Getting married is an exhilarating time filled with thoughts and discussions about venues, wedding dresses, and the guest list. However, it's crucial to devote some consideration to your marriage contract, as it can significantly impact your future.
In South Africa, your marriage is automatically assumed to be in community of property unless you opt for an antenuptial contract. The choice of marriage contract will determine how your assets and liabilities are divided in the event of divorce or death. This underscores the importance of engaging a seasoned family law attorney who specializes in providing legal assistance to families.
In South Africa, there are three (3) distinct types of marriage regimes:
1. In community of property; or
2. Out of community of property, with the Accrual System; or
3. Out of community of property, without the Accrual System.
What does these different marital regimes mean? Well, let us explain.
1. IN COMMUNITY OF PROPERTY:
In an In Community of Property marriage, the estates of both the husband and wife are considered as one entity (one estate). They are both liable for the debts and liabilities of the other, regardless of which one incurred the debt. Whatever property either of them had prior to or during the marriage belongs equally to both of them.
In the event of one spouse becoming insolvent, the other spouse, in most instances, will also be sequestrated, even if they maintain separate bank accounts and operate independent businesses. Creditors of the one spouse have the legal right to take action against the other spouse. One spouse would have to obtain the other spouse's consent to obtain credit or a home loan, to sell a significant asset, or to act as surety for a loan.
Spouses who register their marriage without any other formality will be deemed to have entered into an in community of property marriage. This means that if the spouses have not sought the services of an attorney and had an Ante-Nuptial Contract drawn up and notarized by a Notary Public, then the marriage would automatically be considered to be in community of property.
Inheritances are typically included in the “one estate” unless the Will explicitly excludes the other spouse. This implies that in the event of a divorce, a spouse would share the inheritance of the other spouse.
Upon divorce, assets are generally divided equally. This would mean that the house you are living in, would have to be sold unless one spouse agrees to compensate the other spouse with half of its value.
Upon the death of a spouse, the surviving spouse would not have access to the estate until it has been wound up by the executor. This has often led to hardship for the surviving spouse, particularly if the children of the marriage or other relatives are unable to provide assistance during this interim period.
2. OUT OF COMMUNITY OF PROPERTY:
A marriage out of community of property is established by drafting an antenuptial contract (ANC). According to this contract, community of property and profit and loss are excluded, meaning that there is no merging of estates (“one estate”), and each spouse maintains his/her separate estate.
However, the spouses have the option to include or exclude the accrual system in their ANC.
2.1 OUT OF COMMUNITY OF PROPERTY, WITH THE ACCRUAL SYSTEM:
If the accrual system is included, a spouse will have the right to share in the growth (“accrual”) of both estates upon divorce or death.
As such, upon death or divorce, the spouse whose estate shows no accrual, or a smaller accrual will have a claim against the spouse whose estate has experienced more growth. This claim only amounts to half of the difference between the two estates.
Let’s illustrate the accrual claim calculation with an example:
- Spouse A commenced the marriage with an estate valued at R0.00
- Spouse B commenced the marriage with an estate valued at R100 000.00
These amounts are specifically included in the ANC.
Ten (10) years later, they either divorce or one spouse passes away.
- Spouse A's estate increased in value to R200,000.00
- Spouse B's estate increased in value to R500,000.00
From the start of the marriage, Spouse A's estate "grew" by R200,000.00, while Spouse B's estate "grew" by R400,000.00.
Spouse B's estate experienced a greater "growth" than Spouse A's estate, specifically R200,000.00 (R400 000.00 – R200 000.00) more.
Therefore, Spouse A will have a claim against Spouse B's estate for half (50%) of the difference in their respective estate's growths. Spouse A's accrual claim will be R100,000.00 (50% of R200,000.00).
2.2 OUT OF COMMUNITY OF PROPERTY, WITHOUT THE ACCRUAL SYSTEM:
Opting for an ANC without accrual entails that each spouse's estate (including assets and liabilities) prior to marriage remains exclusively theirs. In the event of divorce or death, the principle of "what's mine is mine and what's yours is yours" applies. Neither spouse will have a claim against the other for any assets.
However, in October 2023 the Constitutional Court handed down a groundbreaking Judgment in the case of Greyling v Minister of Home Affairs and others, providing hope for divorcees married out of community of property without the accrual. A subsequent article discussing this ruling will soon be available on our website.
CONCLUSION:
The default marital regime in South Africa defaults is in community of property. However, if spouses prefer to opt for a different regime, such as out of community of property, whether with or without the accrual system, they will have to execute an antenuptial contract before their intended marriage commence.
The most common practice in South Africa today, is to marry with an antenuptial contract.
JW Wessels and Partners Incorporated
Kindly be advised that we assist with the drafting and subsequent safekeeping of Wills, amongst a wide array of other professional legal services, such as the administration and distribution of deceased estates. Should you have any additional questions, please do not hesitate to contact us for more information.
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