Do we marry IN or OUT of community of property, and of profit and loss?

18 November 2014 2628

The choice of a matrimonial property system is often done when the wedding bells are sounding in the background as a last minute item to be ticked off before the “I do” part is done. The consequences of the choice is not always properly realised namely that it is for the average person one of the biggest and most important estate planning choices also to be made. In a series of two articles the options available will be explained in the first article in schematic format as indicated below and in the second article the important estate planning implications will be dealt with:

Marriage in community of property, profit and loss

Marriage out of community of property, profit and loss with the accrual system

Marriage out of community of property, profit and loss without the accrual system

NO ANTENUPTIAL CONTRACT ANTENUPTIAL CONTRACT (ANC)

Automatically applies if no antenuptial contract

Automatically applies when not expressly excluded in the antenuptial contract.

Only applicable if the accrual system is expressly excluded in the antenuptial contract

Joint estate belongs to both spouses in equal undivided shares

Two separate estates. Each spouse may deal with his/her estate as he/she wishes

Joint estate = assets and contractual liabilities that belonged to either spouse at the date of and during the marriage, excluding the following:

· Property donated/bequeathed subject to the condition that it shall be excluded from a marriage in community of property marriage;

· Certain life insurance policies

· Delictual damages for non-patrimonial loss

· Delictual liabilities

Accrual = Difference between the net value at commencement (escalated) and the net value at dissolution of marriage

The net value at commencement is declared in the antenuptial contract / separate statement. IF NO NET VALUE WAS GIVEN, IT SHALL BE DEEMED TO BE NIL.

ASSETS EXCLUDED:

· Assets excluded in terms of the antenuptial contract;

· Delictual damages for non-patrimonial loss;

· Inheritances, legacies and donations

· Donations between spouses (other than donations mortis causa);

· Certain life policies

Husband and wife have equal powers with regard to disposal of assets, contracting of debts and management of the joint estate.

Can perform any juristic act with regard to joint estate without consent of the other spouse, except acts set out in Sections 15(2) and 15(3)

Remember that consent must be given separately for each transaction

No consent is required for acts performed in ordinary course of business)

The accrual system:

During the marriage: Position is the same as if married out of community of property

On dissolution (death/divorce):

The net increase (accrual) of each estate are added up and divided equally. The spouse whose estate shows no or a smaller accrual has a concurrent claim against the other for an amount equal to half of the difference between the accrual of the respective estates

Advantages:

1.	Spouses have economic equality
2.	Spouses share equally in each other's wealth – existing at date of marriage and acquired thereafter
3.	“Unity” of marriage reflected

Advantages:

1.	Protection on insolvency of one of the spouses
2.	Fair sharing of profits and losses made during the marriage, without sharing in the estate which existed on the date of marriage
3.	No restrictions in contracting capacity.

Advantages:

1.	Protection on insolvency of one of the spouses.
2.	No restrictions in contracting capacity

Disadvantages:

1.	No protection on insolvency
2.	Restrictions in contracting capacity

Disadvantages:

1.	Spouses need to keep records of cash flows and more accounting
2.	In bad relationships, the more "lazy" (no accrual) one spouse is the bigger his/her accrual claim