Inheritance by definition is the practice of passing on private property, titles, debt, rights, and obligations upon the death of an individual. The rules of inheritance differ among societies and have changed over time. The testator (the individual signing the will) can bequeath his or her property to any person or persons by drawing up a will.
The three main statutes governing inheritances in South Africa are:
- The Administration of Estates Act (Regulates the disposal of the deceased’s estate in South Africa)
- The Wills Act (Affects all persons with a will for their property in South Africa)
- The Intestate Succession Act (Governs the distribution of estates of all deceased persons who have a property and who die without a will).
Heirs who inherit property are typically children, descendants, or other close relatives of the decedent. Spouses typically are not legally considered to be heirs, as they are instead entitled to properties via marital or community property laws. While home inheritance is beneficial for most recipients, others may experience financial difficulty due to the estate or inheritance taxes. Therefore, anyone receiving a house or property or both from a loved one needs to understand essential factors in this regard.
There are three main ways that people typically pass down properties that are a part of their estate. All of them require forethought and planning, and the establishment of an up-to-date and indisputable will. Having a capable executor also goes a long way in minimising stress and the complexities involved in the process.
Common ways to pass a property on to your heirs after death
1. Direct transfer to a beneficiary
f you plan to pass your property on to an individual - your spouse or child for example - you can specify that the title deed is transferred directly into their name on your passing. This can also be done for multiple beneficiaries, who would then become co-owners of the property.
2. Deceased sale with profits distributed to heirs
An alternative to transferring your property on as a whole asset is to instruct your executor to sell it after your death and add the proceeds to your estate. This can make it easier to split the value of your property between multiple heirs, particularly if none of them are likely to want to live in your home.
3. Property placed in trust before death
Placing your property, or properties, into a trust before you die is often regarded as one of the most efficient and minimally traumatic ways to ensure that your legacy is enjoyed for generations. This is because trusts do not form a part of your estate at all - they are considered immortal legal entities in their own right. By nominating your heirs as beneficiaries of the trust that owns your property, they can enjoy its benefits, including any rental income, without having to worry about dealing with sales, transfers, estate duty or capital gains tax. This is a simple and cost-effective manner.