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Your property could pose a problem on your death

Personal Finance

Your home is probably the biggest financial asset you will possess, but what happens to that home when you die? It largely depends on whether you made out a will or not.

“Finalising a deceased estate is a fairly complex process, one which is made infinitely more costly and time-consuming if you die intestate (without a valid will), especially if a significant asset such as a property is involved”, Bruce Swain, the managing director of Leapfrog Property Group, says.

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Even if you have made a will, it may not be valid, Swain says. For a will to be legally binding, it must meet the requirements of the Wills Act, he explains. According to the act, three conditions need to be met for a will to be valid:

  • The writer of the will must be over the age of 16;
  • The will must be in writing and
  • Each page must be signed by the testator or testatrix (the person in whose name the will is made out). The final page must also be signed by two competent witnesses, who must be 14 years of age or older. The witnesses need to be present at the time at the signing of the will and they cannot be beneficiaries of the will.

A will should also nominate an executor of your estate. If one is not nominated, the Master of the High Court will have to appoint one. In the case of a nominated executor, a letter of executorship must be obtained from the Master.

If you have indicated who will inherit and the will is not contested, then the matter is simple, Swain says. However, if you die intestate, the assets are disposed of according to the Intestate Succession Act. The broad principles followed are:

  • If the testator is survived only by a spouse, the spouse inherits the intestate estate.
  • If the testator is survived only by descendants, they inherit the intestate estate.
  • If there is a combination of a spouse and descendants (children and grandchildren), they inherit the estate jointly in specific shares.
  • If there is no spouse or descendants, the testator’s parents and/or siblings (collateral relatives) inherit the estate in specific shares.
  • If there are no parents or siblings, other collateral relatives inherit the estate.

It might be that a property needs to be sold to finalise outstanding debt in the estate, such as a mortgage bond, or that the heirs want to sell it, or that selling it is the only way an intestate estate can be disposed of equitably. The sale must be done through the executor, on the consent of the Master, and the written consent of all heirs has to be obtained.

Taxes, such as capital gains tax, transfer duty and estate duty, also need to be taken into consideration on the sale or transfer of a property.

“I advise homeowners to share all the documentation relating to the property with a trusted family member or appointed executor so that they know where everything is, and how to proceed. Should the property need to be sold, this will speed up the process considerably,” Swain says.

“However, even with everything in place, heirs need to know that concluding an estate can be a lengthy process and that it will be some time before the executor will be able to proceed on a property sale, if needed.

“I strongly recommend that homeowners ask an attorney to draft their will, stipulating who is to inherit and appointing an executor, and to get advice as to possible estate duty, capital gains tax and the cost of finalising the estate, so that they can prepare properly – ensuring that their will is valid, their dependents are provided for, and the costs are determined, and limited where possible,” Swain says.

“Each estate is unique, but there are situations where no capital-gains tax or even estate duty will apply, so it’s best to consult with an attorney to do proper estate planning sooner rather than later.”

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