Alex Simeonides — Capital Legacy Wills And Trusts
With Alex Simeonides — Estate Administration What Are The Real Costs
In short
Alex Simeonides, CEO of Capital Legacy, explains how a client's death on the eve of the 2010 World Cup exposed the shock of a 3.5% executor fee and led him to build a wills and estates business now drafting 14,000 wills a month. He sets out the real costs of winding up an estate, why dying without a will is so destructive, and how often a will should be reviewed. The one takeaway: A 3.5% executor fee sounds small until it is multiplied by the estate value and presented as an invoice the family must find cash for.
How did Alex Simeonides end up starting a wills company?
He was a financial advisor who found there was no convenient way to get wills done for clients. Life cover was easy to arrange, wills were not, so most advisors a decade earlier had wills in place for perhaps 10 to 20% of clients. He saw a gap and built a fiduciary business with an insurance element at 27.
What was the moment that made him realise executor fees were a problem?
A young client, a molecular scientist, died in a car crash on the eve of the 2010 soccer World Cup, weeks after marrying, leaving a wife and small daughter. A will existed through a bank, but the 3.5% executor fee, applied to the estate value, arrived as a real rand amount and caused friction between Alex and the widow.
How much has Capital Legacy grown in ten years?
From a target of 1,000 wills a month, which took about two years to reach, to 14,000 wills a month. Office space went from 43 square metres to just under 9,000 square metres nationally, with just under a thousand staff and roughly 9,000 financial advisors involved.
What fees actually have to be paid when someone dies?
The executor's fee is 3.5% of the estate, so an estate of one to two million rand means R35,000 to R70,000. On top of that come conveyancing fees to transfer property title, trustee fees of 1% to 3% a year on a testamentary trust, plus master's fees, advertising, clearances and inheritance taxes.
Is it a bad idea to appoint a family member as executor?
A family member alone is the wrong choice, because they will not know where the master's office is, how to get a certificate of balance, cancel a medical aid or deal legally with a firearm. Alex recommends appointing both a professional firm and a family member for oversight, especially on larger or complex estates.
How is the Capital Legacy protection plan priced, and do you have to buy it?
The premium is calculated from the will itself, so it cannot be quoted upfront. A consultant spends about 45 minutes drafting the will, which then reveals the executor, trustee and conveyancing costs, giving a figure such as R87 or R187 a month. Taking the policy is optional; the will is free and Capital Legacy need not be appointed executor.
What goes wrong when someone dies without a will?
Families are left directionless, confused and delayed, with the grieving process pushed aside while they work out who does the next steps. Minor children's inheritances go to the government guardian's fund, so property cannot be sold or rented, and intestate succession imposes fixed percentages that are unlikely to match the deceased's wishes.
How often should a will be reviewed?
Ideally once a year alongside your policies, though few people do it. As a compromise, use life-changing events as triggers: buying or selling a house, a new child, marriage, divorce or a death. Leaving a will to collect dust can be as irresponsible as having none, because it may now say the wrong things.
In their words
And it actually caused a lot of friction between myself and the widow because she kind of blamed me for setting her up with this huge fee and this big bulky bank who is now there to wind up her loved one's estate.
we've grown from a thousand wills a month to 14,000 wills a month. And in the short space of 10 years.
you can cripple an estate, and you can cripple the legacy that you're actually trying to leave to someone, 'cause they can't even get out the starting blocks
what happens is these vultures come and land on these estates and all of a sudden the fees get out of control
you almost become as irresponsible not updating your will as not leaving a will behind because you can have almost said the wrong things because you just left it outdated.
Key takeaways
- A 3.5% executor fee sounds small until it is multiplied by the estate value and presented as an invoice the family must find cash for.
- Beyond the executor's fee, estates carry conveyancing costs, testamentary trust trustee fees of 1% to 3% a year, master's fees, advertising, clearances and inheritance taxes.
- Unpaid estate fees can force beneficiaries to sell assets, including the family home, before they can move on.
- Dying intestate hands minor children's inheritances to the government guardian's fund and imposes fixed inheritance percentages that rarely match what the deceased wanted.
- An outdated will can be as damaging as no will, so it should be revisited yearly or after major life events.
- A drafted but unsigned will has no effect, as David's uncle's estate showed when an old will overrode his clearly stated wishes.
Show notes
In this episode, I chat with Alex about how he built Capital Legacy. We also talk about why Wills are so important.
Testament to their mandate of making it easier to get your Will in place is the 380,000 clients they have assisted over the last 10 years. This number grows monthly with, on average, 11,000 new clients placing their trust in Capital Legacy to ensure their Legacies are protected too.
Passing away without a Will is problematic in quite a number of ways. Shortly put, though, it means that the deceased dies intestate and his/hers last wishes will most probably not be adhered to.
Capital Legacy draws up Wills at no cost to their clients, puts plans in place to cover legal fees and takes care of deceased estates. Because of the company’s focus on wills and its specialised processes, it finalises estates on average much quicker than industry standards.
Word of mouth regarding Capital Legacy has been a big part of the thousands of enquiries the company gets every month and is a testament to their focus on good old-fashioned client service.
SOURCE: https://www.bizcommunity.com/Article/196/546/227250.html
Frequently asked questions
Is it too late to take out the protection plan in your late sixties?
No. Capital Legacy has a product designed for older clients whose premium rises with inflation rather than age, so it stays affordable into the nineties. Alex says it can protect around 90% of fees for less than a muffin and cappuccino a month.
Does a will override a marriage contract?
No, and Alex calls it a hard no. The marriage contract stands regardless of what the will says. A spouse also cannot be disinherited; they can bring a valid spousal claim against the executors, so advice is needed in that situation.
Do living wills actually work in South Africa?
Alex says a living will is more a wish than an instruction. From his own experience with his father, South African hospitals and doctors do not follow it the way American ones might; they will ease suffering but will not pull the plug.
What does a will normally cost elsewhere?
Between about R500 and R2,500 through an attorney. Some banks waive the drafting fee but insist on being appointed executor so they collect the 3.5% from the estate. Alex says the real question is what the fees will be at death.
Can more than one executor be appointed?
Yes. Alex encourages appointing a family member, friend or family accountant alongside a professional estate administration firm, since the family member will not know the shortcuts or have time to fight banks for balances.
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