Many people think that a marriage contract is only relevant in the event that a couple gets divorced, but it has many long-term financial implications and should be entered into with care. Each matrimonial property regime comes with its own set of advantages and disadvantages.
Let’s have a look at each of these in more detail and discuss the ramification of each on the partners, should the marriage dissolve or a spouse pass away
There are three types of Matrimonial Property Regimes in South Africa:
- Marriage in community of property.
- Marriage out of community of property, without the application of the accrual system; and
- Marriage out of community of property, with the application of the accrual system.
Marriage in community of property is the default Matrimonial Property Regime in South Africa. If a couple does not enter an Antenuptial Contract before their marriage, they will automatically be married in community of property. A marriage in community of property means that after the marriage, a joint estate will be formed between the spouses. All assets and debts which the individuals may own or owe will at the end of the marriage (by death or divorce) be shared equally between the parties, regardless of the contribution made by each party to the joint estate.
All of the assets and liabilities of both parties will fall into the joint estate on a 50/50 basis, subject to a few exceptions (for example, assets that are bequeathed to a party by way of a last will and testament, which strictly provides that it is to be excluded from the joint estate). Spouses will also not be able to perform certain legal action relating to the joint estate without the consent of the other party. One example would be that when a spouse acts in terms of a business transaction, the consent of the other spouse is not required.
Marriage out of community of property, without accrual
A couple who wishes to be married without the accrual system must expressly exclude it from their contract. In this way, they agree to keep their estates completely separate from each other and retain absolute independence of contractual capacity. The spouses will then retain their separate individual estates after the marriage – there is no joint administration of the estate and no consent requirement. When the marriage is dissolved or ends, there will be no division of any joint estate, and there will also be no accrual to be calculated.
Marriage out of community of property, with accrual
A spouse has the right to share in the value of both estates, to the extent that they grew during the course of the marriage, but assets preceding the marriage are excluded as stipulated in the antenuptial contract.
The accrual system means that, at the dissolution of the marriage, a spouse has the right to share in 50% of the difference between the larger accrual and the smaller accrual. Thus, the spouse with the smaller estate may claim from the spouse with the bigger estate.
Certain assets are excluded from the accrual calculation, and examples of these assets are:
- inheritances, legacies, and donations
- assets that are specifically excluded by the Antenuptial Agreement itself and any assets that were obtained due to the possession or prior possession thereof.
- damage payments received, other than damages for patrimonial loss and
- donations between spouses, excluding donations made in expectation of death.
As can be seen, there are a number of marriage contract agreements available to partners entering into a marriage. These should be carefully considered, with each partner’s current and future financial position taken into account. Should you need any assistance in understanding the effect of the regime on your divorce, please contact our specialized team.
