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Think Ahead To Avoid Hitting Your Head

Think Ahead To Avoid Hitting Your Head

How to avoid nasty disputes with your siblings? In times of economic hardship, it can make sense to move in with one’s parents. But this can lead to great unhappiness between siblings in terms of inheritance if the property is co-owned by the parents and one child but not the other children. How can these be avoided? Just Property asked Judd Reid and Sandra van der Linde of Tomlinson Mnguni James Attorneys to weigh in. 

“In practice, these issues are best resolved by having a comprehensively drafted co-ownership agreement between the parents and the child, coupled with a well drafted and valid Will,” says Reid. “Particular attention should be given to how material improvements to be paid for by one party and not the other will be dealt with. This is often a bone of contention if not adequately provided for.” 

It is important to note that the terms and conditions of the co-ownership agreement will be binding on the appointed Executor in the Estate, to the extent that it does not infringe on the testator’s freedom of testation, Van der Linde explains. “Clear and candid communication between parents and their children is extremely important to address any concerns that a child may have about the co-ownership arrangement and to assure those children who are not involved, that upon the death of the last dying parent, they will be treated equally and that measures will be put in place to ensure this intention is honoured.”

In most cases, where co-ownership exists, parents usually make arrangements in their Wills to leave (upon the death of the last parent) their share in the property to the child with whom they share ownership, and then look to balance the scales by compensating the other children with cash from the estate equivalent to the value of their share in the property at the date of death. 

Protracted and unnecessary disputes can often arise in respect of the value to be attributed to the property and that is why it is important to direct that the property be valued by a sworn appraiser, who is appointed at the discretion of the Executor and who should preferably be a professional, impartial and independent person. 

Furthermore, the Will should direct that the sworn appraisal is final and binding on all interested parties and is not to be made the subject of any legal dispute. The above position is easily achieved where the assets of the estate are enough to ensure that the children can indeed inherit equally. The other added benefit is that there will be no Transfer Duty payable as same is exempt in these circumstances. 

But what is the best solution in circumstances where the assets in the estate are not enough to ensure that the children inherit equally? 

In these circumstances, the child who co-owns the property with his parents should be given the option to purchase his parent’s share of the property from the estate at market value. This will ensure that the children inherit equally. The purchase price should be linked to a sworn appraisal value as at date of death, as set out above, to avoid disputes and delays. Furthermore, the other children’s consents to the sale should be specifically dispensed with, as the Master may call for these consents. 

It is highly advisable to seek the advice and guidance of an attorney who specialises in this field of law. Such advice would ensure the intention of the parties is properly recorded, and that on the death of the last surviving parent, all the children are left feeling that they benefited equally and fairly from their parents’ estate, averting potential family feuds. 

 

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