Matrimonial Consequences of my Marriage
Where one is a South African citizen and you conclude a marriage within the borders of South Africa or in another Country, your matrimonial property regime will be governed by the provisions of the Matrimonial Property Act, No. 88 of 1984. It alludes to two main types of marriages either in community of property or, alternatively, out of community of property.
The marriage out of community of property is divided into two kinds namely, straight forward out of community of property and out of community of property with the accrual system. One thus has the choice of three types of matrimonial systems.
- IN COMMUNITY OF PROPERTY
When one marries in community of property, the estate (in other words the sum total of ones assets and liabilities) of each party is consolidated or massed with the estate of the other party, resulting in a joint estate. No matter how big or small one’s estate is, both estates are massed into a joint estate in which one shares equally. If one gets married in community of property one does not need an antenuptial contract as, according to South African Law, such marriage without an antenuptial contract, is deemed to be in community of property. The disadvantages of this system are as follows:
- Neither party has full contractual capacity. This means that one cannot enter into certain contracts without obtaining the written consent of the other spouse. This affects ones situation with financial institutions, buying and selling of fixed property, loan agreements etc. It is obviously a clumsy and old fashioned arrangement that is very inconvenient.
- In case of insolvency, the other spouse is automatically also insolvent. This means that the creditors of the original insolvent person are entitled to, not only attach the assets of the insolvent person but the whole of the joint estate is subject to the insolvency. Obviously this arrangement is detrimental to the estate of the spouse of the insolvent party.
- Should one inherit something from a third party or receive a donation from somebody, this asset will form part of the joint estate, unless the testator provides specifically in his Will that the inheritance will not form part of the joint estate or the donor specifies this fact in the donation agreement. This could be unfair to, for instance the parent, who intended only to benefit his own child, while legally speaking the inheritance or donation will now automatically be shared 50/50 between the parties
- On the dissolution of the marriage the joint estate is divided equally between the parties. A marriage can only be dissolved by way of divorce or death of one of the spouses. The fact that everything will be divided 50/50 at the dissolution of the marriage can be regarded as an advantage to this system, under certain circumstances.
- MARRIAGE OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACRUAL SYSTEM
The parties must enter into an antenuptial contract before the marriage to make this system applicable. Both parties retain their own estate (in other words, each party keeps his/her own assets and liabilities). One is thus married out of community of property and without community of profit and loss. The advantages are as follows:
- Both parties have full contractual capacity. It means that either spouse can separately sign all contracts, enter into business ventures and the one spouse is not liable for any debts of the other spouse.
- If one spouse becomes insolvent, only his or her estate is sequestrated and can be attached by creditors. The estate of the other spouse usually remains untouchable and cannot be attached, except for certain dispositions by the insolvent to his spouse.
- If either party receives an inheritance or donation, such assets will remain the exclusive property of the person who had received such inheritance or donation. In other words, it will not form part of the joint estate as in the case of a marriage in community of property.
- At the dissolution of the marriage, each party retains his or her own estate because there is no joint estate to be divided.
OUT OF COMMUNITY OF PROPERTY WITH THE ACCRUAL SYSTEM
The principals are the same as explained above in the marriage out of community of property without the accrual system. The only difference is, at the dissolution of the marriage the assets which have accrued during the marriage, are divided equally between the spouses. The same three benefits apply namely, you have full contractual capacity, only the insolvent person’s estate can be sequestrated, and if you inherit or receive a donation it will remain your exclusive property.
However, on the dissolution of the marriage (which can only happen through divorce or death) the estate which each spouse has built up during the marriage must be added together and will then be divided equally. What it really means is that this system is a combination of the above marriage in community of property and the straightforward marriage out of community of property. During the marriage, you enjoy all the benefits of a marriage out of community of property where each party retains his or her own estate but at the dissolution of the marriage, that which you both accrued during the marriage (no matter how much you have built up) is divided equally. There are two important requirements for this type of marriage, namely that you must specify in the contract whether you own existing assets which you wish to exclude from the proposed accrual. Secondly you must specify in the contract your existing assets and its value that you commence with at conclusion of the marriage. At the dissolution of the marriage, this opening balance will be subtracted from the total net balance which you have built up during the marriage, in order to determine the actual accrual.
The husband and wife start their marriage with very little or no assets worth at all Five years later the marriage is dissolved and it appears that the husband has accrued an estate of R100 000.00 while the wife has accrued an estate of R20 000.00. You then add the two amounts together which gives you R120 000.00, this amount will then have to be divided by two. The husband will get R60 000.00 and the wife will also get R60 000.00.
The husband starts off with assets worth R10 000.00 and the wife starts off with assets worth R5 000.00. At the dissolution of the marriage the husband has accrued R100 000.00 while the wife has only accrued R20 000.00. The starting balance of R10 000.00 will have to be subtracted from the R100 000.00 of the husband in order to determine the accrual which is R90 000.00 in this case. In the case of the wife the opening balance of R5 000.00 must be deducted from the total of R20 000.00, in other words her accrual amounts to R15 000.00. The amount of R90 000.00 and R15 000.00 must be added together which will give a grand total of R105 000.00. The said amount will then have to be divided by two with the result that each party will receive R52 500.00
It is also possible for the parties to exclude existing assets from the accrual system. You can specify the assets with their estimated value in the contract. These assets as well as any accumulative value like interest, dividends or any future growth may be excluded from the accrual. This means that the other party will not legally be entitled to excluded assets and its accumulative value but these assets will remain the sole and exclusive property of the party who excluded the said assets in the contract.
If one of the spouses has a house worth R100 000.00 and the said property is specified to be excluded from the accrual principal, the other party will never be legally entitled to share in the capital value of R100 000.00. If the property increased in value and for instance is sold after five years for R150 000.00, the other party will also not be legally entitled to a share of the accrual of R50 000.00. The party, who so excluded these assets, is entitled to dispose of these assets freely during his or her lifetime or by way of last Will and Testament when he or she dies.
It is clear from the above that the marriage in community of property is not always recommended. Future spouses must be fully briefed of the consequences of a marriage in community of property. Should they rather elect to rather marry out of community of property they will have to choose between a straightforward out of community of property or else out of community of property with the accrual system. The latter system with the accrual principal is the more popular in South Africa, especially among young couples who have not yet built up a substantial estate. It also seems fair that whatever you build up together during your marriage will be shared equally at the end of the marriage no matter whether the marriage is dissolved by divorce or death.
One chooses the marriage out of community of property with the accrual system, it is important to give a brief description with the estimated value of the assets that you wish to exclude and of the assets which you would like to specify as your starting value. Keep in mind that it is not necessary to specify any assets to be excluded, or to serve as your starting value. Most young couples who do not have substantial assets may choose to exclude nothing and also specify their starting value as nothing. The result is that you throw everything together as the start of the marriage and whatever you build up in future will be divided equally.
Please consult a Notary Public should you require more information.