Author: Design

Unborn Child

Written by Design on October 7, 2022. Posted in Wills & Trusts.

Will Your Unborn Child Be Covered In Terms Of Your Will?

Thinking about the future well-being of your children and grandchildren once you are gone, can be frightening. To give you peace of mind, it is important to ensure that your children and/or grandchildren are protected and provided for in a last will and testament. Luckily most people understand this, but it is not always clear what happens in the case of unborn children. Are they eligible? What is the position if there is no will or testament?

To be or not to be? Baby that is the question

Since the Covid-19 pandemic began, many South Africans have become even more aware of their own mortality. As a result, they had to make serious decisions about their future and rethink their children’s well-being and future. Many have set out to have a last will and a written will. However the question has arose regarding the inheritance for an unborn child, if your wife was pregnant with your child, or your daughter was pregnant with your grandchild, should you die before the baby is born.

The law regulates the birth, civil status and death of a natural person. It sets out the requirements and qualifications of legal personhood or subjectivity to the related rights and obligations. According to the law, a child’s legal identity only begins at birth. The problem is that, when strictly applying this concept, the baby would have “no rights, duties or abilities” before birth. The good news is that, fortunately, the law allows for the protection of unborn children by means of specific provisions, as briefly summarised below.

Nasciturus Fiction

Nasciturus Fiction is a common law doctrine whereby a child conceived before the death of the deceased is deemed to have “acquired rights” from the moment of conception. Despite unborn children not being considered legal entities, this legal principle allows the child to become a legal entity if it was conceived before the death of the testator and then born and being alive to inherit the legal personality.

Testate/ Intestate Succession

Similar to Nasciturus Fiction, the unborn child can acquire inheritance rights by means of testamentary succession, whether the testator leaves a will or not, provided that the child is born alive of course.

Conclusion

In summary, the unborn child can inherit if the principles of Nasturus Fiction are applied or in terms of testamentary succession, if the legal requirements are met. Therefore, when considering the future protection of your unborn child or grandchild under South African inheritance law, it is important to be aware of your rights, the rights of the unborn child and what the law requires. To make sure that everything is clear and in place before you die, it will be best to consult a legal professional. Should a dispute arise after your death, the family should obtain the input of a legal professional before initiating a lawsuit or responding to a lawsuit on their own, in the best interest of the child.

AED Attorneys understands that every situation is unique, and although they strive to ensure that the information contained herein is accurate at the time of publishing, it cannot be guaranteed to be without errors or omissions. As a result, AED Attorneys, its employees, independent contractors, associates or third parties will under no circumstances accept liability or be held liable for any innocent or negligent actions or omissions in this article, which may result in any harm or liability flowing from the use of or the inability to use the information provided.

Burial vs Cremation vs Aquamation

Written by Design on October 7, 2022. Posted in Wills & Trusts.

Burial, Cremation and Aquamation – The Difference Explained

What are the options of dealing with end-of-life arrangements? What is the difference between burial and cremation? How should one make a decision when faced with these choices? In this article, we look at the pros and cons of each option and what they mean in terms of practice.

Burial vs. Cremation vs. Aquamation: What are your funeral options?

Funeral ceremonies, while they may be getting simpler these days, are still an important part of our culture. They represent the last time we will see the person who has died and identify them to their loved ones. There are many ways to celebrate a funeral, from traditional funerals with a religious service and burial, to cremation which is becoming increasingly popular.

Burial is the traditional way of disposing of a body after death. A funeral service is held and the body is buried in a grave cavity or in a coffin.

Cremation is the process of burning a body. The bones, ashes and any other remains are burned inside an oven at extremely high temperatures. The result is an incinerated skeleton that can be scattered in a special place according to the wishes of the deceased.

Aquamation is a water-mediated process that flushes away unwanted bodily fluids, including fat and everything else except bone and teeth.

Both cremation and aquamation are great options for those who want to avoid traditional funerals. However, they both come with their own unique set of benefits and drawbacks. Aquamation is more environmentally friendly than cremation, as it doesn’t produce any pollution. However, it’s not as fast as cremation, so it may not be a perfect choice for those who want some sort of ceremony with their passing. Cremation is not as eco-friendly as aquamation, but it also generates less pollution than an equivalent amount of in-ground burial.

Differences between a burial and cremation

Traditional funeral ceremonies involve burying the deceased beneath the ground. This burial method has been around for centuries and is still used across the world. It has many advantages, such as being able to interact with the deceased after their death and ensuring that they are properly buried.

One potential downside to traditional burials is that it can be difficult to find a place for everyone. Burial plots are often limited and expensive, putting them out of reach for many people.

Cremation is becoming an increasingly popular funeral option. With cremation, all combustible material is burned away leaving only the skeletal remains. There are many reasons why people choose cremation over burial. Cremation is more affordable than burial, and it does not require land or a cemetery. It is also more environmentally friendly than a traditional burial. Ashes are placed in an urn or urn-like container and disposed of in a respectful manner, such as scattering them over water or plants, instead of being buried.

What is aquamation exactly?

Aquamation is gaining in popularity as people seek to simplify their funerals and cut costs. Aquamation involves temporarily preserving the body using a process called hydrolysis which dissolves the body’s tissues into water and salt. After the remains have been dissolved, they are then placed in an embalming fluid that re-hydrates the tissues and replaces lost fluids. Aquamation offers many benefits over traditional funerals, including the ability to retain the body indefinitely in a private setting, the ability to have a relatively simple ceremony without religious obligation, and the potential to reduce costs.

The pro’s and con’s

Traditional funerals are typically time-consuming and expensive. This is because many traditional funeral rites require a large casket, burial shroud or coffin, and often involve elaborate ceremonies with mourning relatives and friends.

Some of the benefits of a traditional burial include:

-Burials are more traditional and often involve more religious ceremonies than cremation or aquamations, often giving mourning family members a stronger sense of a final fitting tribute to their loved ones.

-Burials typically take longer than cremations or aquamations, which may give family members time to reflect on their loved one’s life.

-Grave sites are typically final resting places for loved ones, which can be comforting for some families.

Cremation and aquamation are becoming more popular as people seek to reduce funeral expenses. As these options do not require any burial or mourning rituals, it can be a cost-effective and simpler choice for some families.

Planning your loved one’s final farewell

There are a few key things to keep in mind when planning a funeral or memorial service. Here are some suggestions to help make the process easier and more meaningful for everyone involved.

– First, think about what you want your final goodbye to be. Is it a traditional funeral with a wake and funeral service followed by burial or cremation? Or are you looking for something less conventional, like memorial urns that can be used at any time of year?

– Next, consider who will officiate your service. A priest or minister can provide solemn religious readings and prayers, while an Officer of the Court or other government official may offer more secular readings and condolences.

– Make sure there is enough food and drink available, especially if there are children in attendance. A memorial service is a somber event, but it’s also important to remember that everyone is entitled to have their personal farewell ceremony.

– Finally, be sure to select symbols that represent you and your loved ones to put on display during the service. These might include photographs, mementos from your life together, or objects that represent your favorite memories.

Usus, Habitatio

Written by Design on October 7, 2022. Posted in Deceased Estates Administration.

What is Usufruct, Bare Dominium, Usus, Habitatio and their Differences?

In South Africa we have 11 official languages but this helps little when it comes to legal terms! People are often not sure what the meaning is of Latin words such as Dominium, Usufruct, Usus and Habitatio. Usufruct, Usus and Habitatio are known as “personal servitudes”, which in turn is a limited real right in favour of a person, granting that person the right “to do something” on someone else’s property. Let us explain:

What is Bare Dominium?

A bare dominium, is property without a right of use (usufruct). This means that the owner of the property can only sell it with the consent of the usufruct so as not to infringe on the usufructuary‘s use rights.

What is a Usufruct?

Usufruct is a combination of two Latin words: usus (use) and fructus (fruit) which means “use and enjoyment.” Usus denotes the right to use something directly without damaging or altering it, and fructus denotes the right to benefits that result from the use of the property. A usufruct is a legal right granted to an individual or party for a temporary right to use someone else’s property and generate income or profit in doing so. This is a limited right found in many mixed and civil law jurisdictions. A usufructuary is a person who has rights on a property through a usufruct (as explained above), and is allowed to use and enjoy the income resulting from the use of the property but it does not mean that person has ownership.

What is Usus?

Usus (Use) grants a person (and/or members of his family) the right to use another’s property, but without altering the essential characteristics of that property.

What is Habitatio?

As is the case with usus, habitatio (or residence) gives individuals and their families the right to live in someone else’s home without changing the essential characteristics of the property. In contrast to usus however, habatio allows property owners to lease properties and residence terminates upon expiration of a fixed term or death of a beneficiary.

It still sounds Greek to me, so what is the difference?

A bare dominium is ownership without a right of use (usufruct). You can sell only with the consent of the usufructuary, otherwise you will have to disenfranchise him.
Usufruct: You may use the property of someone else to your gain, but you will not be allowed to acquire ownership of the property itself. An example is where a husband bequeaths a residential property to his children in his will, but stipulates that his wife should enjoy usufruct until she dies. This way the husband ensures that his wife still has the use and enjoyment of the property. As usufructuary you may not do anything detrimental to the property, but you may use it to your benefit, provided that the property is used in the manner it was planned to be used (for instance farming).
Usus: usus is similar to a usufruct but your rights are more restricted. You may use movable property and you and your family may occupy it if it is immovable. You may also “use the fruits of the property” as long as it is not detrimental to the property itself. You may not sell or lease the property or benefit from its fruit. However, should the house be too large for you, you may let a portion of it for rent. Combining a usufruct with usus gives you full ownership and use of the property (i.e., owner of the property in a more general sense).
Habitatio: You and your family the right to live in someone else’s home without changing the important qualities of the property. The habitatio ends when a fixed period has expired or on the death of the holder of the right.

We recommend that, before you buy or rent a property, you first review the title deed to establish whether there are any rights of habitation or other limited real rights registered against it. Even better – obtain the input of a legal professional!

What happens to my overseas assets if I die intestate in SA or testate? Laws of succession in other countries.

Written by Design on October 6, 2022. Posted in Deceased Estates Administration.

Globalisation caused the divide between countries to decrease as people can now easily communicate across the globe with a single click of a button. This has resulted in more people investing in cross-border transactions, as well as more workers migrating from country to country.

There are specific rules in different countries that govern distribution of assets upon death. Global investors need an estate plan with a well-coordinated approach since emigration has been on the rise increasing the number of South Africans with assets spread across the globe.

It’s important to have a will in place which states how your assets would be distributed upon your death. You should consider having a separate will for your worldwide assets. To avoid any complications, it’s important to make sure your draft will is in compliance with the laws of each country. For example, even though you may have a will for your assets in Mediterranean countries such as Portugal and Italy, the law in these countries automatically splits assets 50-50 with spouses and then divides the remaining 50% equally to any children of the family.

Even if you have an executor for your estate, they may not know the appropriate succession laws for assets outside of South Africa. In cases when an executor does not feel like they have enough experience to deal with assets in a different country, the executor can appoint solicitors in that country to help.

It is also important to remember that having a separate will for your worldwide assets still necessitates reporting these assets for estate duty purposes in your country of tax residency.

So what happens to your overseas assets if you die intestate in South Africa? The laws of succession differ from country to country and your assets will be distributed based on the law specific to each country.

In the UK, only married or civil partners and some other close relatives can inherit under the rules of intestacy. Married partners or civil partners inherit under the rules of intestacy only if they were legally married or in a civil partnership at the time of death. If there are surviving children, grandchildren or great grandchildren of the person who died and the estate is valued at more than £270,000, the partner will inherit:

all the personal property and belongings of the person who has died, and
the first £270,000 of the estate, and
half of the remaining estate.

In Australia an intestate estate will be divided up between the surviving married or de facto spouse and children. If there is no surviving immediate family, the assets may be allocated to other family members including parents, grandparents, aunts, uncles or cousins.

Mauritius is one of the jurisdictions where forced heirship rules apply albeit on a limited basis in relation to immovable property only. These rules consist of establishing a reserved and unreserved portion of assets. The reserved portion is then allocated to the children of the deceased, and this portion may not be infringed by any testamentary provision. The reserved assets are divided as follows:

One half (50%) of the estate if the deceased leaves one child.
Two thirds (66%) of the estate if the deceased leaves two children.
Three quarters (75%) of the estate if the deceased leaves three or more children.

At death, in case that the testator did not have a will in place, the legal order of inheritance, in descending order of priority, is as follows:

The descending line and the surviving spouse
The favoured ascending line (father and mother) and favoured collateral line (siblings and children of predeceased siblings)
The ordinary ascending line (grandparents, great-grandparents)

The surviving spouse is legally considered an heir to the deceased, although in some cases they may not be a protected heir. This means that their share of the inheritance can be transferred at any time to another beneficiary. However, the surviving spouse also inherits rights as co-owner over the matrimonial home and furniture, until his or her death.

In the absence of any protected heirs, the deceased’s estate will vest in the Mauritian State.

It is prudent to only trust an expert in international succession law with assistance when doing estate planning to avoid complications when your will needs to be executed. The absolute necessity to have a will, goes without saying.

Not formally emigrated? How does it affect your inheritance?

Written by Design on September 23, 2022. Posted in Deceased Estates Administration, Wills & Trusts.

Death is a topic most of us prefer to avoid, but it’s important to know exactly what to expect when it comes to dealing with claiming an inheritance as a South African living overseas. The finalisation of a deceased estate is often a time-consuming and frustrating process and there is additional complexity and exasperation when one of the heirs is an expatriate living abroad. If you live overseas and are likely to be the beneficiary of either an inheritance or a trust distribution from within South Africa, some advance planning is needed to ensure that payments due to you can be made.

If you live overseas and have inherited money or property in South Africa from a South African estate, you will fall into one of three categories in terms of South African exchange control regulations.

Category 1: If you are a non-resident of South Africa and were never a South African Citizen, you fall into Category 1. Receiving your inheritance in this instance is a relatively uncomplicated process of providing proof of your non-residency status. You should then be able to send any South African inheritance out of the country with relative ease.

Category 2: If you have already emigrated in terms of exchange control regulations and are therefore classified as a non-resident, you fall within Category 2. Your inheritance funds can be transferred to you if you can provide proof or confirmation of your emigration. You will need to be able to provide a South African Reserve Bank reference number (also referred to as the ECA number) or approval which you would have received when you originally emigrated.

Category 3: If you are a South African resident temporarily living and/or working overseas, you fall within Category 3. This means that you are considered a resident “temporarily abroad” by the South African Reserve Bank and that you are subject to the same exchange control and financial regulations as people living in South Africa.

If you fall within Category 3, you have the following options available to you to transfer your inheritance abroad:

You can transfer your inheritance funds using your annual R1 million discretionary allowance (SDA) or your annual R10 million foreign investment allowance (FIA). Should you opt to use your SDA, tax clearance is not required but your green barcoded South African ID book or ID card is needed. Should you opt to use your FIA, you will need a tax clearance certificate, a valid SARS tax number and your green barcoded South African ID book or ID card.

If your inheritance is over R10 million, you will require a special application to SARS and a manual tax compliance letter to transfer your inheritance out of the country.

What if you do not have a valid SARS tax number, you have never been issued with a South African ID book or ID card or it has been lost? The Taxation Laws Amendment Act, which came into effect in March 2021, brought an end to the option of Financial Emigration. Financial Emigration allowed South Africans without an identity document or tax number in South Africa, to undergo a “belated emigration” process instead of using the annual allowances, enabling the transferring of inheritances from South Africa. Post March 2021, the following options are available:

If you still have your green barcoded South African ID book or ID card but no South African tax number and your inheritance is more than R1 million, you will either need to register for a tax number and apply for tax clearance or demonstrate that you are no longer a resident in South Africa for tax purposes and are no longer active on the SARS system.
If you were born in South Africa, were never issued with a green barcoded South African ID book or ID card or you’ve lost it, you will also need to demonstrate that you have ceased to be a South African resident for tax purposes and are no longer active on the SARS registered database.

The challenge lies in proving your non-residency status with SARS. The most common method of proving your tax residency is with a Tax Residence Certificate. If your new country has a Double Taxation Agreement (DTA) with South Africa, the tax authority in the country will be able to issue a certificate showing that you are a tax resident there and not in South Africa. A Tax Residence Certificate (TRC) is an official document issued by a tax authority that certifies you are tax resident in that country. They’re necessary because of the tax treaty agreements between countries that determine where residents get taxed and, in many cases, protect them from being taxed twice on the same income in different jurisdictions.

Although obtaining a Tax Residence Certificate from your new country is the most common way to prove your non-residency status, there are certain circumstances where you may be unable to obtain one. (for example, if your country doesn’t have a DTA with South Africa). Other factors that could be taken into account to determine your non-residency status are:

Tax returns or assessments from your new country of residence.
Proof of a foreign address.
The type of Visa on which you have gone to the foreign country.
A letter from an employer in your new country, confirming your date of employment. If you’re self-employed or own your own business, a letter from your tax practitioner confirming the dates you’ve run your business in the foreign country.
A copy of your passport/travel diary.
Details of any property that you may still have available in South Africa and the purpose that such property is being used for.
Details of any business interest that you may still have in South Africa.
Details of any family members still living in South Africa and the reason thereof.
Details of your social interests (e.g. gym contract, recreational clubs and societies) and location of your personal belongings.
Details of any return visits to South Africa, the frequency thereof and the reason for undertaking such visits.

It is recommended that you make use of a professional and knowledgeable service provider with specialist knowledge of South African exchange control regulations and SARS requirements to assist with the process of transferring your inheritance abroad.

What is collation and what effect will it have on your estate?

Written by Design on September 23, 2022. Posted in Deceased Estates Administration, Wills & Trusts.

Many parents see it as a privilege and a part of their parental duty to assist their children with funding for education, the purchase of a vehicle or a home, or to start a business in their lifetime. We love our children and of course we only want the best for them! However, what many parents are not aware of, is the South African common law presumption of collation (collatio bonorum) and the impact thereof on a Will.

Let’s look at a practical example: Joe has three children – John, Jack and Mary. During his lifetime he assists his son John with a cash amount of R2 000 000 to purchase a house. Prior to this gift to John, Joe’s estate is estimated to be worth R10 000 000. When Joe passes away his estate is deemed to be worth R8 000 000 and his will stipulates that the estate should be divided equally between John, Jack and Mary. This does not sit well with Jack and Mary. They feel that equal distribution of the estate is unfair because John received a substantial financial benefit from his father while he was still alive and that the distribution of the estate should be adjusted proportionately. Collation is the formal process that Jack and Mary can revert to in this instance.

Collation is rooted in the belief that a testator will want his/her estate to be distributed equally among children or descendants. This means that if an heir received a substantial financial benefit from a testator during the testator’s lifetime, collation may be applied to the heir’s inheritance and the value of the inheritance may be adjusted accordingly. To determine the division of the inheritance, one must add the value of all of these “substantial financial benefits” to the value of the original estate. The net sum then needs to be divided between all the heirs according to their share in the original estate.

Collation only applies to the testator’s descendants who share as heirs in the residue of an estate and it is applied to your will automatically by operation of law. If you do not have a will, it will automatically be applied to your intestate heirs. Let’s go back to our practical example mentioned earlier. If you leave your estate in equal shares to your three children – John, Jack and Mary – and John received a considerable financial contribution from you to purchase a house which Jack and Mary did not, collation will be applied to offset the financial contribution against Johan’s inheritance. Other typical examples include funding for tertiary education, start-up capital for a business, settlement of debts, funding of large medical expenses, etc. The size of the financial benefit is usually assessed in relation to the size of the testator’s estate.

If you do not want collation to apply to your will, it is imperative that you stipulate your wishes clearly in your will. An example of such a stipulation would be “I direct that my children need not collate any of the financial contributions they received from me during my lifetime and I remit collation so far as they are concerned.” Similarly, if it is your wish for one of your heirs to collate, this should also be clearly stipulated. An example: “I record that during my lifetime I gifted to my son, John, an amount of R2 000 000 to enable him to purchase a house and I direct that he collates that sum with my estate before he is paid his inheritance in terms of my will.

Collation is another example of why it is of utmost importance to use an estate specialist when drafting your will and doing estate planning.

What are the effects of putting an insolvency clause in your will?

Written by Design on June 21, 2022. Posted in Wills & Trusts.

Insolvency has become a sobering reality for a lot of people. The most recent statistics from Statistics South Africa showed that insolvencies increased by 123% in the three months ended August 2021 compared to the same time in 2020. Facing insolvency isn’t always because you made poor financial decisions. The global pandemic taught us many things, including the fact that we can make the best decisions and circumstances can change our reality in ways we never thought of.

When you set up your will, you might want to protect your deceased estate from the possibility of a named beneficiary being insolvent at the time that his/her inheritance becomes due and then being used to pay creditors. Under South African law, however, there are limited ways in which you can do this, and testators need to be very careful with the specifics in their wills.

Quick recap on insolvency

In his personal capacity, an individual is insolvent when they cannot pay their debts as they become due. You could reach an agreement with your creditors to pay your debt without the intervention of third parties, or you could be sequestrated. In the case of sequestration, the insolvent’s estate is placed under sequestration and a trustee takes control of it. Assets will be sold off or arrangements made to pay the creditors at least a portion of what is owed them.

A testator could wish to keep his own deceased estate from becoming part of the insolvent estate of a beneficiary and be sold off to pay debts. In this case, an insolvency clause needs to be added to the will.

The insolvency clause

In South African case law, there are various examples of Insolvency clauses being dismissed or the Will being interpreted as if the clause did not exist. For example, in Badenhorst v Bekker N.O. & Others 1994 (2) SA 155 (N) the insolvency clause in the Will read “No rights and hopes of the beneficiaries under this Will or part thereof shall be attachable by any creditor or vest in the beneficiary’s trustee on insolvency”. The clause had no effect on the law and the inherited estate formed part of the beneficiary’s insolvent estate.

The issue arises from the fact that the inheritance, once received, will immediately form part of the beneficiary’s estate, regardless of his/her financial situation. The testator cannot place restrictions on how that inheritance is to be used, or not used as the case may be.

So, what CAN you do?

If a testator does want to add an insolvency clause that has an effect and protects the deceased estate, it is possible. These solutions, though, usually equate to the intended beneficiary no longer receiving his/her inheritance as originally intended.

Solution 1:

The Will can state that, should the intended beneficiary be insolvent when he/she is to receive the inheritance, they will forfeit it and the deceased estate’s executor will award the benefit to the beneficiary’s heirs. In the absence of heirs, the insolvent beneficiary’s inheritance can be forfeited to the other named beneficiaries in the Will.

Solution 2:

The testator can instruct that a discretionary trust be created should the beneficiary be insolvent. In this case, the inheritance will be owned by the trust and not the insolvent beneficiary. It is, therefore, not part of the beneficiary’s estate and cannot be subject to a creditor’s claim.

Section 3:

A real right can be created that would favour the beneficiary but not have him/her inherit directly. A real right could be a fideicommissum where a property is given to an heir on the condition that this heir will pass it on to a specific person at a later date. A real right could also be a usufruct over the bequeathed property in which case the right to use and derive income from a property is temporarily granted to an individual.

At AED, we know how important it is to ensure your wishes are respected once you are gone. We can help you ensure that this happens by carefully drafting a Will that will be respected under South African law.

More About AED Attorneys

SARS penalties for delayed Transfer Duty payments

Written by Design on June 21, 2022. Posted in Conveyancing.

Buying a property is a massive investment into your future and can, for some, be a form of financial security. Purchasers should be aware of all the fees and costs that go into buying a property, though, as it is not just the purchase price that needs to be paid. Transfer Duty is an additional cost that has to be paid by a certain time. If it is not paid on or before the appropriate date, you could be facing some hefty penalties.

What are transfer duties

Whenever you buy a property, it has to be transferred to your name. The Transfer Duty is a tax levied on the value of the property when it is acquired (bought) by someone. The current rate at which the tax is levied is valid until 28 February 2023 and is detailed in the table below:

Value of the property (R)	Rate
1 – 1 000 000	0%
1 000 001 – 1 375 000	3% of the value above R1 000 000
1 375 001 – 1 925 000	R11 250 + 6% of the value above R1 375 000
1 925 001 – 2 475 000	R44 250 + 8% of the value above R1 925 000
2 475 001 – 11 000 000	R88 250 + 11% of the value above R2 475 000
11 000 001 and above	R1 026 000 + 13% of the value exceeding R11 000 000

This amount is payable within 6 months from the date of acquisition. The conveyancer responsible for transferring the property to the new owner is usually responsible for ensuring that this tax is paid in time and all conveyancers are required to be registered with SARS.

Transfer Duty should not be confused with the Transfer of Property costs which is the fee owed to the conveyancing attorney responsible for the transfer of ownership.

When is Transfer Duty applicable to be paid?

As per SARS and for the purpose of Transfer Duty the “property” on which Transfer Duty is levied includes”

Land and fixtures;
Real rights in land, excluding right under mortgage bonds or leases;
Rights to minerals or rights to mine including leases or sub-leases to mine for minerals;
A share or interest in a “residential property company”;
A contingent right to residential property or a share or member’s interest in a “residential property company” held by a discretionary trust (not a special trust), where the acquisition of the right is consequence of an agreement for consideration in relation to property held by that trust; or accompanied by a change in the debt or security structure of the trust; or accompanied by a change in the trust’s trustee; and
A share in a share block company.

When a property sale has conditions that need to be met, it is important to remember that the 6 months in which the amount should be paid is calculated from the date the agreement was signed and not the date that the conditions are fulfilled.

It is also important to note that a property sale is not subject to both VAT and Transfer Duty. If the seller is a registered VAT vendor and the property forms part of the seller’s enterprise, VAT will take preference and will need to be paid rather than a Transfer Duty. If the property is not part of the seller’s enterprise, Transfer Duty will have to be paid.

So, what if the Transfer Duty is paid later than 6 months?

SARS is clear that any late payment of a Transfer Duty will be subject to interest that is calculated at 10% per annum for each completed month. A complete month is calculated as the first day from the expiry of the interest-free 6 months to the date of payment.

Can I be exempt from having to pay Transfer Duty?

Yes, you can. Transfer Duty is not levied against properties that are being transferred (or not transferred as the case may be) for the following reasons:

Marriage in community of property;
Divorce;
Inheritance;
Cancelled transactions.

When you need conveyancing attorneys that will see to the timely and efficient transfer of your property, let us know.

More About AED Attorneys

Adoption and Inheritance in terms of the Intestate Succession Act

Written by Design on June 21, 2022. Posted in Wills & Trusts.

Children are usually seen as the descendants of their parents. They are often also some of the first people to be named as the beneficiaries of a parent’s will, though they do not legally have a right to inherit. Minor children, however, are their parents’ responsibility, even in death, and even if a child is not named a beneficiary, he or she can, with the aid of their guardian, claim maintenance against a deceased parent’s estate. Such a claim receives a higher priority than those of named beneficiaries. So, while South African law respects an individual’s freedom of testation some laws can restrain a testator’s exercise of this freedom.

But… what if an individual died without leaving a valid will or any other document containing testamentary provisions? And what if that individual has an adopted child?

Passing away without testamentary provisions

If a person passes away without a will it is said they die intestate, and his or her deceased estate is wound up according to the Intestate Succession Act 81 of 1987. This 5-page Act sets out exactly how a deceased estate is to be wound up in the absence of a will. If a will is present but a portion of the estate is not accounted for in the will, that portion is also wound up according to the Act.

The Act states that if a person “dies intestate, either wholly or in part, and

Is survived by a spouse, but not by a descendant, such a spouse shall inherit the intestate estate;
Is survived by a descendant, but not by a spouse, such descendant shall inherit the intestate estate.”

It further continues to detail the various possible individuals that could inherit the estate depending on who survives the deceased, from just one’s parents to descendants of one’s deceased mother, for example, who are only related to the deceased through her.

Adoption and the Intestate Succession Act

Once again, the Intestate Succession Act is very clear on what is to be done about and intestate deceased estate when the child is to inherit has been adopted:

“An adopted child shall be deemed

to be a descendant of his adoptive parent or parents;
not to be a descendant of his natural parents or parents, except in the case of a natural parent who is also the adoptive parent of that child or was, at the time of the adoption, married to the adoptive parent of the child.”

An adopted child thus has the right to inherit as any biological child would from their adoptive parents. They do not have the same right to inherit from their biological parents as they are legally no longer seen as their biological parents’ descendants.

Final thoughts

While the Intestate Succession Act stipulates how to wind up an intestate deceased estate, this situation only highlights why it is important to have a recent and valid will. It is the last expression of one’s wishes and as long as all the details of your will is legally enforceable, it can ensure that your last wishes are adhered to.

While an adopted child is no longer the descendant of his/her biological parents and cannot inherit according the Intestate Succession, they might still want him/her to inherit. If this is the case, they can state so in their will.

It is always a good idea to have your will drawn up by professionals, like AED Attorneys, that can advise you on the inclusion of important clauses and ensure that the will is accepted by the Master of the court so you don’t pass away intestate.

More About AED Attorneys

Effects of signing surety on a bond and what happens on divorce or death

Written by Design on June 21, 2022. Posted in Deceased Estates Administration.

What if your life partner, business partner, family member or friends comes to you one day saying they want to take out a loan, but the bank says their monthly income and net asset value does not make them financially viable. The bank also said they can get a loan if someone signs surety on it. They tell you that they know they are good for the repayments every month, but they ask you to please sign surety. There are some important things to know before you make a yay or nay decision.

What is surety

Suretyship is a contract entered into on behalf of the principal debtor in favour of a creditor. In laymen’s terms, you sign the contract as a third party confirming that if the debtor cannot pay the creditor, you will do so in his stead. It is not a contract that should be entered into lightly. You should read every detail before even contemplating signing it as the wording of the surety can bind you in different ways.

You could be surety for a particular debt (like a home loan) or for a specific amount only. When this debt is paid off by the debtor, you are no longer surety to any form of debt owed by the principal debtor, though you should always confirm that your suretyship has been cancelled.

An alternative type of suretyship is being surety to the person. In this case, you are not released from the contract when a particular debt is paid, and you might be held liable for that person’s debt years later. If the contract does bind you to the person, you should make sure there is a clause in the contract providing you with an avenue to cancel your suretyship. When a particular debt is paid, you can then request to be relieved of this obligation.

What happens to the surety when you divorce?

If you are married in community of property, you and your spouse should both sign the suretyship agreement to make it enforceable. Both spouses are ultimately liable for the debt as they have a joint estate. If the signing of suretyship is done in the ordinary course of a spouse’s profession, trade or business, this is not necessary.

If you are married out of community of property, only the spouse that wants to act as surety needs to sign the contract as his/her estate and finances are legally seen as separate from the spouse.

Should the spouses get a divorce, it does not mean the suretyship agreement is null and void. If they were married in community of property, it is best to see if the suretyship can be renegotiated so only one person is surety. If this does not happen, both individuals could still be held liable even after divorce. If they were married out of community of property, the suretyship agreement is still relevant and enforceable. If the one spouse was surety for the other and they then get divorced, it does not change the suretyship agreement.

What happens to the surety in the case of death?

If the principal debtor should pass away, his/her creditor can claim against the deceased estate for the money owed them. If the debtor’s deceased estate does not cover the repayment of the debt, the creditors can claim the debt from the surety (person that signed the suretyship agreement).

If the surety passes away, a number of things could happen. If the loan is much smaller by that point or the principal debtor’s financial situation has improved, it could be that the loan agreement is changed to not included a suretyship agreement. Alternatively, if this is not the case, the principal debtor could ask someone else to be surety and have the suretyship assigned to that individual for the remaining amount of the loan. Should neither of these be feasible, it could be that the creditor claims the outstanding amount of the loan from the principal debtor and upon his/her possible inability to pay it, the debt can be claimed from the deceased estate of surety.

Think before you sign

Signing a suretyship agreement should be done with caution. Ensure that you have read and understood the contract wholly and completely. If you are married in community of property, ensure that your spouse also signs for it and understands the agreement completely. Be sure that the terms are clear and that you know exactly when the agreement will come to an end and when you will no longer be liable for the principal debtor’s debt.

If you need assistance in setting up a suretyship agreement, or in fully understanding such a legally binding contract, get in touch with AED.

More About AED Attorneys