A reader wants to know what process she should follow to transfer her property into her two-year-old daughter’s name.
She says she has no living relatives and that, should anything happen to her, the property must be owned by her daughter. In this way she wants to avoid potential issues with the administration of her estate.
She feels she does not trust anybody to handle her estate after her death.
See the reader’s question here.
It appears the reader has had previous experience of some of the more negative issues that may arise during the winding up of an estate.
As the process is closely scrutinised by the applicable Master’s office, it is quite possible that the negative impression arose due to possible in-fighting of the beneficiaries rather than the process itself.
It is possible that the will or the process itself was contested by the beneficiaries, leading to unnecessary delays.
In the current instance, it is possible for the reader to transfer the fixed property to her daughter.
But, as her daughter is under the age of seven, the reader would sign all documentation on her behalf in any event.
Depending on the value of the property, the reader would have to consider that donations tax may be payable, together with possible transfer duties and other associated fees.
The practical aspects of a minor owning fixed property would also have to be considered as certain monthly expenses would need to be covered.
Besides those expenses, the daughter’s guardian may be required to make decisions in respect of the property until she reaches the age of majority.
The reader should consider whether a guardian as nominated in her will – a person she is likely to trust – might also be able to serve as executor.
If not, she must decide whether the guardian could appoint an executor that he or she trusts and work with that person to wind up the estate.
Winding up the estate in the normal manner may be a better option.
This would result in the eventual transfer of the property costing less than if it were transferred now and may also result in fewer problems in the near future.
Practical issues that may arise out of a minor owning property, where the minor has no parent to assist, could be avoided by it being placed in trust upon the death of our reader.
The trustees then administer the property held by the trust on behalf of the beneficiaries.
The trust could be established in accordance with the provision of the reader’s will, which is known as a testamentary trust.
Using this mechanism, the reader could also ensure that the trust is left with a sum of money or other assets that may be sold to realise the cash necessary to administer the property for the benefit of her daughter.
It could stipulate that the property be transferred to the daughter upon, for example, her reaching the age of 18.
The reader would have to nominate two, preferably three, trustees and trust in such nominees acting faithfully and dutifully is paramount.
If she doesn’t use the trust option, our reader may wish to specifically nominate an accountant or attorney to act as executor of her estate rather than merely relying on another party being appointed to manage the winding up of the estate.
More importantly, however, is possibly the issue of guardianship as the failure to nominate one may lead to a person making application to the High Court for an order granting that person guardianship.
Such a person may even administer the estate of the minor child in a manner which the reader would not have wanted.
This could be avoided by the reader taking proper advice and structuring her will and estate to ensure the exact outcome she has in mind to benefit her daughter going forward.
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