Bequeathing fixed property—such as a home, farm, or commercial building—is a significant aspect of estate planning in South Africa. While it may seem straightforward to leave property to a loved one in your will, the process involves several legal, financial, and administrative considerations. Without proper planning, complications can arise that may delay the transfer of property or even lead to disputes among heirs.
In this comprehensive guide, we’ll explore the process of bequeathing fixed property, potential pitfalls, and best practices to ensure your wishes are carried out smoothly.
Understanding Bequeathing Fixed Property
Bequeathing refers to the act of leaving assets to beneficiaries through a will. Fixed property, also known as immovable property, includes land and structures permanently attached to it. In South Africa, the transfer of such property upon death is governed by the Wills Act and the Administration of Estates Act.
To bequeath fixed property effectively, your will must clearly identify the property and the intended beneficiary. Ambiguities can lead to legal challenges or unintended distributions.
The Legal Process of Bequeathing Fixed Property
- Drafting a Valid Will: Ensure your will complies with South African legal requirements: it must be in writing, signed by you (the testator) on each page, and witnessed by two competent individuals.
- Appointing an Executor: Name a trustworthy executor to administer your estate. This person will be responsible for settling debts, managing assets, and distributing property according to your will.
- Reporting the Estate: Upon your death, the executor must report the estate to the Master of the High Court, who will issue letters of executorship, granting the executor authority to act.
- Settling Debts and Taxes: Before distributing assets, the executor must settle any outstanding debts and taxes, including estate duty if applicable.
- Transferring Property: The executor will work with a conveyancer to transfer the property to the beneficiary. This involves registering the change of ownership with the Deeds Office.
Common Complications in Bequeathing Fixed Property
While leaving a property to a loved one might feel like a generous and simple gesture, the process of bequeathing fixed property can come with a surprising number of complications, especially if proper planning hasn’t been done. Here are the most common hurdles that can arise, and what they mean for your estate and beneficiaries:
1. Outstanding Bonds and Liabilities
One of the biggest misconceptions is that a beneficiary automatically receives the property free of any financial burden. In reality, if the property you’re bequeathing still has an outstanding mortgage (bond), that debt must be settled by the estate before the property can be transferred.
If the estate lacks liquidity—i.e., there isn’t enough cash available—assets may need to be sold off to settle the bond. This could result in the property itself being sold, which defeats the original intention of leaving it to someone. It’s essential to either ensure the bond is paid up or that the estate has sufficient liquidity to cover it.
2. Multiple Beneficiaries Inheriting One Property
Leaving one property to several heirs is a recipe for drama if not handled with care. It might sound fair and loving to leave the family home to all your children equally, but in practice, shared ownership can quickly become contentious. What if one heir wants to live in the house, another wants to rent it out, and the third wants to sell it?
Without clear instructions in your will (such as who has the right to reside, how maintenance costs will be split, or whether the property should be sold and the proceeds divided), disputes can arise. In extreme cases, it can lead to legal battles or the forced sale of the property.
Additionally, in South Africa, agricultural property generally cannot be owned by two or more individuals in undivided shares due to the Subdivision of Agricultural Land Act (70 of 1970). The Act aims to prevent the fragmentation of agricultural land into smaller, non-viable portions that could reduce farming efficiency and productivity. According to the Act, the Minister of Agriculture’s consent is required for any subdivision or change in ownership that would result in joint or undivided ownership. Without this consent, co-ownership is effectively restricted to preserve the economic and agricultural value of the land.
3. Usufruct and Bare Ownership Conflicts
A common estate planning strategy involves granting someone (often a spouse) the right to use the property (usufruct) for their lifetime, while the ownership is bequeathed to another (often children). While this can work well, it introduces layers of complexity. The usufructuary (the one with usage rights) may not be allowed to sell the property or alter it significantly, even if they live there for decades.
This arrangement must be clearly outlined in your will and understood by all parties involved, otherwise, it can lead to serious misunderstandings and conflict between the usufructuary and the bare owners.
4. Outdated or Poorly Drafted Wills
Failing to update your will after significant life events, such as divorce, remarriage, or purchasing a new property, can have disastrous consequences. You might unintentionally bequeath a property you no longer own, or forget to include a new asset altogether. Worse still, you could inadvertently leave property to someone you no longer wish to benefit (like an ex-spouse), especially if they are still named in an older will.
A will should also include accurate property descriptions. If the wording is vague or outdated, it could result in confusion about which property is being referenced, especially if you’ve acquired or sold properties since the will was drafted.
5. Costs of Transfer and Administrative Delays
Bequeathing fixed property isn’t just about putting a name in a will—the actual transfer process involves conveyancing, compliance certificates (electrical, water, beetle), municipal rates clearance, and more. These costs, if not planned for, can significantly delay the transfer process.
If the estate doesn’t have sufficient funds to cover these expenses, beneficiaries might need to step in and pay from their own pockets or face long waits until other estate assets are sold.
6. Family Disputes and Claims from Dependants
Heirs aren’t the only people who may lay claim to a property. Surviving spouses and dependents have certain legal rights in South Africa and may contest a will if they believe they have been unfairly excluded or inadequately provided for.
In terms of the Maintenance of Surviving Spouses Act, a spouse can claim maintenance from the estate, which may include rights to the use of property, even if that property was bequeathed to someone else. Similarly, minor children or other dependents can apply to the court for provision from the estate.
7. Capital Gains Tax (CGT) and Estate Duty
Fixed property bequeathed in a will may attract capital gains tax if it is not a primary residence or if its value has significantly appreciated over time. Estate duty may also apply if the overall estate exceeds R3.5 million, which could affect how much is left to your heirs after tax.
While these taxes are paid by the estate, they must be factored in during the estate planning process. If not, your beneficiaries could end up with far less than you intended.
Best Practices for Bequeathing Fixed Property
- Consult Professionals: Work with legal and financial advisors to draft a comprehensive will and plan for taxes and debts.
- Communicate with Heirs: Discuss your intentions with beneficiaries to manage expectations and reduce potential conflicts.
- Regularly Update Your Will: Review and revise your will periodically, especially after significant life events or changes in property ownership.
- Consider Trusts: In some cases, placing property in a trust can provide benefits such as asset protection and tax efficiency. Consult with an advisor to determine if this is suitable for your situation.
Conclusion
Bequeathing fixed property requires careful planning and consideration of legal and financial factors. By taking proactive steps and seeking professional guidance, you can ensure your property is passed on according to your wishes, minimising potential complications for your heirs.
For personalised assistance with estate planning and bequeathing property, contact Crest Trust. Our experienced team is here to help you navigate the complexities of estate management in South Africa.
FAQs
What is the meaning of Bequeathing?
Bequeathing is the act of leaving personal property or assets to individuals or organisations through a will.
What is a bequest meaning?
A bequest is a gift of personal property or assets specified in a will to be given to a beneficiary upon the testator’s death.
What’s the best way to leave a house in a will?
The best approach includes clearly identifying the property, naming the beneficiary, accounting for any debts or mortgages, and consulting legal professionals to ensure the will is valid and up-to-date.
What is a bequest in a will?
A bequest in a will is a provision that specifies the transfer of particular assets or property to a designated beneficiary after the testator’s death.