Marital Property Systems.


Our law regrettably presumes that all marriages are in community of property, and this presumption is rebutted by proving the presence of ant of the following circumstances:1) The existence of a valid ante nuptial contract in which community of profit and loss are excluded.

2) The existence of a valid post nuptial notarial contract in which community of property and community of profit and loss are excluded.

3) The husband’s lex domicilii at the time of the marriage provides that the marriage is out of community of property. In South African law the husband’s lex domicilii dictates which property system operates in the marriage.

The generally accepted view is that community of property entails that the spouses become tied co-owners in undivided and indivisible half-shares of all the assets and liabilities they have at the time of their marriage as well as all the assets and liabilities they acquire during their marriage. Upon marriage the spouse’s estates are automatically merged into one joint estate for the duration of the marriage. Upon dissolution of the marriage, all liabilities are settled from the joint estate and the balance of the joint estate is distributed equally between the spouses. Some assets may be excluded from the joint estate such as those excluded by a will or deed of donation, those subject to a fideicommissum or usufruct, non-patrimonial damages and engagement gifts.

The ante nuptial contract:

WITHOUT ACCRUAL:

The matrimonial property system which is out of community of property and community of profit and loss without the accrual system is called”complete separation of property”. Most couples who entered into an antenuptal contract before the commencement of the Matrimonial Property Act were married subject to complete separation of property and without the marital power.  Consequently, antenuptial contracts with these provisions were referred to as standard-form antenuptial contracts. Since the coming into operation of the Matrimonial Property Act, a marriage which is entered into with an antenuptial contract which excludes community of property and community of profit and loss is automatically subject to the accrual system.If the spouses do not wish the accrual system to apply to their marriage and want to be married subject to complete separation of property, they have to stipulate this in their antenuptial contract. The antenuptial contract which leaves the accrual system intact has therefore become the new standard-form antenuptial contract.

The effect of complete separation of property is that the parties remain in the same financial position as they were before the marriage. Each spouse retains the estate he or she had before the marriage as well as everything he or she acquires during the marriage. Each spouse has full capacity to act and can enter into contracts without the other’s assistance. The spouses can also freely enter into contracts with each other. The are not liable for each other’s contractual or delictual debts,as each spouse binds only himself or herself. They can therefore sue each other in contract or delict. The spouses have full capacity to litigate and can independently institute or defend legal proceedings.

The Accrual system:

This system is founded on the notion that, upon divorce out of community of property and community of profit and loss, both spouses must share in the growth their estates have shown, without there having been  a joint estate during the subsistence of the marriage. This system is a type of postponed community of profit. Each spouse retains control of their estate, but on divorce each shares in the growth their respective estates have shown during the marriage.Accrual sharing is brought about by giving the spouse whose estate has shown the smaller growth or none at all a claim against the other estate for an amount equal to half of the difference between the accrual of the respective estates of the spouses ie. Accrual claim= 1/2(larger accrual-smaller accrual). During the marriage the accrual claim isn’t an asset in the estate of the recipient. Therefore it is not transferable or liable to attachment and doesn’t form part of the insolvent estate of a spouse. The accrual claim does not give spouses rights in respect of one anothers property. Assets which don’t form part of the accrual include, any non patrimonial damages a spouse receives during the marriage, assets the spouses exclude in their ANC, including assets which replace those assets or are bought with the proceeds of the sold asset. Also inheritance, legacies or donations one of the spouses received from a third party are excluded.

ADVANTAGES AND DISADVANTAGES OF EACH SYSTEM:

Marriage in community of property:

Advantages:

1) It applies by operation of law without an antenuptial contract having to be executed and therefore requires no effort or expense on the part of the spouses.

2) Each spouse automatically shares in the assets that are accumulated the marriage.

3) Antenuptial assets are also shared ( although for some spouses it will be a disadvantage)

4) The credit worthiness of husband and wife is the same during the marriage

Disadvantages:

1) The principle of joint liability means both spouses share in debts and therefore are not protected against creditors, and insolvency also poses a big problem for both spouses.

2) With the exception of personal injury, spouses can’t recover delictual damages from one another or their respective insurers.

3) Administration of the joint estate during marriage can get complicated and a liquidity problem can occur on the death of one of the spouses.

COMPLETE SEPARATION OF PROPERTY:

The main disadvantage of this system is that the spouses have no right to share in any part of one another’s estate. This obviously prejudices the spouse who is financially in the weaker position upon the dissolution of the marriage. In some cases, however, the absence of any form of sharing may be an advantage. For example, by opting for complete separation of property a wealthy widower and a wealthy widow who marry each other can ensure that their respective estates remain for their respective heirs.

THE ACCRUAL SYSTEM;

The main advantages:

1) The spouses share in the growth of each other’s estate,

2) Whatever each spouse amassed prior to the marriage is not shared, (However, this can also be a      disadvantage.)

3) The spouses are not liable for each other’s debts, with the result that each spouse’s estate is protected against claims by the other’s creditors, unless one of them is insolvent at the dissolution of the marriage.

4) The spouses may freely enter into contracts with each other.

5) The spouses can incur delictual liability against each other and can consequently hold each other’s insurers liable.

6) The administration of each spouse’s estate is uncomplicated.

Disadvantages:

1) Spouses have enter into ANC to apply this system to their marriage.

2) They don’t share in each others credit worthiness, which can result in having little credit worthiness during the marriage if his/her estate is small.