WHAT CIVIL MARRIAGE REGIME IS BEST FOR YOU AND YOUR PARTNER?

It may not be one of the most romantic topics to discuss before you get married to your partner, however, it’s quite essential to think about a few legalities before tying the knot with your partner. When reading this article, we trust that the below will sufficiently explain your options and assist you in deciding on what system suits you and your partner better.

IN COMMUNITY OF PROPERTY

This marital regime automatically comes into existence if there is no antenuptial contract entered into between you and your partner, it therefore can be considered the “default” regime. If you or your partner decide on this regime, both your estates will fall under one communal “joint estate”. There are implications to this as every asset and liability each party had before getting married and acquires during the marriage will fall under the joint estate and on dissolution of the marriage, the estate will be divided equally between the parties. (Paragraph 2.1)

 

The advantage of choosing this regime is that it promotes legal and economic equality, however, in choosing this regime, one has to be cognisant of the disadvantages. these include:

  • if one of the parties goes into debt, creditors have claim to all of both parties assets;

  • if one of the parties has his/her own business and becomes insolvent, both parties assets can be attached by debt collectors;

  • there is no financial or even contractual independence, certain transactions need the written consent of both parties, such as purchasing a property; and

  • if one of you should die, the estate of both the deceased and surviving partner will be wound up jointly, which effects the surviving partner who will possibly be without access to funds.

 

As can be seen from the above, this regime is quite outdated and not recommended in present times.

OUT OF COMMUNITY OF PROPERTY - ANTENUPTIAL CONTRACT

An antenuptial contract (“ANC”) provides 2 options, marriage without or with the accrual system. A marriage with the accrual system protects the partner who is financially vulnerable, while marriage without the accrual system allows each partner to freely manage and retain their own assets, providing each partner with complete financial freedom.

 

1.  Marriage out of community of property without the accrual:

  

This is the more “straight-forward” system, the parties must sign an antenuptial contract before the marriage is concluded in order to apply this system. Both parties retain their own estate (in other words, each party keeps his or her own assets and liabilities). You are married out of community of property and also out of community of profit and loss. At the dissolution of the marriage, each party retains his or her own estate because there is no joint estate to be divided. It is a case of, “my stuff remains my stuff and your stuff remains your stuff”.

 

Some of the advantages of following this system include:

  • both parties have full contractual capacity. It means that each of you can separately sign all contracts, enter into business ventures and the one party is not liable for any debts of the other party;

  • if one party becomes insolvent, only his or her estate is sequestrated and can be attached by creditors. The estate of the other party remains untouchable and cannot be attached; and

  • if either party receives an inheritance or donation, such assets will remain the exclusive property of the person who had received such inheritance or donation. In other words, it will not form part of the joint estate as in the case of a marriage in community of property.

2.  Marriage out of community of property with the accrual:

The principals are the same as explained above in the marriage out of community of property without the accrual. The only difference is at the dissolution of the marriage where the assets which you have accrued during the marriage, are divided equally between the parties. The term “accrual” is used to denote the net increase in the value of a spouse’s estate since the date the marriage was concluded. In other words, what was yours before the marriage remains yours, and what you have earned during the marriage belongs to both of you. The same three benefits apply namely, you have full contractual capacity, only the insolvent person's estate can be sequestrated and if you inherit or receive a donation it will remain your exclusive property.

 

If either of you chooses to be a stay-at-home parent or offer up your studies, this system ensures that you’re covered. At the dissolution of the marriage (which can only happen through divorce or death) the estate (assets) which each spouse has built up or “accrued” during the marriage must be added together and will then be divided equally between the parties.

What it really means is that this system is a combination of a marriage in community of property and a marriage out of community of property. In that, during the marriage you enjoy all the benefits of a marriage out of community of property where each party retains his or her own estate but at the dissolution of the marriage, that which you have both built up or “accrued” during the marriage (no matter how much one spouse has built up) is divided equally.

The advantages are essentially the same as those mentioned above in paragraph 2.1. The only difference is that in the event of dissolution of the marriage where the assets which you have built up or “accrued” during the marriage, these assets will be divided equally between the parties. 

The disadvantages of following this system include:

  • If you’re the financially stronger partner, you’re required to share the assets which you acquired or “accrued” during your marriage with your partner in the event of divorce; and

  • If your partner is the breadwinner, you’ll be financially dependent on them.

 

The requirements in terms of this system: 

You must specify in the contract whether you own any existing assets which you wish to exclude from the proposed accrual. Secondly, you must specify in the contract your existing assets and the value that you start off within the marriage. At the dissolution of the marriage, this opening balance will be subtracted from the total nett balance which you have built up during the marriage, in order to determine the “actual accrual”.

CONCLUSION

 

There are pros and cons to all regimes, however, we would not advise the in community of property, as stated above it is outdated and has a number of disadvantages. This leaves you with two options, you will either have to choose between an out of community of property without the accrual which is straightforward (what’s yours is yours and what’s mine is mine) or alternatively, out of community of property with the accrual system. The latter system with the accrual principle is the more popular in South Africa, especially among young couples who have not yet grown a substantial estate. It also seems fair, in our view, that whatever you build up together during your marriage should be shared equally at the end of the marriage no matter whether the marriage is dissolved by divorce or death.

 

If you choose the marriage out of community of property with the accrual principle, it is important to give me a brief description with the estimated value of the assets that you wish to exclude and of the assets which you would like to specify as your starting value. Keep in mind that it is not necessary to specify any assets to be excluded or to serve as your starting value. Most young couples who do not have substantial assets may choose not to include anything and also specify their starting value as nil. The result is that you throw everything together at the start of the marriage and whatever you build up in future will be divided equally.

 

We trust that the above provides you with sufficient clarity to make an informed decision on what system would best suit you and your partner. We further, remind our readers herein that we provide speedy drafting and registration services of antenuptial agreements, and trust our readers will consider our offices in this regard. 

 

Should you require any further clarity and/or have any queries, as always, feel free to contact our offices​ on 011 646 8411 or email us.

Philip Da Silva