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Bequeathing property in your will – how it can go wrong

Nov 5, 2014

By David Knott of Private Client Trust, the fiduciary services division of Private Client Holdings, and a member of the Fiduciary Institute of South Africa.

WillWhen it comes to leaving fixed property to someone in your will, unless you have had professional assistance in the drafting of the will, you may be creating unnecessary complications for those you intend to inherit as problems dealing with fixed properties held in your estate can easily arise.

Firstly, you should consider how you are married, as this influences your capacity to distribute assets after your death.

If you are married in community of property, you own only 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 matters further, say you have bequeathed your half share to your minor children and the property is bonded, then if there is insufficient money 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 you 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 realised.

In any co-ownership situation, you may wish to consider whether your spouse should have occupation rights until her death or until some other specified event, or whether you’re happy to leave it to the co-owners to squabble about. Likewise, you may wish to direct the circumstances under which 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 you should think carefully before forcing this upon your spouse.

It is often unwise to describe the bequest of a fixed property by the address as you might move house and be remiss in not updating your will in the meantime. If the property described in your will by its address has been sold, the bequest will lapse. It is usually sufficient for the will to refer to your “residential property” unless of course you flit between houses for the different seasons, in which case you should be more descriptive.

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 you need to create a company and bequeath the farm to this entity. You really should turn to a skilled wills draftsman in this case. There may be further complications if there are protected workers living on the farm.

In conclusion, remember that there are many facets which need to be considered when drafting your will, so it’s best to seek help from a professional.

1 Comment

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