MARRIAGE LAWYERS IN HELDERKRUIN

TYPES OF MARRIAGE AGREEMENTS IN SOUTH AFRICA

In South Africa, there are 3 marriage regimes which a couple can choose from:

1. Marriage In Community of Property;
2. Marriage Out of Community of Property subject to the Accrual System; or
3. Marriage Out of Community of Property with the Exclusion of the Accrual System.

It is of vital importance that you fully understand the legal, financial and tax consequences of each regime in order to make an informed decision. The consequences of each different regime is briefly explained:

1. MARRIAGE IN COMMUNITY OF PROPERTY

If you get married without an antenuptial contract it automatically means that you are married in community of property. This means that all debts and assets before and during the marriage forms part of one joint estate.

Neither party will own any assets in his/her own name as both parties are now co-owners of one another’s property. This also means that the parties will become liable for one another’s debts and liabilities incurred before or during the marriage, even is he/she was not aware of these debts.

This regime poses a high risk to both parties in that when one party becomes insolvent, both parties will be declared insolvent due to the fact that they share one estate.

The advantages of marriages out of community:

• Couples do not have to enter into a special contract before getting married;
• The economically stronger spouse has to share the profits and assets that he/she made during and before the marriage;

It is also important to remember that both spouses have equal powers to manage the joint estate. In the following circumstances written consent should be obtained from both parties:

• alienating or burdening assets in the joint estate that is kept mainly for investment purposes. This includes items such as stamps, works of art, jewellery, coins etc;
• alienating, ceding or burdening insurance policies, mortgage bonds, fixed deposits, shares, stocks or any of the other spouse’s investments at any financial institution;
• withdrawing money from any account held in the name of the other spouse;
• alienating immovable property belonging to the joint estate;
• entering a credit agreement in terms of the National Credit Act 34 of 2005; and
• entering into a contract to purchase immovable property.

2. OUT OF COMMUNITY OF PROPERTY WITH ACCRUAL

 This system also requires an agreement to be drawn up by an attorney prior to the date of marriage.

In terms of this regime, each spouse has his/her own separate estate and assets are kept in their own names. The spouse with the smaller estate will have a claim against his/her share in the growth of the other spouse’s estate during the marriage. The net estate values will be determined separately upon death or divorce and the larger estate will have to transfer half of the difference to the smaller estate.

If either party owns assets prior to marriage, it needs to be specifically excluded in the ANC, otherwise the asset will be included in the accrual calculation. If both parties have no or very little assets, there will be no commencement value to the estate.

Certain assets will be automatically excluded from the accrual calculation, like an inheritance, donations or damages for personal injury. Assets that are jointly acquired by the parties, is considered part of the accrual.

The net estate values will be determined separately upon death or divorce and the larger estate will have to transfer half of the difference to the smaller estate.

Advantages of marriage out of community of property with accrual:

• Both parties share in the assets accumulated during the marriage and the spouse with the smaller estate benefits;
• All assets acquired before the marriage can be excluded;
• Each spouse keeps his/her own assets and has their own discretion on how to deal with their finances;
• Spouses are not liable for each other’s debt. If one spouse becomes insolvent, creditors cannot touch the assets of the solvent spouse.

Disadvantages of marriage out of community of property with the accrual

• The economically stronger spouse has to share the profits that he/she made during the marriage;

Each couple’s circumstances are unique and they have their own way of dealing with finances, debts and assets. There is no marriage regime that one can recommend as a one-size-fits-all approach and each couple’s circumstances need to be investigated prior to recommending a marriage regime.

3. MARRIAGE OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACCRUAL

This system requires an agreement to be drawn up by an attorney prior to the date of marriage indicating that community of property and profit and losses are excluded. This agreement is known as an antenuptial contract (ANC).

In terms of this regime, each spouse has his/her own separate estate and all assets are kept in their own names. Each party will be liable for his/her own debts and liabilities as well.

This system gives each spouse absolute independence of contractual capacity and protects each party’s estate against claims by the other spouse and/or his/her creditors as spouses are not liable for one another’s debt.

The advantages of marriages out of community of property without the accrual:

• Each spouse keeps his/her own assets and has their own discretion on how to deal with their finances;
• Spouses are not liable for each other’s debt. If one spouse becomes insolvent, creditors cannot touch the assets of the solvent spouse.
• The economically stronger spouse does not have to share his/her estate with the economically weaker spouse.

The disadvantage of marriages out of community of property without the accrual:

• The economically weaker spouse does not get to share the estate of the stronger spouse