In South Africa a person may choose between an “in community of property” or
“out of community of property” system of marriage. An antenuptial contract
(“ANC”) arranges the matrimonial property system of spouses and is concluded
between two unmarried persons who are legally competent to enter into a
marriage with each other.
If no ANC is entered into, the marriage is automatically in community of property. Persons marrying out of community of property (i.e. with an ANC) then has the further consideration as to whether they would marry with or without application of the ‘accrual’ system.
An ANC must be properly and fully signed before a Notary, and the Notary must execute same, before the marriage takes place. Further the Notary must thereafter lodge the ANC with the Deeds Office for registration, within three months of it being signed, failing which the ANC will not be valid and binding on third parties. If an ANC is signed but not lodged or thereafter registered in time, the ANC will only be binding on the spouses, but not third parties.
Marriage In Community of Property
If an ANC is not entered into, i.e., if community of property and of profit and loss are not excluded prior to entering into the marriage, the marriage is in community of property by common law. This means that all property of which the spouses are the owners at date of marriage and which they acquire during the marriage, whether by way of remuneration, inheritances, gifts or otherwise, fall into the communal or joint estate. The joint estate is owned by the spouses in equal, undivided shares.
It is possible, however, for a spouse married in community of property under
certain circumstances to acquire and hold property separately from the joint
estate e.g. property donated or bequeathed to a spouse on the condition that it shall be excluded from community of property, or certain life insurance policies.
Similarly, the debts/liabilities incurred by each spouse before the marriage as well as the debts/liabilities incurred during the marriage, forms part of the joint estate and both spouses are jointly and severally liable for the debt of the joint estate. This includes all contractual debt, loans, mortgage bonds, credit card facilities and even spousal and child maintenance in terms of a previous marriage. It is important to note that where one spouse becomes insolvent, both spouses will be declared insolvent and if sequestration takes place, the joint estate will be sequestrated.
The Matrimonial Act provides that a spouse married in
community of property may perform any juristic act with regard to the joint estate without the consent of the other spouse. However, the Act, limits these general powers by listing a number of juristic acts for which the consent of
the other spouse has to be obtained, such as e.g. entering into credit agreements, entering into a contract to purchase immovable property, entering into a contract of surety.
Married Out of Community of Property Excluding the Accrual System
Section 2 of the Matrimonial Act provides that every marriage out of community
of property shall be subject to the accrual system, unless same is expressly
excluded.
The assets of both spouses are separated and each spouse has a full right of disposal over his or her own assets, without prior consent from the other party. This applies to those assets brought into the marriage as well as the assets acquired during the marriage. This also applies to liabilities, which remain their own respective responsibility. The spouses are therefore not liable for each other’s debts.
When the marriage is dissolved there will be no division of any joint estate and there will also be no accrual to be calculated with neither party being entitled to an accrual claim. In this fact, however, lies the major disadvantage of the system, namely unfair
distribution of assets. Clearly spouses make contributions to the marriage
relationship that cannot always be measured in monetary terms, but which are
essential to the survival and wellbeing of the marriage.
While most young couples tend to choose the accrual system, it is fairly
commonly found that older people who have built up estates in their own right or people entering into second marriages prefer the old style of marriage out of
community of property.
Married Out of Community of Property Including the Accrual System
The accrual system is generally regarded as simple yet sophisticated, and in
keeping with modern times where both husband and wife are professional
people.
It appears that most young couples today get married out of community of
property incorporating the accrual system and this system is generally
perceived to be fair and equitable to both spouses.
The accrual system is based on the assumption that both spouses will
contribute equally to the marriage and that they should therefore, ultimately,
share equally in the financial benefits generated during the course of the
marriage. It recognises the fact, however, that not all contributions made by the spouses are financial contributions. The fact that a wife (or a husband, and it happens increasingly in modern times) does not earn an income, does not mean that he or she is not contributing. Her (or his) contribution may be in the form of
emotional and physical support, home-making, and raising children.
Each spouse retains his or her separate estate during the course of the marriage, but can share equally in the growth of each other’s estate during the marriage. In broad terms, the accrual system means that the parties to the marriage will, at the dissolution of the marriage, share in the growth that accrued to their estates during the existence of the marriage. Importantly, they do not become co-owners of each other’s assets, as neither spouse has any claim to any assets of the other spouse, at all. Further, what is shared between the parties is only the value of the growth on the assets, and only from the date of the marriage to the dissolution of the marriage (growth/value accruing before the marriage is not shared).
The calculation of the accrual of the respective estates basically works as follows (this is a very simplified explanation and there are many intricacies to the process omitted from this layman’s description):
• The parties will have to state the commencement value of their estates either in the ANC itself or in a document filed seperately.
• At the time of dissolution of the marriage, the value of their estates will be determined by normal valuation principles.
• At the time of dissolution of the marriage, the commencement value of each estate will be adjusted to make provision for any change in the value of money(CPI).
• The adjusted commencement value of each estate is subtracted from the value of the respective estates as at the end of the marriage. This amount will reflect the accrual in each of the estates.
• Any assets that were excluded from accrual when the ANC was concluded, are not included in the above exercise and are effectively ignored as if they did not exist.
The party with the smaller accrual will have an accrual claim against the party with the larger accrual. The accrual claim is equal to 50% of the difference between the larger accrual and the smaller accrual. It is possible for spouses to agree that accrual will operate on a basis other than 50/50 – they can stipulate the percentages that they would like to apply when they sign their ANC.
It is important to consider all your options in relation to the marriage regime chosen when deciding to marry your spouse to eliminate future complications. Contact us for your questions relating to Matrimonial property law and the operation and consequences of the various matrimonial property systems.
Disclaimer
The articles on these web pages are provided for general information purposes only. Whilst care has been taken to ensure accuracy, the content provided is not intended to stand alone as legal advice. Always consult a suitably qualified attorney on any specific legal problem or matter.
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