- March 16, 2019
- Posted by: Admin
- Categories: Legal, Real Estate Law
With the high legal fees to probate a will or apply for letters of administration, more people are going the cheaper route of creating living gifts or Inter vivos gifts. Creating an inter vivos gift is a cheaper alternative because it transfers the interest of the owner of the property to the beneficiaries during the life of the owner. There is no requirement for the parties to make an application to the court as is the case when applying for probate or letters of administration. Inter vivos means between living persons so an inter vivos gift is one given during the lifetime of the donor. The inter vivos gift, unlike a gift under a will, is given when the donor is still alive. Inter Vivos gifts (including estate property) are not subject to probate taxes since they are not part of the donor’s estate at death.
Meeting with your Real Estate Lawyer for Advice on Inter vivos Gift
Before applying to transfer real estate property by way of gift it is important to seek the advice a real estate lawyer. The real estate lawyer will be able to guide you towards the most suitable solution for your individual case. You must be sure to inform your real estate lawyer as to any dispute relating to the property as this may influence his advice to you. The real estate lawyer will take instructions from you and draft the documents accordingly.
The Application
The application for the transfer of property will start with the real estate lawyer drafting a statutory declaration. This statutory declaration will declare the value of the property. The document should then go to the Stamp Office for assessment. The assessor at the stamp office may not accept the value declared by you in the statutory declaration and in that case will do their own independent valuation.
The Assessment
Once assessed, stamp duty and transfer tax will become payable to the stamp office. The stamp duty is usually $40.00. As of April 1, 2019 transfer tax, which was previously assessed at a rate of 5% has now been reduced to2% of the market value of the property i.e. either the declared value or the assessed value. Transfer tax is only payable on the portion that is being transferred. Therefore, if a donor wants to transfer 1/2 of his interest to a beneficiary, his transfer tax would be only 1/2 of the 2% of the market value of the property since he is only parting with half interest.
The advantage of creating an inter vivos gift in a real estate is that the donor does not have to surrender complete ownership of the property during his lifetime. Joint tenancy gives the donor the power to use the property throughout his lifetime and after his death, the entire property is transferred to the beneficiary through the doctrine of survivorship almost automatically.
Once the stamp duty and transfer tax are paid the Transfer instrument will be completed filed and crossed stamped. A transfer tax certificate will be issued which should accompany the transfer instrument when lodged at the Titles Office.
Lodging Documents at Titles Office
Once it has been stamped, the instrument of transfer, as well as the registered title, should be taken to the Titles Office section of the National Land Agency, where the ownership changes will be registered. The cost to register transfer by way of gift is $5,000.00. A cover letter should accompany the application, usually prepared by the real estate lawyer conducting the registration.
Once lodged, the documents would be ready within 5 working days after submission.
DISCLAIMER:
The contents of this article are for informational purposes only. It must not be relied upon as an alternative to legal advice from your own attorney