A deed of voluntary conveyance is used to transfer an interest in real property (land and its fixtures) by way of gift from the original owner of the property (the `Grantor') to the recipient of the gift (the `Grantee').

The distinguishing characteristic of this method of transferring property is that it is effected during the Grantor's lifetime rather than after his death.

The question of whether or not to proceed with a voluntary conveyance is typically discussed within the context of estate planning with the central objective often being to minimise the amount of stamp duty payable to Government.

Under the Stamp Duties Act 1976 (as amended), the rate of stamp duty for gifts granted during life is typically lower than the rates applicable for transfers after death.

The stamp duty payable in respect of a deed of voluntary conveyance is calculated by the Accountant General following the adjudication of the deed.

The process of adjudication involves submitting the deed to the Accountant General, who first causes the property to be separately valued by Government and then relies on this valuation to quantify the value of the interest in the property that is actually being transferred.

Once the value of the interest is assessed, the stamp duty payable in respect of the deed is calculated at the following rates: First $100,000 of value - two percent.

Next $400,000 of value - three percent.

Next $500,000 of value - four percent.

Next $500,000 of value - five percent.

Any value over $1,500,000 - six percent.

By way of example, based on the rates outlined above, the stamp duty payable in respect of the voluntary conveyance of an interest in property valued at $500,000, would amount to $14,000.

The costs of transferring an interest in property after death, is approached differently in the sense that the value of any interest in property is not assessed separately in this context.

Rather, it is pooled with the value of all of the other assets, which comprise the deceased person's estate at the time of his death.

These assets as well as the deceased person's liabilities, are itemised in a document known as an Affidavit of Value, which is required to be filed at the Supreme Court before an estate can be probated or administered.

Thereafter, stamp duty is calculated by reference to the figure representing the value of the deceased's assets less his liabilities at the following rates.

First $50,000 - nil; Next $150,000 - five percent.

Next $800,000 - ten percent.

Thereafter -15 percent.

In view of the above, if the net value of the deceased's estate is calculated at $500,000, the stamp duty payable would amount to $37,500.

If one then assumes, for the purpose of comparison to the $14,000 voluntary conveyance stamp duty figure mentioned earlier, that the deceased's sole asset in this instance, is his property, then the voluntary conveyance would present a stamp duty saving of $23,500.00.

Notwithstanding the stamp duty savings associated with voluntary conveyances, there are significant disadvantages or risks, which the intended Grantor should carefully consider. These risks do not present themselves if one postpones the transfer of property until after death.

The foremost disadvantage or risk is that upon the execution of a voluntary conveyance, the Grantor will surrender a significant amount (if not all) of his control over his property. He will no longer be able to deal with it as he pleases, which is a major consideration if it is his only asset.

Essentially, once the deed is executed, the Grantee's consent will be required before the Grantor can deal with the property in any way. If, for example, the Grantor wishes to mortgage or sell the property, he will require the consent and co-operation of the Grantee.

The additional significant and related disadvantage is that once a voluntary conveyance has been executed, it cannot be undone without the Grantee's consent and much expense.

The Grantor cannot simply demand that his property be returned to him and expect the Grantee to co-operate.

This disadvantage is demonstrated by the telephone calls which attorneys sometimes receive from disenchanted parents asking whether their children can be forced to hand back their properties. The answer is rarely well received.

Once the decision has been made to proceed with a voluntary conveyance the Grantor should consider the manner in which his property will be held after the fact.

If the Grantor owns other assets, a voluntary conveyance should probably be viewed as one facet of a larger estate planning exercise, possibly involving the preparation of a Will.

It is, therefore, helpful for the intended Grantor to consider how he would like to deal with all of his assets before contacting his attorney.

Attorney Scott Swainson is a member of the Property Department at Appleby Spurling & Kempe. Copies of Mr. Swainson's columns can be obtained on the Appleby Spurling & Kempe web site at www.ask.bm.

This column should not be used as a substitute for professional legal advice.

Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.

LAWYERS LEG