With Transfer Duty, there is a sequence of events that must be followed, depending on the facts of the case.
There are four scenarios where the sequence of events is not always followed:
- Divorce and then later inheritance;
- Massed estate;
- Divorce and re-marriage;
- Inheritance where the surviving spouse is also donating her share to the children – not mentioned in the will as a massed estate, but clear from the contents that such occurred.
The sequence of events
It should be noted that in the above scenarios, both transactions must be done separately, due to the sequence of events that needs to be followed.
- The divorce transaction will have to be the 1st transaction and the inheritance the 2nd transaction.
Example of such scenario:
- Date of Divorce Order is 20.04.2006 in which the ex-wife acquires her ex-husbands half share of the property;
- After the divorce, the ex-husband never updated his Last Will and Testament. He died on the 29th December 2006. According to the Will, the property will be inherited by either the wife (now ex-wife) or children.
It is important to note that the divorce transaction will not be exempted from Transfer Duty, since the transaction is prior to 25.07.2006.
Section 2(5) will be applicable in this instance. See example under Section 2(5) in the guide for more details.
The inheritance transaction, if still applicable after the Divorce transaction, will be subject to Section 9(1)(e) or 9(1)(i) exemption, depending on the facts of the matter and who the beneficiaries are.
- Where there is a massed estate, it should be noted that the transaction from the surviving spouse to the children will be regarded as a donation and not an inheritance. As such, transfer duty will be payable, and section 2(5) will apply to the transfer of any share less than 100%.
- In a scenario where one of the ex-spouses remarries after the divorce, the new spouse cannot be added to the transaction since, on date of transaction (being the date of Divorce), the new spouse was not a party to the agreement. The new spouse only acquires property from the date of marriage. The transfer duty receipt must reflect the parties as at date of transaction and not include any subsequent marriage.
- The same as example 2, the only difference is that the Last Will and Testament will not specifically mention “massed estate”, but the same principle applies.