This page focuses on the part of a wealth banking relationship that is easiest to get wrong and hardest to undo: estate and fiduciary arrangements. Wealth divisions offer will drafting, trust services and executorship, and the terms you accept there bind long after you can review them.
The qualification criteria are set out first, and then the questions worth asking before signing any fiduciary appointment.
Eligibility Requirements at a Glance
Typical criteria for a wealth banking relationship.
- A qualifying net asset value, or a qualifying gross annual income
- Investable assets or assets under management, in some structures
- Be 18 or older with a valid South African ID, or a passport with a valid permit
- Successful FICA verification, including source of funds and source of wealth
- A clean credit record
- Satisfying the affordability assessment required by law, for any credit facility
- Acceptance of the relationship and service fee structure
Income and Affordability Requirements
Every South African adult should have a valid will. Dying without one means the estate is distributed under the Intestate Succession Act 81 of 1987, which follows a fixed formula that may bear no relation to your intentions. That is the single most common and most damaging estate planning failure, and it is free to fix.
A will must comply with the Wills Act 7 of 1953 to be valid — signed by the testator in the presence of two competent witnesses who also sign, with specific requirements on each page. An invalid will is worse than none, because it creates a dispute.
Free will drafting is widely available. Banks, fiduciary firms and law firms offer it, often at no charge. That is not charity: the drafter usually nominates itself as executor.
Executor’s fees are prescribed as a maximum and are calculated on the gross value of the estate, not the net. On a substantial estate that is a significant amount. The rate is negotiable below the maximum, and it is negotiable at the time the will is signed — not afterwards, when your executor is dealing with your family.
Negotiate it now and record it in writing. This is the most valuable single action in this whole area, and almost nobody does it. Ask for the agreed rate to be recorded in a written annexure to the will.
You can nominate whoever you choose as executor, including a family member with a professional agent to do the work. You are not obliged to appoint the institution that drafted the will.
The National Credit Act 34 of 2005 requires an affordability assessment before credit is granted: the provider must verify gross income, subtract statutory deductions, subtract the prescribed minimum living expenses and subtract existing debt repayments. Lending without that assessment is reckless lending and is prohibited.
Credit and Financial Requirements
Estate duty and capital gains tax apply on death. The Estate Duty Act 45 of 1955 imposes duty above an abatement, and a deemed disposal for capital gains tax purposes arises. Confirm current rates, abatements and exclusions with SARS or a registered tax practitioner — they are set in legislation and revised.
Liquidity in the estate is what protects your family. An estate rich in property and poor in cash cannot pay executor’s fees, estate duty, capital gains tax and outstanding debts without selling assets, sometimes at a bad time. Life policies, correctly structured and correctly nominated, are the usual solution. Ask what the estate would actually need in cash.
Trusts are not a general solution. A trust can serve real purposes — protecting minor beneficiaries, providing for a dependant with special needs, holding a business interest — and it carries ongoing administration costs, its own tax treatment and independent trustee duties. Ask what problem the trust solves before agreeing to one, and be sceptical of a trust recommended without a clearly stated purpose.
Trustees have real duties. A trust must be administered independently of the founder, with proper resolutions and records, and the Master of the High Court supervises. A trust operated as the founder’s personal account can be disregarded, which defeats the purpose entirely.
Nominations on policies and retirement funds override the will in significant respects, and retirement fund benefits are distributed under section 37C of the Pension Funds Act 24 of 1956 by the fund’s trustees, not according to your will. Review nominations whenever your circumstances change — marriage, divorce, a birth, a death.
Review the will after any major life event, and keep the original where the executor can find it. A copy is not the original, and a lost original creates a serious problem.
Documents and Verification Required
What is needed for the relationship and the estate work.
- South African ID document, smart ID card or valid passport with a permit
- Latest payslip, or the latest three where income varies
- Latest three months’ bank statements, or electronic retrieval consent
- Proof of residence, where the provider requires it
- Exact banking details for payout and the debit order mandate
- A cellphone you control, for one-time PIN verification
- Evidence of source of funds and source of wealth
- A statement of assets and liabilities
- Marriage certificate and the antenuptial contract, where applicable
- Details of dependants and intended beneficiaries
- Existing will, trust deeds and letters of authority
- Life policy schedules and current beneficiary nominations
- Retirement fund statements and nomination forms
- Latest income tax assessment or a SARS tax compliance status PIN
How to Apply and Improve Approval Readiness
Enter the relationship through a banker, and treat the estate work as a separate engagement with its own questions rather than as a free extra.
Before signing anything fiduciary, negotiate the executor’s fee in writing, confirm who you are nominating and why, calculate what the estate would need in cash, and review every policy and retirement fund nomination. That afternoon of work is worth more to your family than any product in the relationship.
- Make a valid will — dying intestate applies a fixed statutory formula
- Ensure the will complies with the Wills Act — an invalid will creates a dispute
- Negotiate the executor’s fee below the prescribed maximum, in writing
- Record the agreed fee in an annexure at the time the will is signed
- Remember you may nominate any executor, not the drafter
- Calculate what the estate would need in cash on death
- Ask what problem a proposed trust actually solves
- Review policy and retirement fund nominations — they override the will
- Confirm estate duty and capital gains rules with SARS or a practitioner
- Review the will after any major life event and keep the original safe
Frequently Asked Questions
Why is free will drafting offered?
Because the drafter usually nominates itself as executor. That is not improper, and it is a reason to negotiate the executor’s fee before signing.
Can I negotiate the executor’s fee?
Yes. The prescribed rate is a maximum and it is negotiable below that — but only at the time the will is signed. Record the agreed rate in writing.
Do I need a trust?
Only if it solves a stated problem — minor beneficiaries, a dependant with special needs, a business interest. It carries ongoing costs, its own tax treatment and real trustee duties.
Does my will govern my retirement fund?
No. Retirement fund benefits are distributed by the fund’s trustees under section 37C of the Pension Funds Act. Policy nominations also operate outside the will.
Qualifying thresholds, fee structures, prescribed executor’s fees, estate duty rates and abatements are set by the institution, the Master of the High Court and SARS, and are revised. Confirm current requirements with the institution and a registered practitioner.