Our expert says:
Family law expert
Where you did not conclude an Ante nuptial Contract prior to your wedding day, you will automatically marry in community of property. In community of property means that everything the couple own, and their debts, from before their marriage are put together in a joint estate. And everything they earn or buy after their marriage is also part of this joint estate. Any money or possessions belonging to either of the spouses at the time of the marriage, or acquired by them at any time thereafter, cease to be the private property of the one person and become part of a joint estate in which each of the partners has an equal, undivided share.
On termination of the marriage, the husband and wife are each entitled to a half-share of the joint estate and they are jointly liable for any liabilities. A major disadvantage is that if one partner becomes insolvent, the other is protected only if he or she owns property that does not form part of the joint estate. Everything in the joint estate will be attached and sold off to pay any creditors.
The Matrimonial Property Act 88 of 1984 brought with it the “accrual” system which permits a form of sharing, consistent with a primary objective of marriage, but permitting retention of each party’s independence of contract and ability to retain their own unique separate estates.
“Accrual” means increase. The accrual system is a form of sharing of the assets that are built up during the marriage. The underlying philosophy in respect of the accrual system is that each party is entitled to take out the asset value that he or she brought into the marriage, and then they share what they have built up together. One spouse's property cannot be sold to pay the other's creditors if the other becomes insolvent - in contrast to the case where the parties are married in community of property.
The important features of an accrual marriage are in essence the following:-
* Each party retains his or her own estate. Each party may accumulate assets and incur liabilities without interference from or assistance of the other spouse. The estate of each party is determinable separately.
* The monetary value of the smaller estate is subtracted from the monetary value of the larger estate, the difference is split, and the party having the larger estate pays half of the difference between the two estates to the party with the smaller estate.
* At dissolution of the marriage, the estate of each party is calculated by listing all assets, listing all liabilities, subtracting liabilities from assets and arriving at a net asset value.
* In practical terms this amounts to a similar division to a marriage in community of property. However there are certain crucial factors of an accrual marriage which add complexity and much more freedom of choice.
* When drafting the Ante Nuptial Contract, the parties can each decide to exclude certain assets. The effect of excluding an asset will be that it does not feature on the asset statement at dissolution of the marriage and is completely excluded from the calculation. Assets which are not properly described can cause huge problems when the executor or the divorce attorney tries to decide what to do with it in calculating the net accrual value.
* To exclude either a specific asset, or a commencement value, or both (which must be separate and not derived from the same asset), can effectively ensure that couples share only what they choose to share and keep separate any item or items, or values, which they do not believe it fair to share (for example something acquired before the relationship commenced).
* Parties not wishing to exclude specific assets may exclude a certain sum of money which is the agreed equivalent of assets which they do not wish to share, and which is termed a “commencement value”.
Family Law Attorney
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