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by Annette Linton, Senior Associate, Clarke Gittens Farmer
First, who inherits the real estate on the death of the owner?
Second, how is the real estate transferred to the person who inherits it?
This article provides a general outline of who stands to inherit real estate in Barbados when the owner dies and the steps that must be taken to transfer ownership of the real estate to the persons who stand to inherit it.
When a person owns real estate in Barbados in his name alone, the persons who stand to inherit the real estate on the owner’s death are determined either by the owner’s will or by the rules for distribution of assets on intestacy set out in the Succession Act.
Where a person co-owns real estate with another person, how the real estate passes on his death will depend on whether he owned the real estate jointly with the other person or if the real estate was owned by them as tenants in common.
- Property owned jointly automatically passes to the surviving joint owners when one of the original joint owners dies. No share or any interest in the property forms part of the deceased’s estate. Therefore, no one stands to inherit any share of that property from the deceased’s estate.
- Where persons co-own property as tenants in common, each person owns a distinct fractional share in the property e.g. a half-share. When a tenant in common dies his share in the property does form part of his estate and stands to be inherited by the persons entitled under his will or under the intestacy rules.
Inheritance under a will
Generally speaking, subject to certain limitations, a person may leave his real estate to any person he desires under his will, i.e. any family member, a friend, a neighbour, companies, charities, churches or any other beneficiary.
A will cannot be used to disinherit a spouse, a minor child or a child who is by reason of some mental or physical disability incapable of maintaining himself. The rights of these persons to claim a benefit from the estate of their deceased spouse or parent are protected by the Succession Act.
The right of a surviving spouse to claim a share of the estate
Under the Succession Act:
- A surviving spouse has a right to choose to receive a designated share of his or her deceased spouse’s estate instead of taking what is left for him or her under the deceased spouse’s will. A surviving spouse can claim a one-quarter share of the estate (where the deceased died leaving a minor child or a child who is by reason of some mental or physical disability incapable of maintaining himself), or a one-half share of the estate (where there is no such minor or disabled child).
- The surviving spouse who intends to exercise his or her right to claim a share in the estate should do so by notifying the Executor or Administrator of their deceased spouse’s estate in writing of his or her intention to claim.
- The spouse’s legal right to claim a designated share in the estate takes priority over any devises, gifts or bequests made under the deceased spouse’s will.
The right of children to receive maintenance from the estate
Where a deceased parent has failed to make adequate provision for the maintenance of a minor child or a child who, is by reason of some mental or physical disability, incapable of maintaining himself that child has a right to claim financial maintenance from the deceased parent’s estate.
To exercise this right an application must be made by the child, or by a parent or guardian on that child’s behalf, to the Supreme Court of Barbados for an order for financial maintenance. If the court is satisfied that the deceased failed to make adequate provision for the minor or disabled child, it may grant an order requiring the estate to make a lump sum payment or periodic payments towards the maintenance of the child.
Preparation of a will
While a person can prepare his will himself, an attorney experienced in estate planning and the preparation of wills should be hired to prepare the will to ensure that (1) the will once executed is valid and (2) the devises or bequests made under the will are effective. A will can be wholly invalid or a gift to a beneficiary under an otherwise valid will may fail for a number of reasons:
- Beneficiaries may not receive property left to them in a will if the deceased failed to make adequate provision for a minor or disabled child and that child exercises his or her statutory right to claim maintenance from the estate.
- Beneficiaries may not receive property left to them in a will if the surviving spouse exercises his or her right to claim a designated share in the estate.
- Any gift to a beneficiary or the spouse of a beneficiary under a will is rendered null and void if that beneficiary was an attesting witness to the will.
- A gift of property to a beneficiary may fail if the subject matter of the gift, the interest in the property intended to be granted or the intended beneficiary is not clearly identified in the will.
- A will may be invalid if it was not properly signed by the person making the will or not properly witnessed.
- The validity of a will can be challenged if at the time the will was prepared the deceased was of unsound mind or under duress from or unduly influenced by someone to make the will in certain terms.
The above list is by no means exhaustive and a person intending to make a will should seek legal advice to avoid inadvertently depriving a beneficiary of his or her inheritance under the will.
Inheritance on intestacy
Where a person does not leave a valid and enforceable will, the Succession Act sets out who stands to inherit from the estate and the share of the estate the beneficiaries are entitled to receive.
If a person dies intestate leaving:
- a spouse and no children or next-of-kin (next-of-kin being the nearest blood relative to the deceased at the time of his death), the spouse takes the whole of the deceased’s estate.
- a spouse and no children but next-of-kin, the spouse takes two-thirds of the estate and the remainder is split in equal shares between the next-of-kin.
- a spouse and one child, the spouse takes two-thirds of the estate and the remainder goes to the child.
- a spouse and children, the spouse takes one-third of the estate and the remainder is split in equal shares between the children.
- children and no spouse, the estate is split in equal shares between the children.
- neither spouse nor children, the estate is split equally between the deceased’s mother and father and if only one of them survives the deceased, the surviving parent takes the whole of the estate.
- neither spouse nor children nor mother nor father, the estate is split in equal shares between the deceased’s brothers and sisters, and if any brother or sister does not survive the deceased that sibling’s children can take the share that their parent would have received.
- neither spouse nor children nor mother nor father nor brother nor sister, the estate is split in equal shares between the deceased’s nieces and nephews.
- neither spouse nor children nor mother nor father nor brother nor sister nor nieces or nephews, then the estate will be split in equal shares among the deceased’s next-of-kin.
WHAT STEPS MUST BE TAKEN TO TRANSFER REAL ESTATE TO THE PERSONS WHO STAND TO INHERIT?
Appointment of Executors or Administrators for the estate
To begin the process of transferring real estate to the person who stands to inherit same, an Executor or Administrator must first be appointed to administer the deceased’s estate.
Executors are appointed by a person in his or her will. However, an Executor named in a will must make an application to the Supreme Court of Barbados to probate the will and formalise his appointment. This application is called an application for Letters Testamentary.
An attorney should be hired by the Executor to prepare the necessary application and the supporting affidavits that must be filed with the court. The application, the supporting affidavits and the original will when submitted to the court, are reviewed by the Registrar of the Supreme Court. Once the Registrar is satisfied that the will submitted for probate is valid and is the last will of the deceased, a grant of Letters Testamentary will be issued to the Executor.
Administrators can only be appointed by the court. The persons entitled to be appointed by the court are in most cases either the beneficiaries under a will, or the persons entitled to a share in the deceased’s estate on an intestacy.
An Administrator must be appointed when:
- a person leaves a will, but fails to appoint an executor in the will, or when the executor appointed in the will has died, renounced his right to be executor, or is unable or unwilling to act. In such cases the beneficiaries named in the deceased’s will can apply to the court to be appointed Administrators of the estate.
- a person dies without leaving a will (i.e. intestate). In such a case, the persons entitled to a share of the deceased’s estate can apply to the court for the appointment, in the following order:
- surviving spouse
- brothers and sisters
- nieces or nephews
- aunts and uncles
The person seeking to be appointed the Administrator of an estate must make an application to the court for a grant of Letters of Administration. An attorney should be hired to prepare the necessary application and the supporting affidavits which must be filed with the court.
Where the deceased dies intestate, the persons who apply for the grant of Letters of Administration, must provide the court with evidence establishing their relationship with the deceased e.g marriage or birth certificates.
Administrators (unlike Executors) are required to sign an administration bond and in most cases at least one person must agree to stand as a surety for their administration of the estate. The value of the bond and surety is calculated based on the value of the deceased’s estate.
Resealing of a foreign grant
Where an Executor or Administrator has been formally appointed by the court of another country, that foreign court’s appointment does not give the Executor or Administrator authority to deal with property in Barbados. In order to deal with property in Barbados the Executor or Administrator must apply to the Supreme Court of Barbados to have the grant of the foreign court appointing them as Executor or Administrator recognised by the Supreme Court of Barbados. When this is done, the seal of the Supreme Court of Barbados is affixed to a copy of the foreign grant and the Registrar issues a certificate confirming that the foreign grant was ‘resealed’.
Calling in, taking possession of and managing the assets
Once the relevant grant has been issued or resealed by the Supreme Court of Barbados, the Executor or Administrator can then proceed to administer the deceased’s estate.
They must call in, take possession of and manage the deceased’s assets. In the case of real estate this may involve:
- locating all title documents for the real estate;
- making sure that all buildings are insured and that adequate security is in place to prevent vandalism;
- managing rental properties and collecting rent; or
- selling the real estate to pay the deceased’s debts.
Settling the deceased’s debts & liabilities
The Executor or Administrator must investigate and settle all of the deceased’s legitimate debts and liabilities before he can distribute property to beneficiaries. The process of investigating and settling the deceased’s debts and liabilities includes:
- Advertising for creditors in newspapers and the Official Gazette.
- Selling property, including real estate, if necessary to provide funds to pay the deceased’s debts and liabilities.
- As funds become available, paying outstanding sums due to the Government, discharging any bank or private loans and settling any judgments or outstanding bills.
- Submitting an estate account to the Inland Revenue Department, settling any outstanding sums due to Inland Revenue and obtaining a Tax Clearance Certificate stating that all taxes due to Inland Revenue have been paid.
- Paying off any administration costs. This will include reimbursing the Executor or Administrator for any out of pocket costs properly incurred by him in the course of the administration of the estate and paying legal and any other professional fees incurred during the course of administration.
Transfer of property to beneficiaries
After the payment of the deceased’s debts and liabilities, the Executor or Administrator can then proceed to transfer the remaining assets to the beneficiaries.
- To complete the transfer of real estate to beneficiaries, the Executor or Administrator must execute the appropriate document of transfer. An attorney should be hired to prepare this document.
- The transfer of real estate to a beneficiary of an estate is exempt from Property Transfer Tax and only a nominal stamp duty of $50 BBD is payable on the transfer.
- If the real estate is subject to a mortgage or any other charge, the Executor or Administrator should obtain a release of that charge prior to the transfer to a beneficiary. If the Executor or Administrator fails to obtain the release prior to the transfer, the beneficiary will take the real estate subject to the existing charge.
- If the deceased was not resident in Barbados at the time of his death or the beneficiary is not resident in Barbados, an application must be made by the Executor or Administrator to the Exchange Control Authority of the Central Bank of Barbados for permission to transfer the real estate to the beneficiary. A transfer made without this permission is invalid.
Once the necessary document of transfer has been signed it should be recorded or registered at the Land Registry. Following this all documents of title to the real estate should be delivered to the beneficiary.
Each estate has its own unique circumstances, complexities and issues, and in certain cases additional steps may have to be taken to transfer real estate to the beneficiaries. It is not possible to cover all of the scenarios that can arise in relation to the transfer of real estate to beneficiaries in this article. If you are a land owner making a will, the executor or administrator of an estate, or think you may be entitled to inherit real estate from a deceased person’s estate you should retain an attorney to advise you.