Matrimonial Property Regimes in South Africa

• Matrimonial property regimes determine how assets and debts are managed during a marriage and upon its dissolution.

Types of Marriages

• In South Africa, legal and financial effects vary based on the chosen marriage type.
• There are two primary types of marriages recognized: civil marriages and customary marriages.

Civil Marriage

• Civil marriages are governed by the Marriage Act 25 of 1961.
• A civil marriage can be either in community of property or out of community of property.
• If an antenuptial contract isn't signed, the marriage defaults to in community of property.
• In the absence of an antenuptial contract, couples automatically share all assets and debts.

Customary Marriage

• Customary marriages are recognized under the Recognition of Customary Marriages Act 120 of 1998.
• These marriages can be either monogamous (one partner) or polygamous (multiple partners).
• Customary marriages entered into before November 15, 2000, are now governed by community of property rules unless a contract specifies otherwise.

Community of Property

• In community of property, both partners share all assets and debts.
• One spouse is responsible for the others debt in this case.

Community of Property Implications:

• Complicates asset division in case of divorce.
• It offers simple and fair asset sharing, but one spouse's debt puts the other at financial risk.
• If one spouse declares insolvency the other is at risk too.
• In Community of Property – All assets and debts belong to both spouses equally.
• In such a marriage, all assets acquired before and during the marriage are considered joint property.
• Equal financial control to both spouses, but they need to seek mutual consent for big transactions
• One spouse may benefit from gifts or inheritances received by the other.

Out of Community of Property

• Out of community of property requires an antenuptial contract.
• Spouses manage their assets and debts independently.
• Out of community of property protects one spouse if the other incurs debts.
• Financial independence is a benefit, but there's no automatic sharing of wealth.
• Spouses keep their own assets and liabilities
• Requires an antenuptial contract

Implications of no antenuptial contract:

• A failure to create an antenuptial contract can result in:
  • Joint Estate: All assets acquired before and during the marriage are considered joint property.
  • Financial Risks: Exposure to debt or insolvency of the other spouse.

Matrimonial Property Act 88 of 1984

• The Matrimonial Property Act 88 of 1984 controls how property is handled in a marriage.
• This act changed property laws to ensure fairness.
• In 1988 extended it's reach to encompass all South Africans, including black South Africans.

Why Marriage Type Matters

• The choice of marriage type affects asset distribution, financial planning, and estate management.
• If a couple is in community of property and one spouse dies, the surviving spouse automatically owns 50% of everything.

Civil Unions

• Civil Union Act 17 of 2006 introduced civil unions.
• It allows monogamous unions for all couples, regardless of gender.
• Civil unions have similar legal effects as civil marriages.

Antenuptial Contracts

• An antenuptial contract is a legal document outlining the terms of a couple's marriage regarding property and assets.
• Antenuptial contracts become effective upon marriage.
• It has to be notarized.
• The antenuptial contract is essential for couples marrying out of community of property.

Antenuptial Contracts serves to:

• Protect assets.
• Prevents sharing liabilities.
• Must be signed before marriage with a notary public.

Marital Power

• Before December 1, 1993, husbands had marital power.
• Fourth General Law Amendment Act 132 of 1993 abolished marital power, ensuring equal rights.

Civil Unions in South Africa

• Section 13(1) dictates that civil unions follow the same legal consequences as marriages under the Marriage Act 25 of 1961
• Civil unions have legal equivalence to civil marriages and are monogamous only.

Choosing a Marriage Type

• Choosing a marriage type is about legal and financial security.
• Always consider financial goals and legal protection before deciding on a marriage type.

Community of Property Limitations Under the Matrimonial Property Act

• Spouses have equal power for joint estate management.
• The Matrimonial Property Act manages assets in marriages in community of property.
• Both partners share everything equally but some roles exist about what they can and cant do.
• An antenuptial contract can specify assets excluded from accrual calculations.

In Community of Property dissolution of marriage

• All assets and liabilities are jointly owned by both spouses.
• Any increase or decrease in assets affects both parties equally.
• When the marriage ends because of divorce or death, the joint estate must be divided.
• Debts of the joint estate must be settled first.

Division of the Estate

• The joint estate is valued and divided equally, with each spouse getting 50% if it's split 50/50.
• Only the deceased spouse's half is considered for estate duty.
• Gifts or inheritances received by one spouse may benefit the other unless excluded by the donor.

Understanding Marriages Out of Community of Property

• Donations could be revoked before 1 November 1984.
• Section 22 now makes these donations irrevocable, ensuring greater financial security.

Accrual System

• Applies automatically unless excluded.
• The high court case Cumings v Cumings clarified clauses relating to donations.

Accrual System Key Concepts

• Separate Estates: Each spouse retains their estate during marriage.
• Claims Upon Dissolution: Upon divorce or death, either spouse can claim accrued amounts.
• Net End Value: Estate value at dissolution.
• Commencement Value: Estate value at marriage start, adjusted for inflation.

Commencement Value

• Is the net worth of a spouse's estate at the beginning of the marriage and is used to determine how the estate has grown overtime
• The accrual is calculating by subtracting this value from the final estate value.
• Spouses should declare their assets in an antenuptial contract in an Asset Declaration:
• The Matrimonial Property Act allows spouses to submit a private list of assets instead.
• If no assets are declared, the starting value is considered NIL (zero).

Assets Excluded from Accrual

• Assets excluded in the antenuptial contract and inheritances & donations, including Non-Pecuniary Damages .

Non-Patrimonial Damages:

• These are damages awarded for non-financial losses.
• Non-Patrimonial damages are excluded, because because they are personal compensation and do not increase the value of an estate.

Accrual Claims

• Is the amount one spouse can claim from the other when a marriage is dissolved under the accrual system, ensuring fairness by sharing the growth in the couple's estates

Key Terms

• Accrual: Is the increase in the value of an estate from the start of the marriage to its dissolution.
• Commencement Value: The value of a spouse's estate when the marriage began.
• End Value: Is the total value of an estate at the time of dissolution.
• Inflation Adjustment: Is money loses value over time, so old amounts must adjusted to reflect their present worth.