“All you need is love”, and maybe an ANC
By Leané Louw
It is one of the most important decisions you will ever make in your life. It is right up there with who you are going to marry. This question relates to how you are going to marry.
Let us distinguish between the two marital regimes in South Africa which are:
- In community of property; and
- Out of community of property.
Initially, when you are all in love and starry eyed, this does not make much of a difference to you. But when it is (on average) between 5 and 10 years later, it is definitely going to make a difference what regime you chose.
Marriage in community of property can be summarized as “what is mine is ours, and what is yours is ours”. Out of community of property has two sub-divisions, namely with accrual and without accrual. Without accrual means what is yours stays yours, what is mine stays mine. Except for the kids, that is. With accrual means what is mine at the beginning stays mine, what is yours at the beginning stays yours and what happens in the middle could go either way.
Now, as we have mentioned, why is this so important? What about in sickness and in health? For richer or for poorer? Honestly, you need a lot of fairy dust to believe in that. The reality in South Africa is that 4 out of 10 marriages do not make it to their 10th wedding anniversary. The COVID-19 lockdown has not made things much easier, with an increase of 20% in divorce applications since level 4 of the National Lockdown was implemented.
In the event of either death or divorce the marriage regime chosen becomes important. The reason for this is that how the assets and liabilities are divided is determined by the marriage regime, either by way of a liquidator, or a settlement agreement in terms of the divorce.
If you were married in community of property, upon the death of a spouse the joint estate is dissolved. The joint estate is then wound up in terms of the Administration of Estates Act. When all debts of the joint estate have been settled, the surviving spouse is entitled to half of the net balance of the estate.
A settlement agreement that can be reached between the parties during a divorce is considered as first prize. In most divorces, communication has broken down to a certain extent and there is no means of reconciliation. A settlement agreement is in most cases unlikely. If a settlement agreement cannot be reached, the court appoints a liquidator to divide everything, including debts and assets acquired before the marriage, straight down the middle. The above is applicable to a marriage in community of property.
A marriage that is subject to the accrual system leads to the fact that the spouse with the smaller accrual can only claim on the dissolution of the marriage, either by death or divorce. In a practical sense, if Harry and Sally are married, and Sally’s estate has increased more than Harry’s, Harry will have a claim of 50% of Sally’s estate. Furthermore, marriages that are subject to the accrual mean that the parties’ debts remain their own. What this means is that, if Harry is declared insolvent, Sally will still be protected against Harry’s creditors. This form of marriage remains the most equitable.
If Harry had a net asset value of R10 000-00 at the beginning of the marriage (his “initial value”) and a net asset value of R100 000-00 at the dissolution of the marriage (his “end value”) then the accrual to his estate is R90 000-00. If the initial value of the Sally was R20 000-00 and her end value R200 000-00, it follows that the accrual to her estate is R180 000-00. Net accrual is calculated by subtracting the “smaller” accrual from the “larger” accrual. In the above example: R180 000-00 – R90 000-00 = R90 000-00. In accordance with the Matrimonial Property Act, Harry (the spouse with the smaller accrual) acquires a claim against Sally (the spouse with the larger accrual) for one half of the net accrual (namely – R45 000-00).
Make sure that when deciding to “tie the knot”, you are well versed in the implications of the different marital regimes. Often, it is not something you necessarily think about until relations between you and your spouse have soured or you have experienced the death of your spouse and are faced with crippling debt that you had very little knowledge of.
Love does not necessarily last forever, but Ante-Nuptial Contracts do.