In South Africa, the default marital regime is a marriage in community of property. This comes about when parties enter into a marriage without the conclusion of an Ante-Nuptial Contract. This means that from the moment of marriage, everything belonging to either party (assets and debts) prior to the marriage, and with everything obtained during the marriage (assets and debts) form part of what is called the joint estate. These parties no longer have separate estates, but one estate.
Advantages:
A joint estate means that both spouses have access to each other’s income and assets. There is equal sharing of financial growth and can simplify financial management. There are certain automatic inheritance and maintenance benefits.
Disadvantages:
Each spouse is equally responsible for the other’s debts. A negative credit score of one spouse impacts the other spouse. There are complexities in the division of the estate upon death or divorce. If one spouse owns a business, this forms part of the joint estate, and debts of the business can be recovered from the joint estate.
Marriage Out of Community of Property with the Accrual System applicable.
The first option is a marriage out of community of property with the application of the accrual system.
Simply put, the accrual system only applies at the end of the marriage be that by death or divorce, up until this point – each spouse has their own estate.
In this type of system, the spouses’ starting values in terms of assets are declared in the contract. Certain assets can also be excluded from the joint estate at the division.
Advantages:
Assets acquired prior to the marriage are kept separate. There is a distribution of wealth growth that takes place during the marriage at its dissolution. It protects the less financially strong spouse at the dissolution of the marriage. Business owners can safeguard business liabilities.
Disadvantages:
The calculation of distribution of growth can be complicated at the dissolution of the marriage as various factors are included that cannot be anticipated at the onset of the marriage. The claim by the less financially strong spouse is seen as a creditors claim and could cause the forced sale of assets to settle the claim.
Marriage Out of Community of Property without the Accrual System applicable.
A marriage out of community of property without the accrual system means that each spouse’s estate remains separate prior to the marriage, during the marriage and at the dissolution of the marriage.
Advantages:
Assets prior to the marriage are kept separate. Each spouse’s assets and growth acquired during the marriage are kept in their own names. No debts are shared between spouses therefore each spouse retains their credit score without any influence from the other spouse. There is protection for business owners in that no business liabilities can be recovered from their spouse. This system can simplify the administration of the deceased estate of a spouse as it is not linked to the surviving spouse’s estate. Divorce proceedings can also be simplified by this system.
Disadvantages:
There are no automatic inheritance rights. Further, the financially less strong spouse has less financial protection.
If you and your fiancé decide to enter into an Ante-Nuptial Contract, you will consult with a Notary. A Notary is a special type of Attorney that will draft, execute and register the Ante-Nuptial Contract with the Deeds Office.
The Notary will explain the various systems to you and together a decision will be made as to what is the best option for you.
The Notary will draft the Ante-Nuptial Contract and review it with you. Once you are satisfied, the contract will be signed by both parties in front of the Notary or via a Special Power of Attorney if you cannot appear before the Notary.
Once it is signed, the Notary provides you with a certificate that you present to the Marriage Officer that confirms the elected Marital Regime.
The contract is then sent to the Deed’s Office to be registered. Once it is registered, the original is sent to yourselves for safe-keeping.
