Understanding options, the ins and outs of estate inheritance

TAKING ownership of a house is usually a joyous occasion in one’s life, but sometimes this milestone comes with the death of a loved one and the inheritance of their home.

Dealing with the intricacies of such inheritances is also a trying time, especially when one is grieving.

“However, understanding your options and obligations can make the process much simpler for everyone involved,” explains Bill Rawson, chairperson of the Rawson Property Group.

“The first thing you need to understand when inheriting a property is that you might not be the only one with a claim to the asset. There may also be outstanding bond payments, unpaid rates or utilities, or even loans secured using the property as collateral. Those debts will need to be settled, either by the estate or by the beneficiary, before transfer takes place.”

Rawson says it is important to check the details on the title deed are correct.

Following this, Rawson advises:

Book a valuation: Once the inheritor is aware of any liabilities relating to the property and has confirmed the title deed is in order, Rawson says the next step should be to book a professional property valuation and comparative market analysis.

“This is important for a few reasons. The most obvious is in the event you decide to sell and need to know where to position the property on the market.”

Get a home inspection: In addition to a valuation, Rawson strongly recommends beneficiaries have a home inspection performed, as serious maintenance issues may affect the viability of keeping or selling an inherited home.

Weigh up your options: The preceding steps should give the inheritor a good idea of the real value and condition of their inherited property and, together with some sound advice from an experienced real estate agent, provide enough information to decide on moving in, selling or finding tenants.

Fees, duties, and tax: The costs involved in inheriting a property are often a concern for beneficiaries, but most should be covered by the estate, he says. “Conveyancing fees and transfer duties are typically paid by the estate, not the beneficiary, so the only real cost – other than settling debt and doing maintenance and improvements – is if Capital Gains Tax applies.”

Explaining some of the legal aspects, Louis Kruger of Schindlers Attorneys says there are different types of deceased estate transfers.

The first, he says, concerns the transfer of property to an heir in a deceased estate.

“When a person dies the Master of the High Court appoints an executor to administer the deceased estate. The executor’s function is to collect the assets of the deceased, pay any debts and thereafter distribute the inheritance to those entitled to such inheritance.” This process can be lengthy and is thus referred to as a delayed transfer. A simple deceased estate can take more than a year to finalise, Kruger says.

The second involves the sale of the property by an heir before he or she has taken transfer from the deceased estate, and is an extension of the aforementioned process.

The third scenario involves the sale of a property from the deceased estate directly to a purchaser and this process is generally completed quickly.

“In this case the property is sold by the executor of the deceased estate from the deceased estate directly to a third party purchaser.”

After registration of transfer to the purchaser in the deed office, the proceeds of the sale are paid into the deceased estate’s banking account to be dealt with by the executor.