THE LAST WILL AND TESTAMENT – FIXED PROPERTY

Introduction:

Having an updated Will is one of the most important tools in an estate plan. A professionally written Last Will and Testament can meet many of the estate planner’s goals.

A properly structured Will can reduce estate duty liability, provide clear guidelines for dependants and achieve efficient administration of a deceased estate.

In this blog we will touch on dealing with fixed property in a Will.

Fixed Property:

• If the gross value of a person’s estate is more than R3,5 million, estate duty will become payable on the value above R3,5 million. Sufficient cash should be made available to pay Estate Duty Taxes in order to avoid the selling of any fixed assets.
• If a person bequeaths a fixed property to his/her surviving spouse, no taxes are payable as all bequests to spouses are exempt from Estate Duty and/or Capital Gains Tax.
• Bequeathing fixed property to an heir or legatee in a Will, results in no Transfer Duty Tax being payable upon transfer of the property into their name.
• To clear any mortgage bonds on fixed properties, the estate planner may wish to secure the bond by taking out a life insurance policy, the proceeds of which would clear the debt on his/her death

Agricultural Property:

• Where agricultural property is bequeathed, the testator needs to be aware of Section 3 of the Subdivision of Agricultural Land Act, which prevents the subdivision of agricultural land without the permission of the Minister of Agriculture. The Section therefore prevents a testator from bequeathing for example a farm to more than one beneficiary without obtaining the consent of the Minister.
• Through proper estate planning this problem can be avoided.
• Options available to a testator or heir:

1. Redistribution agreement – the heirs can enter into an agreement whereby the land is registered in the name of one heir and the value of the one-half share is paid to the other heir.
2. The land can be sold to a third party and the proceeds then distributed; or
3. The heirs can create a company/trust whereby the heirs become shareholders/trustees and the entire farm is transferred to the said company/trust.

Get proper advice from a profession on how to deal with any immovable property in your estate.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.