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Bequeathing immovable property: What you need to know

To ensure the smooth transfer of the property after your death, ensure that your will remains updated and that you keep up-to-date records of crucial documents.

If you plan to bequeath immovable or fixed property to an heir in your will, bear in mind that the process can be a complicated one. As a testator, it is always advisable to seek professional advice when drafting your will to ensure that your wishes are in line with legislation and actionable.

As the owner of registered immovable property, your property will need to be transferred to another person in the event of your death – either in terms of the laws of intestate succession or in terms of your will. Where you nominate an heir to your fixed property in terms of your will, it becomes the job of your appointed executor to ensure that the property is transferred into that person’s name. However, bear in mind that your marital contract may limit your freedom to bequeath your fixed property and it is therefore important to fully understand the impact of your matrimonial property regime on your immovable property rights.

For instance, if you are married in community of property, only 50% of the joint estate is yours to bequeath. This means that your surviving spouse will remain a one-half share owner of the fixed property. Where you are married out of community of property with the accrual and intend bequeathing your property to a third party, bear in mind that your surviving spouse’s claim for her share of the accrual could necessitate the sale of your fixed property, which could complicate matters. 

In terms of legislation, the person appointed as executor to your deceased estate is the only person who is lawfully authorised to handle the assets of your estate. Before transacting with any assets in your estate, however, the executor must ensure that he has been provided with an official Letter of Executorship by the Master of the High Court.

From a cost perspective, where the fixed property is transferred to another person by way of inheritance – whether testate or intestate – no transfer duty is payable, and Sars will issue a transfer duty exemption certificate upon application by the transferring attorneys. However, keep in mind that your deceased estate will remain responsible for the conveyancing costs, Deeds Office fees, and rates and levy clearance certificates. Electrical and entomologist certificates do not need to be furnished by your deceased estate.

The transferring of fixed property from a deceased estate is a complicated process that needs to be managed carefully by the executor who will then outsource the transfer process to a conveyancing attorney. Naturally, property owned in your personal capacity is an asset in your estate and must, therefore, reflect in the Liquidation and Distribution Account. Your executor will not be permitted to transfer any fixed property before the L&D Account is laid for inspection by the general public and approved by the Master of the High Court. The conveyancer will need to lodge special documents with the Deeds Office which prove that the person to whom the property is being transferred is the rightful heir and that the transfer complies with Section 42 (1) of the Administration of Estates Act.

If your fixed property is bonded and you have the appropriate level of bond cover in place, your executor will settle the bond using the proceeds of the life cover and bond cancellation instructions will be issued, thereby allowing your heir to take ownership of an unencumbered asset. If you do not have bond cover in place, your executor may need to use cash in your estate or liquidate other assets in your estate in order to settle the bond, keeping in mind that one of the executor’s first functions is to settle any debts in your estate.

If your heir is intent on taking ownership of the property, he can apply to take over the existing home loan, although he will need to meet the bank’s qualifying criteria in order to do so. If your beneficiary is not in a position to take over the home loan or chooses not to, your executor may sell the property out of the estate. Before doing so, the executor will need to obtain the consent of your heir and must ensure that the property is sold at market value. When selling the property out of your deceased estate, your executor will be responsible for signing the Offer to Purchase and all relevant transfer documents, and the transferring attorney will need to obtain a certificate from the Master verifying that he has no objections to the transfer. Bear in mind that where your heir decides to sell the property out of your deceased estate, the buyer will be liable for transfer duty.

Delays can arise where your heir is a minor and no provision has been made for a testamentary trust in terms of your will. In such circumstances, the executor will need to obtain permission from the Master on behalf of your heir in order to realise the fixed property. In terms of our law, a minor child (under the age of 18) does not have contractual capacity and is therefore not eligible to take ownership of immovable property.

In the absence of a testamentary trust, your heir’s legal guardian will then be responsible for administering the property until your child reaches age 18, although there are limitations on the actions a legal guardian is permitted to take in respect of such property. For instance, the legal guardian will not be permitted to realise the property without the consent of the Master, and when making an application to the Master it must be demonstrated that such sale would be in the best interests of your minor child. However, in circumstances of an acrimonious divorce where your child’s legal guardian could be your ex-spouse, having him or her administering your property may not be in line with your intentions.

Where the fixed property is left to your minor in a testamentary trust, the trustees will be responsible for administering the property on behalf of your minor children, and this is generally speaking a much more favourable method of leaving fixed property to minors.

To ensure the smooth transfer of the property after your death, ensure that your will remains updated and that you keep up-to-date records of your home loan, bond cover, rates and taxes, utility bills and all related documents, together with a copy of the property’s title deeds.

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Craig Torr

Crue Invest (Pty) Ltd

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Sigh – how about something useful like how transfer duty, capital gains tax and estate duty will work?

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