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By: Ewing  11-11-2011
Keywords: Marriage


What you need to Know!

Under South African law people can either marry ‘in community of property’ or ‘out of community of property’. Their choice will determine their property rights during the marriage, as well as when it is dissolved - either by death or divorce.

You are automatically married ‘in community of property’ in terms of South African Law if you do not sign an Antenuptial Contact prior to your marriage. If you do sign an Antenuptial Contact it must be attested prior to the marriage by an attorney who is also a Notary, as only a Notary can attest an Antenuptial Contract. The contract will then be lodged in the Deeds Registries Office for registration.

'In community of property' means that everything each individual spouse owns and each of their individual debts from before their marriage are put together in a jointly owned marriage estate. From this point onwards everything they earn or buy after their marriage will also form part of this joint estate, including any debt and liabilities incurred by either one of them.

Should one spouse be reckless with his financial affairs in a marriage in community of property, it will adversely affect the other spouse, as they will be liable for each other's debts. The spouses will however also be joint owners of all property in the estate. Both spouses therefore have equal rights of ownership and administration over all the assets.

There are various transactions that require the consent of both spouses. The most prejudicial consequence of marrying in community of property, is that assets in the joint estate are vulnerable to the claims of creditors of both spouses and very little can be done to protect against this vulnerability. This marital regime is not recommended for spouses running independent businesses.

The only real advantage of being married in community of property is that it is based on the fact that marriage is a partnership and as such it can be conducive to a harmonious marriage relationship as it promotes both legal and economic equality of the spouses.

What is an Antenuptial Contract (Prenuptial Agreement)?
An Antenuptial Contract, also known as a Prenuptial Contract or Prenuptial Agreement is a contract entered into by two intending spouses prior to their marriage in which they stipulate the terms and conditions for the exclusion of community of property between them.

Each spouse usually retains his or her separate property and has complete freedom to deal with that property as he or she chooses. If one spouse was declared insolvent, the other's property is protected from the insolvent spouse's creditors, subject to Section 21 of the Insolvency Act.

Why should I consider registering an Antenuptial Contract?
There are various reasons why some people prefer to enter into an Antenuptial Contract in order to be married out of community of property.

The most common reasons are that:

· They do not want to be held liable for any debts that the other spouse may have incurred prior to the marriage;
· They do not want to be held liable for any debts that the other spouse may incur during the marriage;
· They want to protect assets such as a house from creditors, particularly if one of the spouses has a business of his or her own, and they would therefore want to be able to register the house in the name of the other spouse;
· One or both spouses has assets at the time of the marriage that they don't want to become part of a joint estate;
· They want to be able to enter into transactions without having to obtain the consent of the other spouse;
· During the marriage each spouse retains control of his or her own property, builds up his or her own estate and each is responsible for his or her own debts.

The two main options regarding an Antenuptial Contract
An Antenuptial Contract excludes community of property. It creates a marriage ‘out of community of property’. This can only be achieved by entering into an Antenuptial Contract before you get married.

There are two options:

· marriage out of community of property with application of the accrual system
· marriage out of community of property without application of the accrual system

If you conclude an Antenuptial Contract prior to your marriage, the accrual system will automatically apply under the Matrimonial Property Act of 1984, unless it is expressly excluded in the contract.

'Accrual' means increase. The accrual system is a form of sharing of the assets that are built up during the marriage. The underlying philosophy in respect of the accrual system is that each party is entitled to retain the asset value that he or she brought into the marriage and they share what they have built up together.

Under both options (with or without the accrual system), one spouse's property cannot be sold to pay the other's creditors if the other becomes insolvent - in contrast to the case where the parties are married in community of property.

Marriage out of community of property WITHOUT application of the accrual system
If you do no want the accrual system to apply, it must specifically be excluded in the Antenuptial Contract. This achieves a complete separation of assets of spouses - not only those brought into the marriage but also those acquired during the marriage. Each spouse will retain ownership of completely separate estates.

There is no sharing and on dissolution of the marriage, neither spouse has any claim against the assets of the other. Similarly, neither spouse is liable for the debts of the other. In other words, there is no sharing of profit or loss and the Court has no discretion whatsoever to adjust the division on the basis of equity or fairness.

Marriage out of community of property WITH application of the accrual system
In most cases the accrual system is, perhaps, the fairest marriage system for the majority of couples. Before the introduction of the accrual system in 1984, if prospective spouses chose to be married out of community of property there was no form of sharing between them of what was built up during the marriage. The accrual system was introduced to remedy this. It is applicable to all marriages out of community of property, unless the prospective spouses specifically exclude the accrual system in their contract.

In terms of this regime, both spouses have separate estates during the subsistence of the marriage and do not share each other’s profits or losses during the marriage. This system has all the advantages of the protection afforded to marriages concluded out of community of property i.e. that assets of one spouse are secure from the creditors of the other spouse, but it incorporates the ethic of sharing, which is the basis of an in community of property marriage. In other words, while neither spouse will be liable for the other spouse’s debts, the parties will, however, share what they have acquired during the subsistence of the marriage. This sharing only occurs upon dissolution of the marriage. This regime of marriage allows for very imaginative and flexible estate planning.

The 'accrual' is the extent to which the respective spouses have become richer by the end of the marriage, in other words, the amount by which the spouses' joint wealth has increased over the period of the marriage. The spouse with the smaller accrual has a claim against the one with the greater accrual for half of the difference between the two amounts.

Take note that an accrual claim can only be made on dissolution of the marriage, not during the marriage. If the marriage is dissolved by death, a claim in terms of the accrual system must be paid before the will or intestate succession is given effect to. If the estate of the first dying spouse has a greater accrual, the surviving spouse would have a claim against the deceased estate. If the estate of the surviving spouse has a greater accrual, the estate of the deceased spouse would have a claim against the surviving spouse. If the surviving spouse is the sole heir/heiress by virtue of the will or of intestate succession (ie how an estate devolves when a person dies without leaving a will) then it is academic. It is not necessary to work out the accruals as the surviving spouse receives everything anyway.

How to register an Antenuptial Contract
The Antenuptial Contract must conform to certain standards and rules in order for the Registrar of Deeds to accept and register it for full legal validity. Only an attorney who is also qualified as a Notary may attest and attend to the registration thereof. The Antenuptial Contract must be signed in his presence by you and your intended spouse or by someone you both have given a Power of Attorney to sign it on your behalf and it must be so signed before your marriage to avoid complications and expense of trying to execute and register a post-nuptial contract.

The above outline is a guide. Consult us for more information and advice specific to you.

Contact us:
Attorneys - Notaries - Conveyancers - Administrators of Estates
031 7655937

Keywords: Marriage

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