Tying the knot?
It is important for couples planning to get married in the near future to pause and consider the property consequences of their marriage. The Common Law and Legislation applicable to marriages in South Africa provide for different systems and an unwary couple may regret their lack of planning before their marriage, when they find they are trapped in a system which does not suit them in which case they will have to apply to Court after the wedding to have their matrimonial property system varied, at great expense. Here are your options:
1. Marriage in Community of Property: This is the default in terms of our Common Law. No Antenuptial Contract is required and when they are married, their estates are joined into what is called the “joint estate” in which each partner has an undivided half-share. The advantage of this system is that both husband and wife have full (joint) control over their assets and each partner will have a claim to half the joint estate on dissolution of the marriage. The disadvantage is if one or both parties are in business and is sequestrated by his/her creditors, the creditors then take control of the entire joint estate and the “innocent” partner loses his/her assets as well.
2. Marriage Out of Community of Property: If the partners to a marriage do not wish to be married In Community of Property as described above, they must sign an Agreement, called an Antenuptial Contract (ANC), with each other, before a Notary, before the marriage. The ANC must be registered within 3 (three) months from signature (registration can take place after the wedding date). The result of this contract is that, after their marriage, each party retains his or her own estate and has no rights towards his/her spouse's estate (“what's yours is yours, and what's mine is mine”).
2.1 ANC Without Accrual: This is the old type of Antenuptial Contract popular before the law was changed in 1984, whereby couples were Married Out of Community of Property. Each partner retained his/her own estate (everything that they made before and after the marriage). This of course means full control over his/her own assets. The other obvious advantage of this system is that if one partner has a business, which fails, and is sequestrated, at least the other partner still has assets on which they can base their future. However, the major disadvantage of this system was that often one partner built a large estate by acquiring assets in his/her own name and the other partner (who possibly stayed at home and looked after children) did not build up anything. In divorce, this had very unfair consequences to the partner who had no assets, who was placed in a terribly uncomfortable situation. Remember, our law does not provide for automatic maintenance for the wife after divorce anymore, which means a long and expensive battle in Court to try to gain control of some of those assets in the other estate.
2.2 ANC With Accrual: In 1984, the Matrimonial Property Act was passed, which introduced the Accrual System. Accrual (meaning “growth”) in the marriage is a system designed to remedy the inequalities of the old type of ANC. Although it is still an out-of-community marriage, the Accrual System provides that on dissolution of the marriage (by death or divorce) the net increase in the respective estates of the partners since marriage are notionally added up and then divided equally. In order to determine which assets have been built up during the marriage, it is important to record in an Antenuptial Contract what assets were brought into the marriage by the husband and wife respectively. Please understand that this is a mechanism available to the disadvantaged spouse - whether he/she chooses to use it is of course up to them. The abovementioned Act also excludes certain categories of assets from the operation of the Accrual System (inheritances, legacies, donations and matrimonial gains) and the parties also have the right to exclude their own assets in the contract. The Accrual System is fairly flexible and must be tailored to the financial needs of the couple. To summarize then, the net effect of the Accrual System is to place the spouse whose estate has shown the lesser accrual or growth, in a better position in which he/she would have been if married under the old type of Antenuptial Contract, by giving such spouse a right to claim a share of the other spouse's larger estate.
Contact us at marzaan@mdv.co.za to make and appointment and we will explain the above systems to you more fully, and if you choose to enter into an Antenuptial Contract, we will tailor that ANC to suit your needs.
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