EVERYDAY LAW: Ways to transfer one’s property
“I am 65 years old. I have a son (26 years old) from a relationship prior to my marriage. In addition to the matrimonial home, I have a house and land which I acquired prior to my marriage.
“Although my son has been good to me and my present family, I fear that if I die he will not benefit from my estate because he has never been accepted by my wife.
“My son currently lives in the house which is a small house compared to the one in which I now reside. I want to give the house to my son. Should I give it to him by will or is there another way to give it to him since I am not sure that my wife will carry out my wishes?”
The above is a summary of one of the queries I received recently.
The option presented by the above facts is either to transfer the property by deed of gift or to make a gift of the property by will.
The main difference between the two options is that a gift by will takes effect after the death of the testator, while a deed of gift effects an immediate transfer of the property to the donee of the gift.
It should also be borne in mind that while there is no consideration for the gift, the donor of the gift must pay stamp duty transfer tax and recording expenses on the gift, in addition to legal fees.
Where a person opts for a will, the only expense required is the legal fees. Therefore, in most cases it would cost significantly less to have a will prepared than a deed of gift.
Currently the rate of transfer tax on a deed of gift is 2.5 per cent of the value of the property transferred. Where that property is a dwelling house the first $150 000 is not subject to tax. Stamp duty is payable at the $10 in every $1 000 or part thereof.
A property valued at $300 000 will attract stamp duty of $3 000 and transfer tax of $3 750.
There is another significant difference between a deed of gift and a will. Once executed, a deed of gift cannot be revoked since the property passes immediately to the donee.
However, a will takes effect on death and can be revoked at any time by the testator provided he retains testamentary capacity. A testator is free to dispose of the property at any time prior to his death. A beneficiary named in a will therefore has no interest in property devised or bequeathed to him until after the death of the testator.
Sometimes a person who has effected a transfer of property by deed of gift discovers that because of changed circumstances the property would have been helpful to him.
It is because of the above that I encourage persons to opt for a will unless they can be reasonably sure that the property is not needed by them.
Nevertheless, there may be considerations that might suggest that a deed of gift should be preferred. For example, if the house is required for the purposes of security for a loan, it will need to be vested in the borrower.
I recommend that you consult your attorney at law and provide him with all the facts surrounding the matter.
• Cecil McCarthy is a Queen’s Counsel. Send your letters to: Everyday Law, Nation House, Fontabelle, St Michael.