate administration?

The estate administration requirements can vary significantly depending on each person’s estate and family situation but here a few of the tasks.

• Finding and contacting beneficiaries

• Cashing in assets i.e. KiwiSaver and bank accounts

• Making sure your property is insured and or maintained

• Advertising for creditors

• Paying all debts

• Getting assets valued

• Dealing with gift requests

• Cancelling subscriptions

• Claiming insurance or any entitlements such as annual leave from an employer

• Checking employee entitlements

• Transferring ownership of joint assets

• Obtaining a declaration of family history

• Completing an end of life tax return

• Distributing the estate

• And more…..

Just laying it out there; it’s not a short or particularly easy list. Additionally, some of these tasks can be quite technical which is why an estimated 95% of people end up seeking the help of a professional. So if you’re thinking your admin fees won’t cost much by having a family member or friend do it, there is still likely to be fees for professional services.

Besides the costs associated with executorship and estate administration, it’s important to know that any executor you select (either personal or professional), is legally and financially liable for any mistakes they make that negatively impact beneficiaries. We often refer to the situation that occurred when a family friend who had been appointed executor had to take out a second mortgage on their house to pay a beneficiary the $60,000 due to a mistake he’d made. Ouch! Although using a professional means it will cost for the expertise, at least you’ll know that’s exactly what you’ll get: experts.

Now before we continue and get into how you can save thousands on your estate fees, there’s one more crucial piece you should consider. We all handle the death of someone close differently; nonetheless, it is not an easy time for anybody. If your initial thought was appointing your partner or children as executor this is well within your rights to do so. However, we suggest that you consider how they might be feeling upon losing your wonderful self, and how you feel about all the responsibilities they will have to carry out during this time of grief. One way to keep a family member or friend involved in the process of settling your estate without having to bear the weight of financial liability is to appoint them as an advisory trustee. This way they liaise and guide the executor in all relevant matters without having to take the brunt of all the work involved.

How to save thousands on estate administration fees

There are a lot of factors that can influence the time that goes into administering an estate. Here are some tips that can make a big difference to the overall time and cost.

1. The first and most effective thing you can do is have a legally valid Will, this alone can save you thousands of dollars.

2. Gifts of significance: In your Will you have the opportunity to leave any gifts of significance, these are usually high value or high sentiment items. The more gifts you have listed in this area, the more time it will take, which in turn, increases the costs. If you have a long list of other minor gifts that you want to leave to specific people, you may want to consider listing those items and who should receive them in a separate document placed with your Will. This is not legally binding but it does act as a record of your wishes which your advisory trustee could distribute.

3. Make sure you always have the most up to date contact information for all your beneficiaries and backup beneficiaries so they can easily be reached. It is not uncommon for time to really add up having to search for beneficiaries.

4. Keep all your important documents, insurance policies, ownership papers, receipts, etc. in an easily accessible place. The Footprint Will It package comes with a digital vault that is designed specifically for this purpose.

5. A lot of time can be saved by ensuring your executor knows you have a Will, when it was last updated and where it is stored. The Will It package has a Will notification function that allows you to send a notification to whomever you please advising them that you have done your Will. You can also store the original signed and witnessed hard copy of your Will with Footprint at no extra cost.

6. Discuss your Will with your beneficiaries and explain what you have done and the reason behind it. Though there are no guarantees, this could reduce the likelihood of time consuming conflicts.

7. Your estate only consists of assets that are held in your sole name only. If you have any assets that should be owned jointly, you may want to adjust the ownership so that after you pass away those assets can be transferred automatically to the other person.

Save more with Footprint Rewards

Footprint Rewards is a great way you can save on your probate and estate administration fees, while also protecting your family from having to deal with the responsibility and financial liability that comes with being an executor.

Upon joining you earn a $100 discount on fees and then another $100 every year after. Terms and conditions apply.

If you’re ready to join Footprint Rewards get started with a Footprint Will It package today, or log in and join now! If you already have a Will with us we’ll give you a free opportunity to update your executor so that you can join and start earning rewards immediately.