It is said that nearly half of all marriages in South Africa end in divorce. And this figure might be conservative. Unfortunately, divorce usually goes hand in hand with great unhappiness about how the assets of the two parties have built up over the years should be divided. The marriage contract will determine to a large extent how these assets are to be divided. Therefore, it is worthwhile to spend time scrutinising different forms of marriage contracts and how each of them can affect the division of assets later.
Here are a few examples:
If you are married in community of property:
In terms of this marriage contract, both parties are the owners of the joint estate. From the start of the marriage, all assets and liabilities are incorporated in a single, joint estate, with certain assets being excluded. Assets accumulated by one or both parties before the marriage also become part of the joint estate owned by both parties.
In this case, assets that are excluded are, for example, those inherited by one of the parties on the distinct understanding that they will not form part of the joint estate. Consequently, all property in the joint estate will belong to the husband and wife as an equal, indivisible portion – and both of them will share in the profits or losses of the joint estate.
A marriage out of community of property, without accrual:
This type of marriage becomes effective when the parties enter into an antenuptial contract. This is a contract entered into by both parties and sets out the rules and conditions in respect of the division of assets, and which will apply during the marriage.
In the case of marriages out of community of property without accrual, the property owned by a person prior to the marriage, as well as all property accumulated during the marriage, belongs only to that person. The same rule applies to liabilities. Each party’s debt remains his or her responsibility. Consequently, each party may deal arbitrarily with his or her estate in a will.
A marriage out of community of property with accrual:
In terms of this marriage contract, the difference between the net increases in the respective estates during the duration of the marriage is divided equally between the two parties when the marriage is terminated.
Certain assets are excluded from the accrual in terms of the Matrimonial Property Act. These include, for example, the following:
* An inheritance received during the duration of the marriage;
* Donations made between the parties during the duration of the marriage;
* Assets explicitly excluded in terms of the conditions of the marriage contract.
Although each marriage partner may bequeath his or her separate estate at his or her discretion, it should be borne in mind that in terms of the accrual system, the other party may have a claim that will have to be finalised before the testamentary distribution can take place.
The testator could be prevented from bequeathing his estate as he wishes if, after settlement of all claims, there are not sufficient assets or funds in his estate to carry out his wishes. Although no one wants to envisage a divorce, it is advisable to plan your life in such a way that you are not ruined financially if your marriage comes to divorce. Women, in particular, should take cognisance of this, as they face new financial responsibilities when they have to take out risk and insurance policies and make investments.
