Marriage Out Community of Property Excluding Accrual
This matrimonial property regime involves an antenuptial contract (i.e. an agreement entered into before the marriage) where community of property and profit and loss are excluded. There is no joining of the spouses’ estates into one joint estate. Each spouse has his/her own separate estate, consisting of his/her premarital assets and debts, and all the assets and debts he/she acquires during the marriage. They each administer their own separate estates and have full and exclusive control over their own property.
By marrying out of community of property, the spouses choose to keep their estates separate and whatever assets and liabilities they individually had before the date of marriage will remain part of their separate estates. The spouses can, however, agree to include the accrual between them so that both spouses will share equally in the growth during the marriage of each other’s separate estates.
Antenuptial contracts
A marriage out of community of property is achieved by drawing up an antenuptial contract (ANC). The ANC will be the most important contract that a married couple will sign in their lifetime. Entered into before marriage, the purpose of the contract is to change some or all of the automatic financial consequences of marriage.
The ANC allows the husband and wife to tailor-make their very own matrimonial property regime. They can include any provisions they like in their ANC, as long as the provisions are not against the law, good morals or the nature of marriage. ANC’s are problematic to change as they dictate the financial and proprietary consequences of the couple’s future and can affect the rights of the couple’s creditors.
Couples may enter into one of two types of ANC:
The ‘accrual’ is the extent to which the husband and wife 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. When married according to the accrual system, each spouse acquires a certain right to the other’s property on divorce. Neither system is superior to the other. The marital property regime chosen (i.e. with or without accrual) must suit the couple’s relationship dynamic and specific needs. Note that the ANC is a normal contract, so all the rules as to fraud, duress and mistake apply.
Registration
Only an attorney who is a notary public may execute an ANC. It is important that both parties consult with the notary public beforehand and request an explanation of the various marital regimes, and the implications of each on divorce. It is important to properly understand the implications. In fact, it is desirable that the parties obtain independent and separate legal advice before committing to the terms of an ANC.
Once the ANC has been drafted, both parties and the notary public must sign it in duplicate prior to the marriage. The ANC will then be forwarded to the deeds office in the area where the parties reside to be registered. Registration must be affected within three months of the date it was signed by the notary public. Apart from the usual fees, a prescribed fee is payable to the deeds office upon registration of the contract.
In the event that the ANC is not signed or registered timeously, the couple can approach the High Court in terms of the Deeds Registries Act 47 of 1937 by means of a joint application to grant condonation for the late signing and/or registration of the ANC after the conclusion of the marriage. The application must be made within a reasonable time after it was discovered that the contract was not properly registered. Notice must also be given to the registrar of deeds of the applicants’ intention to bring such an application.
Marriages out of community of property without the accrual
In this system, when couples marry each spouse keeps a separate estate and whatever assets and liabilities they individually had before the marriage form part of their separate estates. Furthermore, assets and liabilities acquired by each during the marriage also fall within their separate estates. This system gives each spouse absolute independence of contractual capacity and protects each spouse’s estate against claims by the other spouse’s creditors.
A marriage is out of community of property if it falls within one of the following categories:
Before 1 November 1984
Marriages out of community of property concluded before 1 November 1984 are based on the principle that each spouse has his/her own separate estate. Prior to 1984, spouses either entered into in community of property or out of community of property marriages. The accrual system only came into operation on 1 November 1984.
The consequences of divorce when married out of community of property before 1 November 1984
A ‘redistribution of assets’ section was introduced in the Divorce Act to assist spouses who married out of community of property prior to the enactment of the Matrimonial Property Act 88 of 1984. Although this section may only apply to a relatively small number of marriages, it is important to a particularly vulnerable class of women, namely older women who are less likely to find employment upon divorce and who do not qualify for either child-support grants (as their children would be older) or state pensions.
This reforming and remedial measure applies to marriages out of community of property entered into between whites, coloureds and Asians before 1 November 1984, and to black people married out of community of property in terms of the old Black Administration Act 38 of 1927, prior to the commencement of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988. It was introduced to redress the financial imbalance invariably suffered by the wife on termination of the marriage by divorce.
In the absence of a divorce settlement agreement between the spouses, they retain their own separate estates and there is no sharing of assets on divorce, unless the court granting the decree of divorce orders a redistribution of assets between the parties in terms of Section 7(3) of the Divorce Act. A pension interest forms part of the spouse’s estate and will form part of the assets if redistribution is ordered. The parties may also agree to share the pension interest.
The court will not grant a redistribution order unless it is satisfied that it is equitable and just to do so. Apart from contributions made by the party concerned, the court will also take into account, among other things, the existing means and obligations of both parties.
The Act sets out two requirements that must be met if the court is to consider granting a redistribution order:
Although the law allows either spouse to apply for a redistribution order, in practice this section has largely been used by women. In past cases, the courts have:
The court is thus enjoined to apply discretion, justice and equity in coming to the assistance of the financially disadvantaged spouse.
The consequences of divorce when married out of community of property without the accrual after 1 November 1984
In a marriage out of community of property without the accrual contracted after 1 November 1984, there can be no claim for a transfer of assets. The argument is that there are now three matrimonial property regimes to choose from, and if the parties willingly decided to marry out of community of property and without the accrual system, one of the parties cannot later request a redistribution of assets. In such a regime, upon divorce, each party will retain their separate estates, i.e. what they had upon marriage and including all growth to the separate estate that occurred during the marriage, minus any losses that may have been sustained. For example, if the husband came into the marriage with R10 000, he would leave with R10 000 + profits ˗ losses.
A spouse who contributed to the other spouse’s estate, whether in cash or otherwise, will have a difficult time proving that he/she is entitled to anything from their ex’s estate on divorce as contributions play no role if the parties are married without the accrual. If, for example, the wife stays home to raise the children and does not contribute financially towards the marriage and the other spouse works and accumulates assets, the wife may find herself with nothing and no claim to her husband’s assets, save for a possible spousal maintenance claim.
It is not uncommon in marriages out of community of property for the parties to jointly own property. No joint holder can be forced against his/her will to retain his/her undivided half share in a property. If the parties cannot agree amicably on how to terminate their joint ownership, either of them may apply to a court for a directive as to how the joint ownership is to be terminated and may apply for the appointment of a receiver who will dispose of the property and distribute the proceeds among the parties.
Sometimes spouses advance each other money from time to time. Such transactions can be regarded as pure money-lending with the result that a spouse can institute a claim against the other for repayment of such a loan as part of the divorce proceedings.
Insolvency
Spouses who are married out of community of property have separate estates and are not liable for each other’s debts. Assets that will be excluded from insolvency are assets that belonged to the solvent spouse before the marriage, assets given to the solvent spouse by his/her spouse in the ANC, assets acquired by the solvent spouse during the marriage from his/her own income or from a person other his/her spouse, and certain insurance policies.
Advantages of marriage out of community of property without the accrual
Disadvantages of marriage out of community of property without the accrual
By marrying out of community of property, the spouses choose to keep their estates separate and whatever assets and liabilities they individually had before the date of marriage will remain part of their separate estates. The spouses can, however, agree to include the accrual between them so that both spouses will share equally in the growth during the marriage of each other’s separate estates.
Antenuptial contracts
A marriage out of community of property is achieved by drawing up an antenuptial contract (ANC). The ANC will be the most important contract that a married couple will sign in their lifetime. Entered into before marriage, the purpose of the contract is to change some or all of the automatic financial consequences of marriage.
The ANC allows the husband and wife to tailor-make their very own matrimonial property regime. They can include any provisions they like in their ANC, as long as the provisions are not against the law, good morals or the nature of marriage. ANC’s are problematic to change as they dictate the financial and proprietary consequences of the couple’s future and can affect the rights of the couple’s creditors.
Couples may enter into one of two types of ANC:
- an ANC that excludes community of property, community of profit and loss, and the accrual system; or
- an ANC that excludes community of property and community of profit and loss, but includes the accrual system.
The ‘accrual’ is the extent to which the husband and wife 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. When married according to the accrual system, each spouse acquires a certain right to the other’s property on divorce. Neither system is superior to the other. The marital property regime chosen (i.e. with or without accrual) must suit the couple’s relationship dynamic and specific needs. Note that the ANC is a normal contract, so all the rules as to fraud, duress and mistake apply.
Registration
Only an attorney who is a notary public may execute an ANC. It is important that both parties consult with the notary public beforehand and request an explanation of the various marital regimes, and the implications of each on divorce. It is important to properly understand the implications. In fact, it is desirable that the parties obtain independent and separate legal advice before committing to the terms of an ANC.
Once the ANC has been drafted, both parties and the notary public must sign it in duplicate prior to the marriage. The ANC will then be forwarded to the deeds office in the area where the parties reside to be registered. Registration must be affected within three months of the date it was signed by the notary public. Apart from the usual fees, a prescribed fee is payable to the deeds office upon registration of the contract.
In the event that the ANC is not signed or registered timeously, the couple can approach the High Court in terms of the Deeds Registries Act 47 of 1937 by means of a joint application to grant condonation for the late signing and/or registration of the ANC after the conclusion of the marriage. The application must be made within a reasonable time after it was discovered that the contract was not properly registered. Notice must also be given to the registrar of deeds of the applicants’ intention to bring such an application.
Marriages out of community of property without the accrual
In this system, when couples marry each spouse keeps a separate estate and whatever assets and liabilities they individually had before the marriage form part of their separate estates. Furthermore, assets and liabilities acquired by each during the marriage also fall within their separate estates. This system gives each spouse absolute independence of contractual capacity and protects each spouse’s estate against claims by the other spouse’s creditors.
A marriage is out of community of property if it falls within one of the following categories:
- the parties entered into a valid ANC prior to their marriage that excludes community of property;
- the parties changed their marital regime by way of a court application from in community of property to out of community of property;
- the parties are black South Africans who married prior to 2 December 1988 without entering into an ANC; or
- the legal system of the country in which the husband was domiciled at the time of the marriage dictates that the parties will be married out of community of property.
Before 1 November 1984
Marriages out of community of property concluded before 1 November 1984 are based on the principle that each spouse has his/her own separate estate. Prior to 1984, spouses either entered into in community of property or out of community of property marriages. The accrual system only came into operation on 1 November 1984.
The consequences of divorce when married out of community of property before 1 November 1984
A ‘redistribution of assets’ section was introduced in the Divorce Act to assist spouses who married out of community of property prior to the enactment of the Matrimonial Property Act 88 of 1984. Although this section may only apply to a relatively small number of marriages, it is important to a particularly vulnerable class of women, namely older women who are less likely to find employment upon divorce and who do not qualify for either child-support grants (as their children would be older) or state pensions.
This reforming and remedial measure applies to marriages out of community of property entered into between whites, coloureds and Asians before 1 November 1984, and to black people married out of community of property in terms of the old Black Administration Act 38 of 1927, prior to the commencement of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988. It was introduced to redress the financial imbalance invariably suffered by the wife on termination of the marriage by divorce.
In the absence of a divorce settlement agreement between the spouses, they retain their own separate estates and there is no sharing of assets on divorce, unless the court granting the decree of divorce orders a redistribution of assets between the parties in terms of Section 7(3) of the Divorce Act. A pension interest forms part of the spouse’s estate and will form part of the assets if redistribution is ordered. The parties may also agree to share the pension interest.
The court will not grant a redistribution order unless it is satisfied that it is equitable and just to do so. Apart from contributions made by the party concerned, the court will also take into account, among other things, the existing means and obligations of both parties.
The Act sets out two requirements that must be met if the court is to consider granting a redistribution order:
- the spouse seeking the order must have contributed directly or indirectly to the maintenance or the increase of the other spouse’s estate during the marriage; and
- the court must be satisfied that by reason of such a contribution, it would be equitable and just to make a redistribution order.
Although the law allows either spouse to apply for a redistribution order, in practice this section has largely been used by women. In past cases, the courts have:
- specifically considered the historical gender imbalance that made it more difficult for women to access the labour market;
- acknowledged that wives’ household duties should not be viewed as of less value than the employment duties of the husband;
- noted that the Act is sufficiently worded to cover any contribution a spouse makes, including the ordinary duties of a wife; and
- found that it is not always necessary for an applicant to show which assets he/she contributed to, but merely to prove that a contribution was made to the other spouse’s estate.
The court is thus enjoined to apply discretion, justice and equity in coming to the assistance of the financially disadvantaged spouse.
The consequences of divorce when married out of community of property without the accrual after 1 November 1984
In a marriage out of community of property without the accrual contracted after 1 November 1984, there can be no claim for a transfer of assets. The argument is that there are now three matrimonial property regimes to choose from, and if the parties willingly decided to marry out of community of property and without the accrual system, one of the parties cannot later request a redistribution of assets. In such a regime, upon divorce, each party will retain their separate estates, i.e. what they had upon marriage and including all growth to the separate estate that occurred during the marriage, minus any losses that may have been sustained. For example, if the husband came into the marriage with R10 000, he would leave with R10 000 + profits ˗ losses.
A spouse who contributed to the other spouse’s estate, whether in cash or otherwise, will have a difficult time proving that he/she is entitled to anything from their ex’s estate on divorce as contributions play no role if the parties are married without the accrual. If, for example, the wife stays home to raise the children and does not contribute financially towards the marriage and the other spouse works and accumulates assets, the wife may find herself with nothing and no claim to her husband’s assets, save for a possible spousal maintenance claim.
It is not uncommon in marriages out of community of property for the parties to jointly own property. No joint holder can be forced against his/her will to retain his/her undivided half share in a property. If the parties cannot agree amicably on how to terminate their joint ownership, either of them may apply to a court for a directive as to how the joint ownership is to be terminated and may apply for the appointment of a receiver who will dispose of the property and distribute the proceeds among the parties.
Sometimes spouses advance each other money from time to time. Such transactions can be regarded as pure money-lending with the result that a spouse can institute a claim against the other for repayment of such a loan as part of the divorce proceedings.
Insolvency
Spouses who are married out of community of property have separate estates and are not liable for each other’s debts. Assets that will be excluded from insolvency are assets that belonged to the solvent spouse before the marriage, assets given to the solvent spouse by his/her spouse in the ANC, assets acquired by the solvent spouse during the marriage from his/her own income or from a person other his/her spouse, and certain insurance policies.
Advantages of marriage out of community of property without the accrual
- Each spouse keeps his/her own assets and is free to deal with his/her own estate as he/she likes.
- Spouses are generally not liable for each other’s debts. Thus, if one spouse becomes insolvent, creditors cannot touch the assets of the other spouse.
- The financially stronger spouse does not have to share his/her estate with the weaker spouse. This is subject to judicial discretion and forfeiture of benefits.
Disadvantages of marriage out of community of property without the accrual
- The economically weaker spouse, traditionally the woman, does not get to share in the estate of the stronger spouse, even though she may have indirectly contributed to the estate by running the household and looking after the children. This is subject to judicial discretion and forfeiture of benefits.
- An ANC has to be entered into in order to marry out of community of property. This costs money, and the parties must pay the fees of a notary and costs of registration.
