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Tuesday Oct 21, 2014

Bequeathing property in your Will - how it can go wrong

If you leave fixed property to someone in your Will you may be creating unnecessary complications since problems dealing with fixed properties can easily arise.

First one should consider how one is married since this influences one's capacity to distribute assets after death says David Knott of Private Client Trust.

"If you are married in community of property, you only own one half of all assets registered both in your name and that of your spouse - notwithstanding how the assets may be registered and when the assets were acquired. Your spouse therefore still remains a one half share owner of any fixed property you may have bequeathed to a third party, a child or children for example. To complicate further, say you have bequeathed your half share to your minor children and the property is bonded, if there is insufficient monies to discharge the bond, the property will probably end up having to be sold as very few financial institutions if any, will agree to lend to minors."

(Any property bequeathed in terms of your Will must devolve upon the beneficiary free of any mortgage bond and one should ensure that there is either bond liability insurance cover or assets held in your estate which may be easily realised to discharge this liability.)

"If you are married in terms of the accrual regime, the calculation to determine which spouse has a claim against the other to equalise the growth of the respective estates, only occurs at death. Your spouse may therefore have a substantial claim against your estate necessitating the sale of assets you had not intended to be realized," says Knott.

"In any co-ownership situation, you may wish to consider should your spouse have occupation rights until her death or until some other specified event or are you happy to leave it to the co-owners to squabble about. Likewise you may wish to direct under what circumstances the possible sale of the fixed property or repairs, alterations and improvements can occur. Co-ownership of a fixed property does bring its own problems and one should think carefully before forcing this upon your spouse."

Knott further advises that it is often unwise to describe the bequest of a fixed property by the address as one might move house and be remiss in not updating the will in the meantime. "If the property described in your Will by its address has been sold, the bequest will lapse. It would be sufficient for the Will to refer to your "residential property" unless of course you flit between houses for the different seasons and then one should be more descriptive."

According to Knott agricultural land may not be held in the name of more than one person in terms of the Subdivision of Agricultural Land Act. "There has been talk about the repeal of this Act for many years but for the moment if you wish your farm to devolve upon several beneficiaries, one needs to create a company and bequeath the farm to this entity. A skilled Wills draftsman can assist as once again, professional advice is needed as there may be protected workers living on the farm."

Knott concludes that there are many facets which need to be considered when drafting your Will. "Do not attempt this without the assistance of a professional."

Private Client Trust Press Release

    
 

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