When parents do their estate planning, the question often comes up as to whether they should buy the house or a property in the name of their minor children.
In South Africa a person younger than 18 years old is considered a minor. This was changed from 21 to 18 not too long ago, and we therefore have a new age where you are deemed to be an adult.

Although it is possible for a minor to purchase, sell and/or register a mortgage bond over an immovable property, there are some things that the parents need to keep in mind.  The challenges often only arise when the family situation changes due to finances, death or other life changing situations, and the parents need to sell the said property.  Buying is easy, but selling a whole different situation.Things to keep in mind:

a. When a minor purchases an immovable property: 
• For children younger than 7 years – the child’s guardians (usually both natural parents of the child) need to sign all documents on behalf of the child; and, 
• For children 7 years or older but under 18 years – the child may sign all the documents but the child’s guardians (usually both natural parents of the child) need to provide assistance by also signing all the documents.

b. When a minor sells or registers a mortgage bond over an immovable property: 
• The same rules for signing of documents apply as when the minor purchases a property (see above); 
• If the value of the immovable property or mortgage bond to be registered is R250,000 or less – The Master of the High Court must approve the sale; and, 
• If the value of the immovable property or mortgage bond to be registered is greater than R250,000 – a Court Order by the High Court of South Africa is required to sell the property.
The basic legal principles will apply and the court will protect the rights of the minor and his financial future.
The court and the Master will require information on the following before they consider the application to sell the property:
• The reason for the sale
• Proceeds of the sale and what will be done with it after the sale
• If funds will be invested for the child, who will have control of the funds
• Why is the property being sold now
• Is the sale to the benefit of the minor or the parents
Prepare yourself for an uphill battle that has little chances of success if you can’t show exceptional circumstances.

What are some of the advantages of buying a property in the name of your minor child:
• Giving the minor a financial head start in life.  
• Any property owned by minors is separate from any claims by creditors or other third parties. This is a good way to protect your children’s future, against possible            financial complications by the parents or their business.  
• The alternative is to place the property in a trust but you will be faced with excessive capital gains when transferring the property into such an entity.
• Transferring a property to a minor means that when you die, the property will not form part of your estate, this means there is less estate tax to be paid.

As Helen Ward states in her article on Helen Melon properties in 2016:  The idea of transferring or buying a property for a minor is a nice one, a noble one and can make plenty financial and common sense. But think long and hard before you do, and better still consult a property attorney or estate planning specialist and make an informed decision.