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Out of Community of Property with the inclusion of the Accrual Regime

Accrual System Out of Community of Property

Various Matrimonial Property Regimes focusing on the Accrual System

Getting married is a legal act. With it comes certain responsibilities and rights. For example, you have a legal obligation to maintain your spouse. You cannot marry anyone else, and furthermore, your spouse can inherit from you interstate. Depending on the matrimonial property regime you entered into, certain legal consequences would apply regarding the proprietary (or money) aspects of your marriage. For example, to whom do money and assets belong to acquired during the marriage and before it.

In South Africa, a person has three (3) choices when it comes to getting married in relation to your matrimonial property regime. They are explained briefly below.

Marriage Contract - Antenuptial - Prenuptial Agreement

In Community of Property (Default system)

A marriage in community of property is the default matrimonial property regime. You do not need to enter into an antenuptial contract in order to be married like this. Basically, when getting married, both spouses’ assets, money, liabilities and so on becomes one single joint estate. You can compare it to placing it all in one pot. And from that pot would the spouse’s finances be dealt with. If either spouse gets themselves into financial trouble, it is the joint estate, or the pot that would have to be looked at in order to sort it out. This would apply to financial trouble which arose even before the marriage.   Lastly, at death or divorce, the joint estate, or the pot would be divided and each party’s estate would leave with half. If you are worried about the financial implications of your marriage, you need to read further.

Out of Community of Property and Profit or Loss (Without Accrual)

Being married out of community of property and profit or loss is basically the exact opposite of being married in community of property. Here we are dealing with out of community of property with the exclusion of the accrual regime. Under this matrimonial property regime, there remain two separate estates just as there was before the spouses got married. Each spouse is responsible for their own wealth and debt. Creditors can therefore only claim from the estate of the relevant spouse. Not the other. At death or divorce, the situation remains exactly the same. Each estate leaves with whatever it has, being it money, assets or debt.

In order for a couple to be married out of community of property and profit or loss, they need to stipulate it in an antenuptial contract and have it registered. The antenuptial contract would be executed before a Notary Public and registered at the Deeds Office. If this is not done,  then the marriage would be In Community of Property as above.  Next, we deal with a hybrid regime. You may find it more beneficial to you.

Read more on antenuptial contracts by clicking here.

Out of Community of Property and Profit or Loss (With Accrual)

The third option a couple has is to get married out of community of property and profit or loss with the inclusion of the accrual regime. The accrual regime or system is outlined in the Matrimonial Property Act 88 of 1984. Basically, what it entails is that during the marriage you are married out of community of property and profit or loss as in the latter section, but at divorce or death, you share in the accrual or profits of the marriage. Each spouse still retains full control over their assets and estate during the marriage. Just as out of community of property and profit or loss without the accrual. If, however, the parties divorce or one dies, they will share in the accrual or profits.

If you want the accrual regime to apply to your marriage, that would be stated in your antenuptial contract. It would then also be registered at the Deeds Office. In order to work out the accrual, one needs to know the net commencement value of each party’s estate. That would be stipulated in the antenuptial contract. The Accrual system is regulated in Chapter 1 of the Matrimonial Property Act 88 of 1984. In terms of the Act, certain items are excluded when calculating the accrual unless otherwise agreed upon. This is dealt with next.

Items or amounts excluded in the accrual calculation (unless otherwise agreed upon)

  1. Amounts which accrued to that estate by way of damages, other than damages for patrimonial loss. E.g. pain and suffering;
  2. An asset which has been excluded from the accrual system in terms of the antenuptial contract of the spouses, as well as any other asset which he or she acquired by virtue of his or her possession or former possession of the first-mentioned asset;
  3. An inheritance, a legacy or a donation which accrues to a spouse during the subsistence of his or her marriage, as well as any other asset which he acquired by virtue of his or her possession or former possession of such inheritance, legacy or donation (except in so far as the spouses may agree otherwise in their antenuptial contract or in so far as the testator or donor may stipulate otherwise);
  4. Donations between spouses, other than a donation mortis causa [anticipation of the death of the donor], is not taken into account either as part of the estate of the donor or as part of the estate of the donee.

Below find the relevant sections of the Matrimonial Property Act 88 of 1984

Marriage Contract - Antenuptial - Prenuptial Agreement

Matrimonial Property Act 88 of 1984

Extracts of the Matrimonial Property Act:

CHAPTER I

ACCRUAL SYSTEM

2.Marriages subject to accrual system

Every marriage out of community of property in terms of an antenuptial contract by which community of property and community of profit and loss are excluded, which is entered into after the commencement of this Act, is subject to the accrual system specified in this Chapter, except in so far as that system is expressly excluded by the antenuptial contract.
3.Accrual system
(1) At the dissolution of a marriage subject to the accrual system, by divorce or by the death of one or both of the spouses, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, or his estate if he is deceased, acquires a claim against the other spouse or his estate for an amount equal to half of the difference between the accrual of the respective estates of the spouses.

(2) Subject to the provisions of section 8(1), a claim in terms of subsection (1) arises at the dissolution of the marriage and the right of a spouse to share in terms of this Act in the accrual of the estate of the other spouse is during the subsistence of the marriage not transferable or liable to attachment, and does not form part of the insolvent estate of a spouse.

4.Accrual of estate
(1) (a) The accrual of the estate of a spouse is the amount by which the net value of his estate at the dissolution his marriage exceeds the net value of his estate at the commencement of that marriage.

(b) In the determination of the accrual of the estate of a spouse—

(i) any amount which accrued to that estate by way of damages, other than damages for patrimonial loss, is left out of account;

(ii) an asset which has been excluded from the accrual system in terms of the antenuptial contract of the spouses, as well as any other asset which he acquired by virtue of his possession or former possession of the first-mentioned asset, is not taken into account as part of that estate at the commencement or the dissolution of his marriage;

(iii) the net value of that estate at the commencement of his marriage is calculated with due allowance for any difference which may exist in the value of money at the commencement and dissolution of his marriage, and for that purpose the weighted average of the consumer price index as published from time to time in the Gazette serves as prima facie proof of any change in the value of money.

(2) The accrual of the estate of a deceased spouse is determined before effect is given to any testamentary disposition, donation mortis causa or succession out of that estate in terms of the law of intestate succession.

5.Inheritances, legacies and donations excluded from accrual
(1) An inheritance, a legacy or a donation which accrues to a spouse during the subsistence of his marriage, as well as any other asset which he acquired by virtue of his possession or former possession of such inheritance, legacy or donation, does not form part of the accrual of his estate, except in so far as the spouses may agree otherwise in their antenuptial contract or in so far as the testator or donor may stipulate otherwise.

(2) In the determination of the accrual of the estate of a spouse a donation between spouses, other than a donation mortis causa, is not taken into account either as part of the estate of the donor or as part of the estate of the donee.

6.Proof of commencement value of estate
(1) Where a party to an intended marriage does not for the purpose of proof of the net value of his estate at the commencement of his marriage declare that value in the antenuptial contract concerned, he may for such purpose declare that value before the marriage is entered into or within six months thereafter in a statement, which shall be signed by the other party, and cause the statement to be attested by a notary and filed with the copy of the antenuptial contract of the parties in the protocol of the notary before whom the antenuptial contract was executed.

(2) A notary attesting such a statement shall furnish the parties with a certified copy thereof on which he shall certify that the original is kept in his protocol together with the copy of the antenuptial contract of the parties or, if he is not the notary before whom the antenuptial contract was executed, he shall send the original statement by registered post to the notary in whose protocol the antenuptial contract is kept, or to the custodian of his protocol, as the case may be, and the last-mentioned notary or that custodian, shall keep the original statement together with the copy of the antenuptial contract of the parties in his protocol.

(3) An antenuptial contract contemplated in subsection (1) or a certified copy thereof, or a statement signed and attested in terms of subsection (1) or a certified copy thereof contemplated in subsection (2), serves as prima facie proof of the net value of the estate of the spouse concerned at the commencement of his marriage.

(4) The net value of the estate of a spouse at the commencement of his marriage is deemed to be nil if—

(a) the liabilities of that spouse exceed his assets at such commencement;

(b) that value was not declared in his antenuptial contract or in a statement in terms of subsection (1) and the contrary is not proved.

7.Obligation to furnish particulars of value of estate
When it is necessary to determine the accrual of the estate of a spouse or a deceased spouse that spouse or the executor of the estate of the deceased spouse, as the case may be, shall within a reasonable time at the request of the other spouse or the executor of the estate of the other spouse, as the case may be, furnish full particulars of the value of that estate.
Power of court to order division of accrual
(1) A court may on the application of a spouse whose marriage is subject to the accrual system and who satisfies the court that his right to share in the accrual of the estate of the other spouse at the dissolution of the marriage is being or will probably be seriously prejudiced by the conduct or proposed conduct of the other spouse, and that other persons will not be prejudiced thereby, order the immediate division of the accrual concerned in accordance with the provisions of this Chapter or on such other basis as the court may deem just.

(2) A court making an order under subsection (1) may order that the accrual system applicable to the marriage be replaced by a matrimonial property system in terms of which accrual sharing as well as community of property and community of profit and loss are excluded.

(3) When an order is made under subsection (2), the registrar shall send a copy thereof to the registrar of deeds concerned, who shall cause an appropriate reference to the new matrimonial property system to be made on the registry duplicate of the antenuptial contract concerned and on every copy thereof tendered to him for endorsement.

(4) A registrar of deeds who receives notice of a new matrimonial property system in terms of subsection (3), shall notify all other registrars of deeds accordingly and furnish each of them with a copy of the court order, and every registrar of deeds so notified shall cause an appropriate reference to the new matrimonial property system to be endorsed on the copy, if any, of the antenuptial contract concerned filed in his registry and on every copy thereof tendered to him for endorsement.

8.Forfeiture of right to accrual sharing
The right to share in the accrual of the estate of a spouse in terms of this Chapter is a patrimonial benefit which may on divorce be declared forfeit, either wholly or in part.
Deferment of satisfaction of accrual claim
A court may on the application of a person against whom an accrual claim lies, order that satisfaction of the claim be deferred on such conditions, including conditions relating to the furnishing of security, the payment of interest, the payment of instalments, and the delivery or transfer of specified, assets, as the court may deem just.

Marriage Contract - Antenuptial - Prenuptial Agreement

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