If you don’t have an ANC, you are automatically married in community of property. This means that there is one estate between a husband and a wife. Everything is shared equally between spouses, which includes debts. However, with an antenuptial contract, the estates of each spouse remain separate. The difference comes with the addition of the accrual system.

What is an antenuptial contract?

An ANC determines whether a marriage will be out of community of property with/without the accrual system. It must be signed by the persons entering into a marriage, two witnesses and a notary public, and it must be registered in the Deeds Registries office within the prescribed time period.

What is the accrual system?

The accrual system is a formula that is used to calculate how much the spouse with the larger estate must pay the smaller estate if the marriage comes to an end through death or divorce. Only property acquired during the marriage can be considered when calculating the accrual.

• If there is no accrual system, then the spouses have their own estates which contain property and debts acquired prior to and during the marriage – nothing is shared.
• The underlying philosophy of the accrual system is that each spouse is entitled to take out the asset value that he or she brought into the marriage, and then they share what they have built up together.
• The accrual system only applies if the marriage ends – either by divorce or death. You cannot claim your share of the joint estate while you’re still married.

Whether or not you decide to include the accrual system in your antenuptial contract depends on the couple. Some may see the relevance while others do not.

It’s important that both of you consult the lawyer who’s drawing up the ANC because both spouses need to be fully aware of the consequences. It’s also important to see someone who’s neutral, and who can mediate what goes into your ANC, because emotions can cloud your judgment, and it can be a stressful negotiation if one spouse has a lot of assets and the other doesn’t, for example.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

References:

http://www.biznews.com/thought-leaders/2014/11/09/nine-things-need-know-antenuptial-contracts/

https://www.legalwise.co.za/help-yourself/quicklaw-guides/marriages/

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A husband and wife buy a house together. Their marriage takes a tumble, along with their ­finances, and they have to sell their home and are left with an outstanding mortgage bond. They subsequently got divorced. The couple is concerned about what will happen to the debts and who will be ­responsible for paying them.

Who pays what after divorce?

If the couple was married in ­community of property, the debt on the property is a joint debt. They will be jointly and severally liable. This means that each partner is not just liable for half the debt now that they are divorced, in fact the bank can seek the full amount from either of them. The one spouse who is held liable by the bank would then have a claim of 50% of the debt against the other, but it would be his or her responsibility to collect that debt (not the bank’s). Alternatively, the bank may agree to accept 50% from one person and release them from the ­liability, but it does not have to.

Sometimes, the divorce settlement makes a special mention of the mortgage. But if there is no clause in the divorce, the joint liability principle applies. After a divorce, the husband and wife should present their bank with a copy of the divorce settlement. This will remove any uncertainty about ownership and liability for bond payments.

Getting divorced while under debt review

If you get divorced while you are under debt review and you have the debt review court order in place, then this will need to be rescinded and for new debt counselling applications to be started, as in order to follow on with the debt counselling process you will need to reapply, but will now need to be seen as two single applications. A new budget and new proposals will also have to be drawn up.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

References:

“Debt And Divorce”. News24. N.p., 2017. Web. 12 June 2017.

“Debt Review After A Divorce Settlement – Debt Review”. Debtbusters. N.p., 2017. Web. 13 June 2017.

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The most important forms of marriage are: marriage in community of property, marriage out of community of property (without accrual), and marriage out of community of property (with accrual).

Marriage in community of property

1. There is no prior contractual arrangement, apart from getting married;
2. Spouses do not have two distinct estates;
3. There is a joint estate, with each spouse having a 50% share in each and every asset in the estate (no matter in whose name it is registered);
4. Applies to assets acquired before the marriage and during the marriage;
5. Should one spouse incur debts in his own name it will automatically bind his/her spouse, who will also become liable for the debt;
6. If a sequestration takes place (in the case of insolvency), the joint estate is sequestrated.

Marriage out of community of property without the accrual system

1. An antenuptial contract (ANC) is drawn up by an attorney (who is registered as a notary), before the marriage;

2. Where there is no contract, the marriage is automatically in community of property;

3. The values of each spouse’s estate on going into the marriage are stipulated in the contract;

4. A marriage by ANC means that all property owned by spouses before the date of the marriage will remain the sole property of each spouse;

5. Each spouse controls his/her own estate exclusively without interference from the other spouse, although each has a duty to contribute to the household expenses according to his/her means;

6. To allow for assets acquired by spouses during the marriage to remain the sole property of each spouse, the accrual system must be specifically excluded in the ANC.

Marriage out of community of property with the accrual system

1. The accrual system automatically applies unless expressly excluded in the antenuptial contract;
2. The accrual system addresses the question of the growth of each spouse’s estate after the date of marriage.

ESTATE PLANNING

Donations between spouses are exempt from donations tax and estate duty.

Marriage in community of property

1. In the event of the death of one spouse, the surviving spouse will have a claim for 50% of the value of the combined estate, thus reducing the actual value of the estate by 50%. The estate is divided after all the debts have been settled in a deceased estate (not including burial costs and estate duty, as these are the sole obligations of the deceased and not the joint estate).

2. When drafting a Last Will and Testament, spouses married in community of property need to be aware that it is only half of any asset that he or she is able to bequeath.

3. Upon the death of one spouse, all banking accounts are frozen (even if they are in the name of one of the spouses), which could affect liquidity.

4. Donations or bequests to someone married in community of property can be made to exclude the community of property; in other words, if the donor stipulates that the donation must not fall into the joint estate, then the donee can build up a separate estate. However, returns on such separate assets will go back to the joint estate.

Marriage out of community of property without the accrual system

Each estate planner (spouse) retains possession of assets owned prior to the marriage.

Marriage out of community of property with the accrual system

A donation from one spouse to the other spouse is excluded from the calculation of each spouse’s accrual; in other words, the recipient does not include it in his growth and the donor’s accrual is automatically reduced by the donation amount.

DIVORCE

In the event of divorce, the marriage will be dissolved by court decree, which will address such aspects as child maintenance, access, guardianship and custody, spousal maintenance, the division of assets, division of pension interests and so on.

COHABITATION AND DEFINITION OF “SPOUSE”

Cohabitation is defined as a stable, monogamous relationship where a couple who do not wish to or cannot get married, live together as spouses. The Taxation Laws Amendment Act has extended the definition of “spouses” to include “a same sex or heterosexual union which the Commissioner is satisfied is intended to be permanent”.

Many pieces of legislation, including the Pension Funds Amendment Act and the Taxation Laws Amendment Act, now define spouse to include a partner in a cohabitative relationship, the effects of which are that cohabitees will benefit from the Section 4(q) estate duty deduction in the Estate Duty Act, and the donations tax exemptions of the Income Tax Act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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“Men marry women with the hope they will never change. Women marry men with the hope they will change. Invariably they are both disappointed.” –  Albert Einstein

So you are getting married and you are both filled with excitement to take the big step. Between planning the dress, venue, catering and guest list it is still important to know the legal implications involved when saying “I do”.  Knowing what the legal implications are at the beginning means that there will be less fighting and complications involved should the marriage come to an end. It is realistic to bear this in mind because choosing a specific marital regime can have immense implications on your personal assets, your estate, business or even your career.

In South African law three marital status regimes are known. This article serves as a brief discussion on each one of these regimes.

Getting married in community of property

This entails that the parties’ separate estates are joined at marriage and now the estate is known as the ‘joint estate’. Each party has the right to dispose of the assets in the joint estate, however the consent of the other party needs to be obtained to alienate or encumber the estate assets.

This system lends itself to financial equality but this can also be to the detriment of the other party, especially in the case of insolvency. Certain assets may be excluded from the joint estate by ways of a will, but this category is limited.

It is important to bear in mind that should the parties not enter into an antenuptial contract before tying the knot; their marriage will automatically be deemed to be in community of property.

Upon divorce or dissolution of the marriage the joint estate gets split 50/50 between the parties.

Getting married out of community of property with the accrual system excluded

This marital regime is done by way of an antenuptial contract. Your attorney will draw up the contract and it must be signed in front of a notary. The accrual system must expressly be excluded in the antenuptial contract, otherwise it will apply to the couple’s marriage.

According to this system what is yours is yours and what is mine is mine. Each party maintains their separate estates and each has full right of disposal over his/her own assets without having to get any consent from the other spouse. At the dissolution of the marriage each party should walk away with what they have built up within their own estates.

This marital system is recommended where the parties already have substantial estates or income or if the one party does not want to be held liable for the debts of the other spouse. Being married out of community of property without the accrual system is popular to use to protect assets from creditors.

Getting married out of community of property with the accrual system included

The accrual system creates a form of sharing of the assets that are built up during the marriage. Neither the debts nor the assets are jointly owned.

When the marriage dissolves, either by divorce or death, the accrual or growth to each party’s estate is calculated. The growth is calculated by taking the net value of the estate at the dissolution less the net value at the commencement of the marriage. The commencement value of each estate is stated in the antenuptial contract. If one of the estates has grown more than the other during the marriage, the party with the smaller growth has a claim against the party with the greater growth, for half of the difference between the two estates.

So, now you are married and you want to change your marital system…how is this done?

The parties are required to make a joint application to the High Court to change their matrimonial property system. This is a costly and complicated application to bring. The application to court does however not guarantee a positive outcome.

Written by: Annerine du Plessis

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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