Marital Regimes In South Africa – Part Three

Marital Regimes In South Africa – Part Three

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 29 March 2024.

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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

Marital Regimes In South Africa – Part Two

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 22 March 2024.

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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.

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 contract is tailored to your specific needs.


Marital Regimes In South Africa – Part One

Marital Regimes In South Africa – Part One

By: Danelle Meintjes – Brits Law Inc.

Published Friday, 15 March 2024.

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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.

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 contract is tailored to your specific needs.


Understanding Property Transaction Fees: What Purchasers and Sellers Need to Know

Understanding Property Transaction Fees: What Purchasers and Sellers Need to Know

By: Kasper Brits – Brits Law Inc.

Published Tuesday, 05 March 2024.

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Buying or selling a property involves more than just the purchase price or the proceeds you receive from a sale. There are various fees and costs associated with the transaction that both purchasers and sellers need to be aware of to avoid any surprises. Here is a breakdown of the fees payable when buying or selling a property in South Africa:

Seller’s Responsibilities:

1. Bond Cancellation: If the property has an existing bond, the seller is responsible for paying off the outstanding amount. This includes any early settlement penalties that may apply.

2. Bond Cancellation Attorney’s Fees: The seller is also responsible for the fees charged by the bond cancellation attorney for cancelling the existing bond registered over the property.

3. Property Practitioner’s Commission: If the property was sold with the assistance of a property practitioner, the seller is liable to pay the property practitioner’s commission. This is typically a percentage of the sale price and is negotiable.

4. Levy Clearance Figures: If the property is part of a sectional title scheme, the seller needs to pay levy clearance figures as received by the body corporate or managing agents.. This figure represents any outstanding levies owed by the seller as well as provision for 2 – 3 month’s levies in advance. The transferring attorneys will do a pro rata calculation on the date of registration and the purchaser will be liable for the pro rata amount from the date of registration.

5. Homeowners Association Clearance Figures: If the property is in a residential estate or complex with a homeowner’s association, the seller needs to pay clearance figures to the association. These figures will also include any outstanding amounts owed as well as provision for 2 – 3 months in advance. The purchaser will also be liable for the pro rata amount from the date of registration.

6. Municipal Clearance Figures: The seller is also liable to pay the municipal clearance figures from the local authority. Once payment of the figures is made the transferring attorneys will receive a clearance certificate, indicating that all municipal rates and taxes are up to date.

7. Compliance Certificates: The seller needs to provide certain compliance certificates to the purchaser, including an electrical compliance certificate (COC), a gas certificate (if applicable), and an electric fence compliance certificate (if applicable). These certificates ensure that the property meets certain safety standards.

Purchaser’s Responsibilities:

1. Transferring Attorney’s Fees: The purchaser is responsible for paying the transferring attorney’s fees. These fees cover the transfer of ownership of the property from the seller to the purchaser.

2. Deeds Office Fees: The purchaser needs to pay fees to the Deeds Office for the registration of the property in their name.

3. Transfer Duty: Transfer duty is a tax payable by the purchaser to the South African Revenue Service (SARS) and is calculated on the value of the purchase price of the property. However, certain properties may be exempt from transfer duty, such as properties valued below a certain threshold or if VAT is payable.

4. Bond Registration Attorney’s Fees: If the purchaser is obtaining a bond to purchase the property, they are responsible for paying the bond registration attorney’s fees.

5. Pro Rata Levy Clearance Figures: The purchaser needs to pay a portion of the levy clearance figures paid by the seller, calculated on a pro rata basis from the date of registration.

6. Pro Rata Homeowners Association Clearance Figures: Similar to the levies, the purchaser needs to pay a portion of the homeowners association clearance figures paid by the seller.

7. Initiation Fee to the Bank: If the purchaser is obtaining a bond, they may be required to pay an initiation fee to the bank. This fee covers the administrative costs of setting up the bond.

8. Occupational Rent: if the purchaser wishes to occupy the property before the date of registration, the purchaser is liable to pay occupational rent to the seller.

It’s essential for both purchasers and sellers to factor in these fees and costs when budgeting for a property transaction this will help navigate these complexities and ensure a smooth property transfer.


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