The gift of giving — The Valentine's Day edition

Business

The gift of giving — The Valentine's Day edition

Legal Notes

With Natasha Rickards

Wednesday, February 12, 2020

Print this page Email A Friend!


Valentine's Day is traditionally celebrated as the day of love where gifts are exchanged between loved ones across the world. These gifts range from candy and flowers to more substantial assets such as shares and real property.

If you are trying to figure out the best way to give your loved ones an asset such as real property or shares here are a few options to consider:

INTER VIVOS TRANSFERS

The term inter vivos is Latin for 'between the living'. An inter vivos transfer is a legal term that refers to a transfer of a gift while both the transferor and transferee are alive. Such transfers usually entail adding your loved one to the title of the asset or completely and outrightly transferring all your interest to your loved one.

If you are considering gifting your loved one with shares you will be required to obtain the following: the name of the company in which shares are held; the numbers of shares held; the number of shares you intend to give your loved one; and the unit value of the shares.

Once you have gathered all the information required you must provide same to your attorney to get the process going. The attorney will prepare the necessary transfer documents so that the transfer to your loved one can be effected.

It is important to note that a transfer of shares will attract Transfer Tax and Stamp Duty. Transfer Tax on shares is set at two per cent of the value of the shares you are giving away and Stamp Duty is fixed at $5000. Once the Transfer Tax and Stamp Duty are settled your attorney will be able to take further necessary steps to see to the transfer of shares to your loved one.

If you intend to gift real property (land) you will be required to do a transfer by way of gift. To complete this transfer you will be required to present the duplicate certificate of title for the property you intend to transfer to your loved one. You must also be prepared to give your attorney the market value for the property which will be assessed for the payment of Transfer Tax. The attorney will prepare the necessary transfer document for your execution as well as the execution of the giftee.

Like shares, the transfer of property also attracts Transfer Tax and Stamp Duty. Transfer Tax on property is set at two per cent of the reasonable market value of the property you intend to transfer.

Note, that if you are adding someone to the title of your property you will be required to pay Transfer Tax on the reasonable value of the share and interest you intend to give away. For example if you intend to give away 50 per cent of your share and interest in the property you will be required to pay Transfer Tax on that 50 per cent. If you intend to gift all your interest in the property, then you will be required to pay two per cent on the entire market value.

In this type of transaction, Stamp Duty is usually no more than $100. Once the Transfer Tax and Stamp Duty are settled your attorney will be able to lodge all the relevant documents with Titles Office in order to have the transfer endorsed on the certificate of title for the property.

TRANSFER ON DEATH — WILL

For those who are in no rush to turn over property or shares to loved ones this Valentine's Day, but would like to ensure that loved ones inherit assets upon your death, then preparing a well written will is the option for you.

A will is a testamentary document that comes alive on the death of the testator (the maker of the will). A will provides the testator with the opportunity to clearly indicate the beneficiaries of his/her assets including but not limited to property and shares.

By carefully drafting a will you will be able to safeguard the interest of your loved ones and provide for them when you are no longer physically here on earth. It is strongly recommended that you engage the services of an attorney-at-law when creating your will, to ensure that it is legally valid, clear, and cannot be challenged by people who you do not want to benefit from your estate.

You must note that the transfer of shares and property on death also attracts Transfer Tax also with other costs. Currently Transfer Tax on death is 1.5 per cent of the value of the assets at the time of death. However, this Transfer Tax on death is only applicable where the value of the property and/or shares is more than $10,000,000. If the value at the time of death is less than $10,000,000 then Transfer Tax on Death is not applicable.

TRUST

The third option to gift property is creating a trust. A trust creates a legal relationship between the settlor, who places assets under the control of others (trustees) for the benefit of a person or class of people (beneficiaries). Trusts are established to provide legal protection for assets and are designed to make sure assets are distributed in accordance with the wishes of the settlor.

The trust is most useful in circumstances where you would like to give an asset to a beneficiary who is a minor or who does not have the wherewithal to deal with and/or manage the assets, or you want the assets to be directed for specific purposes or last for a specific time.

It also allows you to pass on your assets, including property and shares quickly and privately, minimising the hassle and potential fees associated with handling an estate.

AtTrust which is used to transfer property and/or shares also attracts Transfer Tax of two per cent of the value of the property or shares being transferred into the trust. Stamp Duty of $500 is also applicable. If you intend to use a trust as a vehicle for gift giving you must engage the services of an attorney to ensure same is valid and meets all requirements in law, especially in light of the newly proposed Trust Act.

In order to determine the best option for you to give your loved one a gift, we recommend that you consult your attorney-at-law who can provide needed guidance.

Natasha Rickards is an Associate at Myers, Fletcher & Gordon and is a member of the firm's Property Department. Natasha may be contacted via natasha.rickards@mfg.com.jm or www.myersfletcher.com . This article is for general information purposes only and does not constitute legal advice.


Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT