Are you a couple residing in South Africa and looking to understand the complexities of the Matrimonial Property Act, and the marital regimes provided for therein? Look no further – this comprehensive guide will provide you with all the information you need to navigate the legal landscape of marital property in South Africa.
The Matrimonial Property Act plays a significant role in determining how assets and liabilities are dealt with between spouses, and understanding its intricacies is crucial for couples who wish to protect their interests and plan for the future, especially prior to getting married.
This guide will break down the key matrimonial regimes provided for in the Matrimonial Property Act, and explain the implications that each system holds for couples, both during their marriage, and upon dissolution thereof.
Types of Marital Regimes in South Africa
There are two main types of marital regimes recognised by the Matrimonial Property Act, namely a marriage in community of property, or one out of community of property.
In Community of Property
Under an in community of property marital regime, all assets and liabilities acquired before and during the marriage are considered to be joint property of the parties. The assets and liabilities are both placed in a hypothetical “pot”. This means that both spouses have equal ownership of assets, and similarly, are equally responsible for any liabilities, irrespective of which spouse incurred the debt. Whilst this regime appears to be the simpler of the two, a marriage in community of property may result in serious financial implications.
Upon dissolution of a marriage, which could occur either upon death or divorce, all assets and liabilities are divided equally between the spouses, regardless of who contributed more financially. It is essential for couples to carefully consider the implications of the community of property regime, and whether it aligns with their individual financial goals and circumstances prior to entering into the marriage.
Out of Community of Property
Should parties not wish for their marital regime to be one in community of property, the alternative would be to enter into an antenuptial contract, which would then result in the marital regime being one out of community of property. If no antenuptial contract is entered into before the marriage, the marriage would automatically be considered as one in community of property. An ante-nuptial contract is a legal agreement entered into between couples before getting married. This contract allows couples to customise their marital regime, and determine how their assets and liabilities will be dealt with upon dissolution of the marriage.
A marriage which is out of community of property has two sub-regimes, namely; inclusive or exclusive of the accrual.
Out of Community of Property Inclusive of The Accrual System
In marriages out of community of property, assets and liabilities of the spouses remain separate. The most appealing aspect of a marriage out of community of property is that neither spouse will be liable for the liabilities incurred by another spouse, which protects them financially from creditors.
The accrual system is a formula-based approach to asset division. This marital regime ensures that each spouse retains the assets which they brought into the marriage (provided that these are stipulated as a commencement value in the antenuptial contract), but will share in the growth of the parties’ respective assets which accrued during the course of the marriage.
Upon dissolution of the marriage, and on application of the accrual system, the assets and liabilities of each spouse are calculated, and subtracted from one another in order to determine the equity of their estate. The commencement values provided for in the antenuptial contract will then be determined by increasing same in accordance with the Consumer Price Index, and will also be subtracted from any equity. Thereafter, the spouse with a larger equity will be required to pay the other spouse half the difference in their respective equity.
Of importance when electing to apply the accrual system to your marriage, is to correctly reflect the values of your assets as a commencement value, so as to ensure that those are excluded from the calculations upon date of divorce. Antenuptial contracts can also include further provisions whereby certain assets are excluded.
Out of Community of Property Excluding The Accrual System
Should parties not wish for the accrual system to be applied to their marital regime, its application would need to be expressly excluded in the antenuptial contract. If not expressly excluded, the accrual system would automatically apply.
Where the accrual system is expressly excluded, parties will retain their own assets and liabilities upon dissolution of the marriage, and no sharing of assets will take place upon dissolution. Essentially, under this regime, both parties will walk away from the marriage with all of their own assets and liabilities.
The Importance of Understanding The Matrimonial Property Act
By understanding the different matrimonial property regimes and the implications they hold, couples can make the best choice for their individual circumstances. It’s essential to consider factors such as personal assets, financial goals, and risk tolerance when deciding on a matrimonial property regime. Seeking legal advice is highly recommended to ensure that the chosen regime aligns with your expectations and offers the necessary protection for your assets.
Rights and Obligations of Spouses Under The Act
The Matrimonial Property Act outlines the rights and obligations of spouses in South Africa. These rights and obligations vary depending on the chosen matrimonial property regime. Under the community of property regime, both spouses have equal rights to all assets and liabilities in the joint estate, which means that decisions regarding the management, disposal, or acquisition of assets or liabilities need to be made jointly by both spouses.
On the contrary, marriages out of community of property would allow each spouse to retain ownership of their individual assets and liabilities, and the right to manage them independently without the consent of their spouse.
Seeking Legal Advice for Navigating The Matrimonial Property Act
Navigating the complexities of the Matrimonial Property Act can be challenging, especially for individuals without a legal background. Seeking legal advice from a qualified attorney specialising in family law is highly recommended to ensure that you fully understand your rights and obligations under the Act.
A family law attorney can guide you through the process of entering into an ante-nuptial contract, explain the implications of different matrimonial property regimes, and provide personalised advice based on your unique circumstances. They can also assist you in drafting a comprehensive ANC that aligns with your financial goals and offers the necessary protection for your assets.
Remember, it’s better to invest in legal advice early, to avoid potential disputes and uncertainties down the line.
