Getting married can be quiet a stressful and exciting time all at the same time. The excitement of spending the rest of your life with the love of your life and the stress that comes with planning a wedding, for most couples, a wedding ceremony.
In between all of this, you may need to add the stress of estate planning, especially if you already own property prior to the marriage.
There are principally three types of marriage regimes in South Africa in terms of the Matrimonial Property Act (88 of 1984), a marriage in community of property, a marriage out of community of property with accrual and a marriage out of community of property excluding accrual. I can hear someone at the back shouting, what about customary marriages. Customary marriages are also governed by one of these regimes, which I shall elaborate on further below.
A marriage in community of property for many reasons including affordability and religious beliefs remains the most common of the marriage regimes. For a marriage in community of property, parties are only required to sign a marriage certificate, save for in a customary marriage, although this is highly advisable: to register the marriage so that you do not struggle with proof should the need ever arise. If parties wish to enter into either of the out of community of property marriage regimes, the parties must enter into an antenuptial contract prior to the date of the marraige taking place and sign the antenuptial contract in the presence of a notary public. The contract must be registered in the Deeds Registry within three months of its signature in order for it to be valid.
In Community of Property
A marriage in community of property is known as the ‘default’ regime. In other words, this system will apply automatically should you not choose either of the out of community of property marriage regimes. When you marry in community of property, your estates become joined and everything you owned before or come to own during the course of the marriage is considered to be equally and jointly owned by the parties. You equally share in the benefit of any asset owned before the marriage but also become liable for each other debts. The law now sees you as one estate. Further, certain decisions in respect of the joint estate must be made by both parties.
Upon dissolution of the marriage, the estate will be divided equally between the parties and both parties shall share equally in any benefit or loss of the joint estate. In other words once all liabilities have been paid what is left over will be shared equally and if there is a deficit, that is shared equally. This sharing will include any properties acquired before or during the marriage. No matter how aggrieved you may feel, any property or assets acquired before the marriage must be shared equally on dissolution. This very often leaves a lot of parties who entered the marriage with assets, especially property feeling that they have been ‘prejudiced’ when they have sell the property or pay over an amount equal to half the value of the property to the other spouse. Also creditors may attach any of your assets for debts outstanding as no differentiation is made as to who acquired what in a joint estate. So are property purchased prior to the marriage could be put at risk due to debts created by the marriage partner who did not acquire the property. Lastly, in a sequestration event, the joint estate is sequestrated, which means both parties are sequestrated.
Out of Community of Property with Accrual
In this marriage regime, parties enter into an antenuptial contract in terms of which they agree for their estates to remain separate. Each party will therefore be able to do with their assets as they like and make decisions on their own, each party is liable for their own debts and on insolvency the assets of the solvent party will be excluded from the sequestration of the insolvent party.
Upon dissolution of the marriage, the accrual system will apply. In terms of the accrual system the parties will share the assets acquired during the course of the marriage by comparing the estates of both parties and paying half of the difference of the estate of the of the party who he shown the larger accrual to that of the party showing the lesser accrual. This means if from the commencement of the marriage, Themba’s estate has grown by R500 while Karabo’s estate has only grown by R100. Themba’s estate will be reduced by R100 and half the difference, R200 will be paid over to Karabo.
Assets received via inheritances and donations received from third parties will not be included in this calculation.
Notwithstanding the separate estates, the party with the larger estate could find themselves having to sell or give assets to the other party in order to satisfy the half difference claim of that party, especially if they do not have enough liquid cash available.
Out of Community of Property without Accrual
In this marriage regime parties enter into an antenuptial contract in terms of which they agree for their estates to remain separate. Under this system, parties continue to control their estates separately as they did prior to the marriage.
On dissolution of, the parties will retain each other their assets and liabilities.
Customary marriages are considered to be automatically in community of property. Which means upon the successful conclusion of a customary marriage, parties are married in community of property and all the consequences of this marriage regime shall apply. Parties can choose to sign an antenuptial contract prior to the conclusion of a customary marriage and in such instance, the chosen out of community marriage regime will apply.
Where there are more than two parties in the customary marriage, the assets will be split equally amongst the number of parties on the dissolution of the marriage and the party leaving the marriage regime shall be paid their equal share. The same will apply in the accrual calculation.
It is easy to see that the type of marriage regime chosen must be given proper consideration and the parties must seek professional advice in order to ensure that they make the best and most informed decision in respect of their chosen marriage regime.
*Disclaimer: The contents of this article should not be considered as legal, professional, financial or any other form of advice. These are merely views based on the writer’s personal experience. Readers should obtain independent advice on any matter prior to making any decision.