What happens to property upon death? Drafting a will. | Legal Articles

 

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What happens to property upon death? Drafting a will.

Contrary to popular belief, not all property passes through probate upon death. 

In fact, there are 5 major types of property that an individual owns upon death (estate property), and only one of them (i.e. “solely-owned property”) actually passes through probate.

Generally speaking, nobody likes to dwell on the subject of their own death. Unfortunately, it is something that none of us can escape and ignoring the consequences can make things that much harder for those left behind.

Drafting a Will

When drafting your will, it’s important to consider the nature of your relationship with your significant other’. 

If you are married in community of property, you only own half of all assets registered in your name and that of your spouse. 

Your spouse therefore still remains a one half share owner of any fixed property you may want to bequeath to a third-party which could potentially present difficulties.

If you are married in terms of the accrual regime, the calculation to determine which spouse has claim against the other to equalise the growth of the respective estate only occurs at death. 

Your spouse may therefore have a substantial claim against the estate necessitating the sale of assets you had not intended to be sold. 

If you are involved in a co-ownership situation, you may wish to address the issue of occupation rights for your surviving spouse in your will. 

Co-ownership, like many other aspects relating to walls can be tricky which is why it's best to involve the services of a professional when drafting a will.

Having a will in place will assist surviving joint holders. If there is no will, it would take significantly longer for the bond to be transferred as the estate would have to first be administered and wound up.

Transfer Duty exemption

There is no transfer duty payable on property bequeathed to heirs. Even if the heirs agree to distribute the property or properties among themselves in a different way to that envisaged by the testator. 

However, conveyancing fees are still payable. If the heirs decide to sell the property to an outsider transfer duty will then apply, and which will in most cases be paid for by the buyer. 

Simply put there is no excuse not to have a will.

The 5 major types of property

Joint-Owned Property

Joint-Owned Property: Property owned as joint tenants with right of survivorship (JTWROS) passes directly to the surviving joint owner(s) upon the death of an owner. 

This form of ownership of property is commonplace between a husband and wife. It is also seen between a parent and a child or between other individuals where there is an expressed intent to have the property pass immediately and by operation of law to the surviving joint owner. 

Many jurisdictions will require a clear intent to create this form of co-current ownership before the courts will enforce it. 

Concurrent ownership between husband and wife (Tenancy by the Entirety) may be presumed to create a joint tenancy with right of survivorship, while concurrent ownership between non-spouses (Tenancy in Common) is often presumed to create a tenancy in common place and not a joint tenancy with right of survivorship.(Non-Probate Property)

Living Trust Property

Living Trust Property: Property held in a living trust passes directly to the beneficiaries designated under the trust instrument. (Non-Probate property)

Solely-Owned Property

Solely-Owned Property: Solely-Owned property passes to beneficiaries designated under a will or, if there is no will, under the laws of intestacy. 

Property that you own yourself is the most common form of probate property - for example, a bank account in your name, a stock or bond in your name, a piece of real estate in your name etc.(Probate Property)

Annuities & Life Insurance

Annuities & Life Insurance: Death benefits payable under an annuity of life insurance policy passed directly to the beneficiaries designated under the annuity contract or insurance policy. (Non-Probate Property)

Retirement Benefits

Retirement Benefits: Death benefits payable under retirement plans (including IRAs) pass directly to the beneficiaries designated under the retirement plan. (Non-Probate Property)

Van Deventer & Van Deventer Incorporated - Estates, Wills and Trusts Attorneys

Van Deventer & Van Deventer Incorporated can assist you greatly to minimise the complications that arise from estate administration.

Above all we can help you draft a professional will so that your family is protected.

Contact us for a free 20 minute no-obligation consultation.

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