There are many people who intend on getting married but are unaware of what the best option regarding the matrimonial property regime is. Especially in the current environment where both parties will possibly have active business interests.
There are 3 matrimonial property systems to consider before getting married, namely:
- In community of property;
- Out of community of property, with the exclusion of the accrual system; and
- Out of community of property, with the inclusion of the accrual system.
These different matrimonial property regimes will be discussed in further detail below.
- IN COMMUNITY OF PROPERTY
Marriages in community of property are the default marriage system which is used in South Africa. It does not require the signing of any documentation prior to your marriage. When spouses are married in community of property, they form one joint estate, consisting of all assets and all liabilities of both parties. Each spouse will therefore be liable for the debts held in their significant others name and be a joint owner of any of the assets which forms part of the joint estate. There are also limitations with regards to a spouse concluding a contract and before concluding such contracts, that spouse will need the consent of his/her spouse.
- In the event of the spouses seeking a divorce, the joint estate will generally be divided equally between the spouses.
- In the unfortunate event of death, the full estate must be dealt which can have difficult temporary financial consequences for the surviving spouse.
- OUT OF COMMUNITY OF PROPERTY, WITH THE EXCLUSION OF THE ACCRUAL
In order for spouses to ensure they are married out of community of property, they are required to conclude an antenuptial contract before the marriage. This is done by consulting with an attorney who is also admitted as a Notary.
When spouses exclude the accrual system from their marriage, it means that their respective estates remain their own and no joint estate is formed between the parties. Each party’s estate contains all the assets and liabilities incurred in their own name (whether before or during the marriage) and they remain responsible for it. The other spouse will not have a claim to any assets or liabilities held in their significant others name.
- In the event of a divorce, there will be far less disputes relating to property as each spouse retains as his/her sole possession that which they own.
- In the unfortunate event of death, the surviving spouse can continue with their estate as it is not affected by the finalisation of the deceased estate.
- OUT OF COMMUNITY OF PROPERTY, WITH THE INCLUSION OF THE ACCRUAL
As this is also a marriage out of community of property, the spouses too will have to consult with an attorney to conclude an antenuptial contract before the marriage. The contract will specifically include the application of the accrual system.
The inclusion of the accrual system is the most practical and the most common form of a marriage out of community of property in South Africa. When concluding their antenuptial contract, the spouses can elect to exclude certain of their assets from the calculation of the accrual of their estate, so that these assets are not considered at the beginning or end of marriage.
The accrual system will only apply should you or your spouse ever decide to obtain a divorce, or upon death.
During divorce proceedings, it will be determined which spouse’s estate has increased higher in value. The spouse whose estate has seen less of an increase will then have a claim to 50% of the difference of the respective estate values upon divorce.
A considerably basic calculation of such an estate will be:
John’s start estate value R 0.00
John’s end estate value R 100 000.00
Susan’s start estate value R 0.00
Susan’s end estate value R 250 000.00
Difference between the estates is calculated as R 150 000.00
John has a R 75 000.00 claim against the estate of Susan.
CONCLUSION
Do not underestimate the importance of an Ante Nuptial Contract whilst planning your wedding. This document will have great consideration for your future assets and finances and is specifically recommended for business owners.
Contact our offices and speak to our Mr Nicholas Strydom for further information on the subject.