Marital Property Regimes

Learn about the different marital regimes and understand the requirements, eligibility, registration process and the advantages and disadvantages of the marital regime.

General

What are marital property regimes?

According to South African law there are three different marital property regimes that couples can enter into when getting married. Marital property regimes regulate whether the parties have unfettered discretion over their property or whether they require the consent of their partner when dealing with their property in certain situations. It also determines how much of the estate is to be divided at a divorce, if there is any estate at all that is to be divided. The three times of marital regimes are as follows:

  1. In community of property
  2. Out of community of property
  3. In community of property with accrual

Note: The registration of all civil marriages, customary marriages and civil unions is done by the Department of Home Affairs and in order to register marriages certain formalities must be completed. 

In Community of Property

In community of property is the default marital regime in South Africa. This means that if parties are married without an ante-nuptial contract, they will automatically be married in community of property. According to this marital regime, all the assets of both parties before their marriage are joined together with each partner owning an undivided half of each asset. Moreover, it means that any property acquired by the parties during their marriage will also be owned jointly in an undivided half. 

Assets

All assets that belong to each party, prior and during the marriage, will form part of the joint estate. There are exceptions to this, for example where a party inherits an asset or property from another person through a Will.

Liabilities

All liabilities incurred prior and during the marriage will fall into the communal estate. This means that if one party enters the marriage with debt, their debt will now be shared by both parties, such debts includes contractual debts or a spousal and child maintenance payable from a previous marriage. 

Insolvency 

When one party can no longer pay their debts, they are deemed insolvent. If this occurs when parties are married in community of property, both parties will be declared insolvent because they now share a joint communal estate. If there is a court order against the insolvent spouse, then the joint estate will be liable unless it was unfair or fraudulent.

Managing the joint estate:

When is consent required?

Each party has equal management rights over the joint estate, however, there are instances where consent from the other party is needed. For example, where: 

  1. A party makes a deposit at the bank;
  2. A party makes a donation to third parties; 
  3. When a party forms a company or trust; 
  4. When a party enters into a transaction on the stock exchange;
  5. When a party enters into a contract in the ordinary course of business;
  6. When a party performs a transaction in the ordinary course of business; and
  7. When a party sells movable or immovable assets. 

When is written consent required?

Written consent from the other party is needed when: 

  1. A party sells an asset of the joint estate;
  2. A party cedes or burdens an insurance policy, mortgage bond or fixed deposit; and
  3. A party withdraws money held in an account that is in the name of the other spouse.  

When is written consent with additional witnesses required?

 

Written consent from the other party, which must be witnessed by two witnesses, is needed when: 

  1. A party sells immovable property that forms part of the joint estate(e.g.a house);
  2. A party enters into a credit agreement; 
  3. A party enters into a contract to purchase immovable property;
  4. A party enters into a contract of surety, when the joint estate is bound for the debt of a third party; and
  5. A party enters into a sale of immovable property, belonging to the joint estate or granting of a right over the property to a third party, such as a share in the property.

Note: This must be done before the transaction occurs, only then can the action be performed by the other spouse. 

Advantages:

  1. The parties to the marriage do not have to enter into a contract prior to the marriage and avoid the attorney costs; and 
  2. The financially weaker party will share in the benefits of the joint estate of the parties equally.

Disadvantages:

  1. The financially stronger party will have to share all their assets at the time the marriage ends where no agreement can be reached;
  2. Both parties are jointly liable for each other’s debts; and
  3. Parties who are married in community of property cannot sue each other for damages, as the money used to pay for damages will then fall back into the joint estate. However, they can sue for pain and suffering, in the event that they are abused.

Out of Community of Property

The out of community of property marital regime in South Africa is one that must be entered into with an ante-nuptial contract before a marriage occurs. In terms of this marital regime, all property held or accumulated by each party before or during their marriage will remain that party's private property. Therefore, each party will have complete control over their own property and estate. This means that if parties unfortunately get divorced, a party to the marriage will not be entitled to claim any property from the other. 

When is a marriage out of community of property?

A marriage is out of community of property when:

  • The parties entered into an ante-nuptial contract before their marriage that excludes their property;
  • The parties changed their marital regime with a court application from in to out of community of property;
  • The parties are black South Africans who married prior to 2 December 1988 without entering into an ante-nuptial contract; or
  • If the legal system of the country in which the husband is permanently resident at the time of the marriage states that the parties shall be married out of community of property.

How to register an ante-nuptial contract?

An attorney can execute the contract, they will explain the various marital regimes and the possible implications upon divorce to both parties. Once drafted, both parties and the attorney must sign the contract. The contract will then go to the Deeds Office and will be registered. The fees involved will be the attorney fee as well the prescribed fee at the Deeds office to register the contract. 

Advantages:

  1. Each spouse is entitled to their own estate;
  2. The spouses are not liable for each other's debts; and
  3. The financially stronger spouse does not have to share their assets with the weaker spouse. 

Disadvantages:

  1. The financially weaker spouse is not entitled to a share in the estate, even if they contributed indirectly to the estate by running the household and looking after the children. This will be subject to the judge's discretion and forfeiture of benefits. 
  2. An antenuptial must be entered into in order to marry out of community of property, this is costly as parties pay for attorney fees and cost of registration.

Out of Community of Property with Accrual

The out of community of property with accrual marital regime in South Africa is one that must be entered into with an ante-nuptial contract before a marriage occurs. In terms of this marital regime, all property held or accumulated by each during their marriage will remain that party's private property. However, at the end of the marriage, through death or divorce, the property accumulated by the parties will be split into halves. Therefore, each party will have complete control over their own property and estate during the marriage. This means that if parties get divorced, a party to the marriage will be entitled to claim any property from the other. 

The accrual system must be explicitly excluded in the antenuptial contract if a person wishes to do so, otherwise it will be deemed to be with accrual. This means that a spouse is entitled to a share in the growth of the two estates at divorce. 

How to register an ante-nuptial contract?

An attorney can execute the contract. They will explain the various marital regimes and the possible implications upon divorce to both parties. Oncedrafted, both parties and attorney must sign the contract. The contract will then go to the Deeds Office and the and will be registered. 

There are two types of ante-nuptial contracts for spouses:

  1. A contract that excludes in community of property, community of profit and loss, and the accrual system; or
  2. A contract that excludes in community of property and community of profit and loss and includes the accrual system. 

The accrual system is one in which both spouses will have an equal share in the growth that occurs during the marriage.

Advantages:

  1. It is seen as being more fair, where each person keeps their own personal property before the marriage and after that the growth of the marriage is shared;
  2. The spouse who is financially weaker will share the benefits of the profits made during the marriage.

Disadvantages:

  1. The financially stronger spouse has to give away their share of their estate;
  2. If no profit is made,the regime will act as merely out of community of property.