Inheritance tax and law
Last Updated: January 21, 2016
The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Ghana: what restrictions there are and whether making a will is advisable.
No inheritance tax is levied in Ghana.
However, properties given out as gift are subject to a gift tax on the market value of the total gifts received. Gift tax is levied at a flat rate of 15%.
Gifts falling under the following categories are exempt from taxation:
- Made under a will or interstate
- Made between spouses, children, and specified close relatives (brother, sister, aunt, uncle, nephew or niece)
- Made to religious bodies for the benefit of the public or sections of thereof
- Made for charitable or educational purposes
Thanks to David Hesse of Hesse & Hesse Law Firm
What inheritance laws apply in Ghana?
Ghanaian inheritance laws affect everyone who owns property in Ghana.
The principal laws relating to inheritance in Ghana are the following:
- Constitution of the Republic of Ghana, 1992
- Administration of Estates Act, 1961 (Act 63)
- The Wills Act, 1971 (Act 360)
- Intestate Succession Act, 1985 (PNDC Law 111)
- Intestate Succession Amendment law, 1991 (PNDC Law 264)
- Conveyancing Act, 1973 (NRCD 175)
- The Marriages Act, 1884 – 1985 (Cap 127)
Ghanaian law is emphatic that, in relation to immovable property, the law of the place where the property is located is applicable.
The High Court in Ghana is competent to deal with inheritance issues.
The High Court has jurisdiction to take decisions about property in Ghana owned by foreigners. The Circuit and District Courts may also deal with inheritance issues if the value involved does not exceed their statutory limits. The special facts or merits of each case determine how long the Court proceedings last, but inheritance cases are, on average, disposed of within three months.
Intestate succession laws in Ghana apply to foreigners.
The Intestate Succession Act, 1985 (PNDCL 111) applies automatically, subject to the rules of Private International Law, to both foreigners and citizens of Ghana who die leaving assets in Ghana but do not make a will,. However, experience shows that many Ghanaian families do not follow the provisions of PNDC Law 111, fearing it would dissipate their property. Most families still rely on the dictates of customary law.
Under the rules of PNDCL 111, in the absence of a will, the entire estate of the deceased devolves to the next of kin. The compulsory beneficiaries are the children, spouse and parents of the deceased. The fraction of the estate distributed to each heir varies according to the numbers and categories of heirs involved in the distribution.
The surviving spouse and/or children are entitled to all the household chattels of the deceased. If the estate includes one house, the surviving spouse and/or children are entitled to own it. If the estate includes more than one house, the surviving spouse and/or children must decide how the houses are devolved, and they own the houses as tenants in common. If there is disagreement, or if they are unwilling, or unable, to make such a choice, then the High Court, upon application by the administrator of the estate, can determine which of the houses devolves to the spouse and/or children.
If the deceased has no family, the Administrator-General takes charge of the payment of the deceased’s debts, fees, expenses, and liabilities, and pays the balance to the Accountant-General. The Accountant-General, in turn, informs the Attorney-General, who publishes the accounts, announces the completion of the administration of the estate, and calls on claimants to present their petitions to court on legal, equitable, or moral grounds. Equitable or moral claims refer to those of dependants of the deceased or other persons for whom the deceased might reasonably have been expected to make provision. Claimants have two years to make a claim by petition to the Attorney-General, unless the court fixes a shorter time. Any order made by the court in relation to the petition is published.
The reserved portion must be catered for in a will.
There is a reserved portion of the estate, to ensure that some categories of people are not excluded from the will. The rules are complex. The portions depend on the numbers and existence of each category of heir. The minimum reserved portion is a 1/8 share to each person, if the deceased is survived by a spouse, children, and parents. The maximum share is ¼ to each person, if the deceased is survived by only parents with no spouse or children.
Once these categories are catered for, then the testator is free to distribute the residue of the estate as he/she desires, including those already beneficiaries under the reserved portion.
If the deceased failed to make provision in his will for a financial dependent, that person can apply to the High Court for provision.
Foreign wills are upheld in Ghana
The will of a foreigner is usually upheld by Ghanaian law if the formalities of execution comply with either the laws of Ghana, or with the national law of the country where the will was made. If the will of a testator has been proved according to the law of a foreign jurisdiction, then a Court in Ghana would hesitate to declare it invalid, and be hesitant to vary or set aside the testator’s wishes.
The applicable law for the execution of a will is influenced by the personal law of the testator, such as customary law; Mohammedan law if Muslim; Common Law; or the law of another jurisdiction. In the absence of any specific provision as to which laws should govern the devolution of property in Ghana, Ghanaian law is the applicable law.
In the case of a joint will, made by a married couple with different religions and/or nationalities, the wishes of each party are construed differently, in conformity with the personal laws of the respective parties. The Courts Act, 1993 (Act 459) provides that the applicable laws governing any issues arising between such married couples are the relevant rules of their different systems of personal law, with a view to achieving a result that conforms with “natural justice, equity and good conscience”.
It is normal to make a will in Ghana.
It is advisable for a foreigner who has property governed by Ghanaian jurisdiction to make a will in Ghana. The advantage is that once proved and admitted to probate, the administration of the estate can commence immediately. On the other hand, a foreign will admitted to probate in the jurisdiction in which it was made must also be proved and admitted to probate in Ghana, before the estate to which it applies can be administered.
The physical presence of a foreign testator in Ghana is required to make a written will. The testator must sign or acknowledge his signature in the presence of two or more witnesses who are present at the same time. The will can also be signed on the testator’s behalf in the testator’s presence with two or more witnesses present. The witnesses are also required to attest and sign the will in the presence of the testator, but no legal form of attestation is necessary.
Gifts can be made during the lifetime of the property-owner.
Most property in Ghana can be given freely to anyone during the lifetime of its owner. The requirements are: the donor must be the legal owner of the gift; the donor must have the age, mental capacity, and intention to make the gift; and the gift must be delivered to and accepted by the donee during the lifetime of the donor.
Household chattels, except those used exclusively for commercial purposes, may not be given to anyone, since they are reserved for the surviving spouse and children. The giving of property to which other people have interests is restricted by law, and cannot contravene co-ownership arrangements. In the case of a malicious disposition of a gift, a surviving spouse, children or family member can apply to Court to challenge the gift after the death of the donor.
Title deeds confer legal property ownership, but Ghanian law also recognizes trusts.
Title Deeds confer the legal title of property to named individuals, but other persons, such as minors and other legal incompetents, may have equitable interests, and trustees may hold equitable interests in property for other persons. The Court, where necessary, looks beyond Title Deeds to establish ownership of property.
Property rights of husband and wife are separate.
In Ghana, any properties acquired by spouses in their own right remain separate throughout their marriage and do not become jointly owned.
If a husband buys property in the name of his wife, the husband is presumed to have intended the property as a gift for his wife. This can, however, be rebutted by cogent evidence to show that a gift was never intended, and the husband wanted to retain a beneficial interest. If a husband can show that he made a substantial contribution to the acquisition of property in the name of his wife, he could obtain an order of the Court decreeing that his wife holds the Title Deeds to the property in trust for himself.
Minors can inherit property.
A trustee can be appointed in the will by the testator to protect the interests of minors or persons not of legal age who inherit property in Ghana. The Court can also appoint trustees over property intended for minors and other legal incompetents.