Marital Regimes In South Africa – Part Three

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 29 March 2024.

COMMENCEMENT VALUES, EXCLUSION OF ASSETS AND THE CALCULATION OF THE ACCRUAL

1. COMMENCEMENT VALUES

In an antenuptial contract the commencement values refer to the assets and liabilities each party brings into the marriage. These values are typically recorded at the beginning of the contract and serve as a baseline for determining what each party owned before the marriage began.

The purpose of including commencement values is to establish a clear understanding of each party’s financial standing at the start of the marriage. is important in the event of dissolution of the marriage, as it helps to distinguish between assets and liabilities acquired before and during the marriage.

The commencement values of each spouse’s respective estate can be R0.00 and you do not have to include a certain value.

2. EXCLUSION OF ASSETS

The parties can choose to exclude certain assets that will not form part of the marital estate and will not be subject to or included in the accrual calculation. This can include assets owned by one party before the marriage, inheritances or gifts received during the marriage, or any other specific assets the couple agrees should remain separate. An asset excluded in the antenuptial contract and any proceeds received on that specific asset will not form part of the accrual calculation.

Excluding assets in an antenuptial contract can help protect individual property rights and clarify financial expectations in the event of dissolution of the marriage.

Assets to be excluded must be specifically listed in the antenuptial contract and properly described. Assets which are not properly described can cause problems for the executor or the divorce attorney who will be involved at dissolution of the marriage.

3. HOW THE ACCRUAL IS CALCULATED

Herewith a practical example on how the accrual will be calculated on dissolution of the marriage:

The accrual is determined by subtracting the net asset value of one spouse’s estate at the start of the marriage from the net asset value of that spouse’s estate at the end of the marriage. After calculating each spouse’s accrual value, the smaller growth will have a claim against the larger growth for half of the difference between the two accruals.

For example, if spouse A had an asset value of R10 000.00 at the commencement of the marriage and an asset value of R100 000.00 at dissolution of marriage then the accrual to that spouse A’s estate is R90 000.00. (R100 000.00 – R10 000.00)

If spouse B’s commencement value was R20 000.00 and the dissolution value is R200 000.00, it follows that the accrual to spouse B’s estate is R180 000.00. (R200 000.00 – R20 000.00)

The net accrual is calculated by subtracting the smaller accrual from the larger accrual. In the above example: R180 000.00 – R90 000.00 = R90 000.00.

Therefore, spouse A, as the spouse with the smaller accrual, acquires a claim against spouse B’s estate for half of the net accrual being R45 000.00.

Deciding on the best option for you can be challenging and may require extensive discussion between you and your prospective spouse. We would advise that you make an appointment with our notary at Brits Law to have a thorough discussion with regards to your options and to ensure that the antenuptial contract is tailored to your specific needs.

Marital Regimes In South Africa – Part Two

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 22 March 2024.

In South Africa, an antenuptial contract is a legal agreement entered into by two individuals before the date of marriage that governs the division of their assets and liabilities in the event of divorce or death. There are two main types of antenuptial contracts: with accrual and without accrual.

In this part two of the Marital Regimes in South Africa blog series we will discuss the difference between an antenuptial contract with accrual and without.

1. ANTENUPTIAL CONTRACT WITHOUT ACCRUAL:

In this type of contract, each spouse retains ownership of the assets and debts they had before the marriage, as well as any assets they acquire during the marriage. This means that if the marriage ends, each spouse keeps what they brought into the marriage and what they acquired during the marriage. There is no sharing of assets or liabilities accumulated during the marriage. All assets and all liabilities will remain the property of the spouse that owns the asset or incurred the debt. While an antenuptial contract without the accrual offers maximum protection of assets, it may provide little security for the financially weaker spouse, as neither party can have a claim against the other’s estate upon dissolution of the marriage by way of death or divorce.

An antenuptial contract without accrual can be beneficial for individuals who wish to maintain separate financial identities during the marriage, or who have significant assets they want to protect in the event of divorce or death. It can also provide clarity and certainty about financial matters, which can help prevent disputes and conflicts in the future.

2. ANTENUPTIAL CONTRACT WITH ACCRUAL:

In a marriage out of community of property with accrual, spouses can share in the growth of their estates on dissolution of the marriage, while also protecting their assets from each other’s creditors during the marriage.

The term “accrual” refers to an increase or accumulation over time. In the context of the accrual system in antenuptial contracts, the underlying principle is that each spouse retains the value of the assets they brought into the marriage. Then, they share the growth or accumulation of assets that occurred during the marriage, reflecting what they have built together.

If you decide to marry out of community of property with the accrual there are further considerations that must be discussed with the notary assisting you. Firstly, you will need to determine your commencement values and secondly, you will need to decide if any assets need to be excluded.

Part three of this blog series will cover commencement values, assets to be excluded and the calculation of the accrual in more detail.

Marital Regimes In South Africa – Part One

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 15 March 2024.

Getting married? Then you must face a very important question: to antenuptial contract or not to antenuptial contract?

When you are getting married it is important to decide if you would like to be married in community of property or out of community of property. If you do not sign an antenuptial contract before the date of your marriage you will automatically be married in community of property.

Herewith a short discussion to differentiate between married in community of property and married out of community of property:

1. MARRIED IN COMMUNITY OF PROPERTY:

Marriage in community of property means that there is one joint estate that belongs to yourself and your spouse. The joint estate includes all assets and debts that any of the spouses acquired prior to the marriage as well as all assets and debts acquired during the marriage. This means that you and your spouse share everything equally. You and your spouse will jointly be held liable for all debts incurred. If one spouse is declared as insolvent, the other spouse will automatically also be insolvent. This means that the creditors of the original insolvent person are entitled to, not only attach the assets of the insolvent person but the whole of the joint estate is subject to the insolvency.

Neither party has full contractual capacity. This means that you cannot enter into any contracts without obtaining the written consent of your spouse. This includes finance for vehicles or properties, opening of bank accounts, opening of accounts at clothing stores etc.

MARRIED OUT OF COMMUNITY OF PROPERTY

If the parties sign an antenuptial contract, duly drafted and attested by a notary public, they will be regarded as married out of community of property. In this marital regime both parties retain their own estate. You will be regarded as a separate financial entity from your spouse.

You do not share the assets or debts as with a married in community of property regime. This is an advantage as each spouse can protect their assets from creditors. Each spouse will have full contractual capacity and you do not need the consent of your spouse to conclude any contracts.

Selecting the appropriate marriage regime is a critical decision for couples, impacting their financial security and legal rights during the marriage and in the event of divorce or death.

In the second part of this blog series, we will delve into the two types of Antenuptial Contracts available: one with the accrual and one without.

DEBUNKING THE MYTH OF DOMESTIC PARTNERSHIP RIGHTS

Debunking the Myth of Domestic Partnership Rights in South Africa

By: Kasper Brits – Brits Law Inc.

Published Wednesday, 19 September 2023.

In South Africa, cohabitation has gained immense popularity in recent years, with the number of cohabitants increasing by almost 100 percent each year. However, there exists a pervasive misconception that living together, often referred to as common law marriage, automatically grants couples the same legal rights and protections as married couples. This blog aims to debunk the myth surrounding domestic partnership rights in South Africa and shed light on the reality of cohabitation within the country’s legal framework.

Cohabitation: What it Means

Cohabitation, also known as living together or domestic partnership describes the arrangement where two individuals, regardless of gender, choose to live together without undergoing a formal marriage ceremony. Historically, such relationships were often labeled as extramarital cohabitation. It’s essential to understand that South African law does not recognize cohabitation as a legal relationship, which has significant implications for the rights and responsibilities of those involved.

The Absence of Legal Regulation

One of the most significant misconceptions about cohabitation in South Africa is the belief that after a certain duration of living together, a common law marriage automatically comes into existence, granting the couple legal rights and benefits akin to those of married couples. Unfortunately, this assumption is incorrect. South African law does not provide any legal framework to regulate the rights and duties of cohabiting couples.

Lack of Legal Recognition

Unlike marriages, which are legally recognized and come with a comprehensive set of rights and responsibilities, cohabiting couples do not enjoy the same legal standing. The absence of legal recognition means that cohabitants are not entitled to the rights and benefits that married couples receive. This is true regardless of the duration of their cohabitation.

Key Points to Remember

No Automatic Common Law Marriage: Contrary to popular belief, simply living together for a specific period does not result in the creation of a common law marriage in South Africa. The legal status of cohabiting couples remains unchanged.
No Legal Protections: Cohabiting couples do not have access to the legal protections, rights, and benefits that are inherent in a formal marriage.
Individual Agreements: To protect their interests, cohabiting couples should consider drafting cohabitation agreements that outline their respective rights, responsibilities, and expectations.
Property Rights: South African law does provide some protection regarding property rights in cohabitation, primarily through property law. However, these rights are limited and differ from the rights enjoyed by married couples.

Exeptions to the rule

There are certain exceptions to the above. Certain legal benefits are derived from cohabiting such as in the cases of taxed deceased estates of cohabiting partners, medical dependant benefits and certain rights derived in respect of the Domestic Violence Act. These are however very limited and can be hard to prove in court.

In South Africa, the myth of domestic partnership rights persists, leading many cohabiting couples to believe that they automatically acquire legal benefits similar to those of married couples over time. However, the reality is quite different. Cohabitation is not legally recognized as a marriage, and the rights and duties that come with marriage do not apply. To safeguard their interests, cohabiting couples should consider seeking legal advice and drafting cohabitation agreements. Understanding the legal framework surrounding cohabitation is essential to ensure that individuals are aware of their rights and responsibilities within this type of relationship in South Africa.

Marital Regimes In South Africa – Part Three

Marital Regimes In South Africa – Part Three

COMMENCEMENT VALUES, EXCLUSION OF ASSETS AND THE CALCULATION OF THE ACCRUAL

2. EXCLUSION OF ASSETS

3. HOW THE ACCRUAL IS CALCULATED

Marital Regimes In South Africa – Part Two

Marital Regimes In South Africa – Part Two

In South Africa, an antenuptial contract is a legal agreement entered into by two individuals before the date of marriage that governs the division of their assets and liabilities in the event of divorce or death. There are two main types of antenuptial contracts: with accrual and without accrual.

In this part two of the Marital Regimes in South Africa blog series we will discuss the difference between an antenuptial contract with accrual and without.

2. ANTENUPTIAL CONTRACT WITH ACCRUAL:

Marital Regimes In South Africa – Part One

Marital Regimes In South Africa – Part One

Getting married? Then you must face a very important question: to antenuptial contract or not to antenuptial contract?

When you are getting married it is important to decide if you would like to be married in community of property or out of community of property. If you do not sign an antenuptial contract before the date of your marriage you will automatically be married in community of property.

Herewith a short discussion to differentiate between married in community of property and married out of community of property:

1. MARRIED IN COMMUNITY OF PROPERTY:

MARRIED OUT OF COMMUNITY OF PROPERTY

DEBUNKING THE MYTH OF DOMESTIC PARTNERSHIP RIGHTS

Debunking the Myth of Domestic Partnership Rights in South Africa

Exeptions to the rule

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