Regime Details
In of community of property
When a couple gets married or enters into a civil partnership without signing an antenuptial contract, they are automatically married in community of property.
This means that all assets and liabilities by either spouse before or during the marriage are considered joint property and are shared equally between them. This also includes inheritances (unless specifically excluded in the deceased’s will).
Under the community of property regime, both spouses have equal rights and responsibilities regarding the management and control of the shared assets. This includes things like buying and selling property, entering into contracts and making financial decisions. This means you will also need your spouse’s permission to enter into certain contracts and to make certain purchases.
In the event of a divorce or the death of one spouse, the joint assets are divided equally between the spouses or passed on to the surviving spouse. Similarly, any debts or liabilities incurred during the marriage are shared equally.
It’s important to note that community of property applies to all assets and debts acquired by either spouse, regardless of who earned the money or whose name the asset is registered under. This can have significant implications for individuals who wish to protect their personal assets or maintain separate financial identities during their marriage.
To avoid this default community of property regime, couples have the option to sign an antenuptial contract before getting married or entering into a civil partnership.
This contract allows them to choose an alternative marital regime, such as “out of community of property” or “out of community of property with accrual” – these are explained further below.
Pros:
- No upfront legal costs as no antenuptial Contract is required
- A single view of the couple’s financial affairs
Cons:
- Jointly liable for each other’s debts.
- Consent needed to deal with assets.
- Limited freedom of testation.
- A 50/50 division of the estate upon dissolution is not necessarily an equitable outcome.
Out of community of property with accrual
This marital regime means that each spouse keeps their own assets and debts separate – even after getting married. However, unlike the community of property regime, there is a provision for sharing in the growth of the couple’s combined wealth accumulated during the marriage only. This means that if the marriage ends, the spouses will share in the increase in their wealth that occurred from the date of their marriage, while still maintaining their separate assets owned at the start of the marriage. The idea behind this regime is to ensure that both spouses benefit fairly from the partnership, even if one partner contributes more financially. It provides a level of protection for each individual’s personal assets, while still allowing for some sharing of the financial growth achieved during the marriage.
During your marriage you live as if you are out of community of property, it is only on dissolution (death or divorce) that you share the growth in your estates.
Certain assets are excluded from the accrual calculation (they are not taken into consideration at either the commencement of the marriage or the dissolution).
Such as:
- inheritances, legacies and donations
- assets specifically excluded by the antenuptial Agreement itself
- damages received, other than damages for patrimonial loss;
- donations between spouses, excluding donations which are made in expectation of death.
Pros:
- Fair and equitable system as each spouse effectively shares in the increase in the assets accumulated during the marriage.
- Protected from the creditors of the other.
- Each spouse exercises full control over their own estate
- During the subsistence of the marriage, the position is the same as if married out of community of property, but when the marriage dissolves each spouse shares equally in the profit and losses made during the marriage
Cons:
- Accrual calculation at the dissolution of the marriage can be somewhat technical and complicated, especially if the antenuptial contract is a complex one.
Out of community of property without accrual
This means that each spouse keeps their own assets and debts separate, even after getting married. Unlike the community of property regime or the “with accrual” option, there is no provision for sharing in the growth of the couple’s combined wealth during the marriage. This means that whatever assets and debts each spouse had before the marriage, as well as any acquired during the marriage, remain individually owned. In the event of a divorce or the death of one spouse, the assets and debts will not be shared equally. Each spouse retains
ownership of what they had before the marriage and what they acquired individually during the marriage. This regime provides a higher level of separation and protection for each partner’s personal assets and financial independence.
Pros:
- Each spouse exercises full control over their own estate
- Creditors have no recourse against the estate of the other spouse
- Full freedom of testation.
- Simple and straightforward
Cons:
- Particularly disadvantageous to a spouse who contributes to the household in other ways, such as choosing to stay at home to raise children or one who does not have the same earning potential
FAQ
When do we need to sign an Antenuptial contract?
It is crucial to sign the antenuptial contract BEFORE you get married. If you don’t, you will be married in community of property.
Your attorney must lodge it at the Deeds office within three months of signature.
Does accrual have to be split 50/50?
No, you can stipulate a different sharing split – such as 60/40 etc
What is a net commencement value?
This is the amount that you are worth at the start of the marriage. To calculate this, subtract the total amount of your debts from the total amount of your assets. The remainder is your nett commencement value.
NB: Assets being excluded from the accrual do not form part of your commencement
value.
Can we amend our Antenuptial contract?
Yes, but only BEFORE marriage. If you want to amend it afterwards you have to make an application to the High Court which is a costly process.
How is accrual calculated?
To put it simply:
The commencement value of your estates is adjusted to make provision for inflation.
The value of the estate upon dissolution of the marriage is calculated.
The commencement value is subtracted from the dissolution value. This will give you the amount by which the estates have grown.
The parties share in that growth