A look at marriage in community of property


relationships

The Matrimonial Property Regimes

The Matrimonial Property Act of 1984 provides for three types of marriages under South African law, namely:

Marriage in community of property; and

Two forms of marriage out of community of property governed by an antenuptial contract, namely one with accrual and one without accrual.

Marriage in Community of Property

When no antenuptial contract is signed, then the marriage is, by default, a marriage in community of property. Besides the obligations in respect of property ownership the law also places obligations on couple’s for example they have a duty to support each other by providing clothing accommodation, food, medical services and other necessities. The duty of support is a duty that goes both ways, and if the husband doesn’t have the necessary means to support himself, then the wife has a legal obligation to support him and vice versa. Furthermore, in case of marriage, mere separation is not recognised by the law and a couple must be divorced for the dissolution of the marriage to be recognised and ensuing a division of assets to take place.

Under the Matrimonial Property Act, partners married in community of property have equal legal status. Apart from certain exclusions all property is shared by the parties in a joint estate. The couples become joint owners of all the assets and liabilities they acquired before they got married and those acquired during the marriage. Four example, if the husband has a motor vehicle valued at R 200 000 and an outstanding loan of R 100,000, it means that the other party assumes half of the assets and becomes the joint owner of the car, but also take up the joint liability for the debt of R 100,000.

The main exclusions to communal ownership of:

Assets excluded by a will for example, if you inherit property through someone leaving it to you in his/her will. It will be excluded from the joint estate. Only if the will specifically states it is to be excluded.

Assets excluded from the joint estate in a prenuptial contract or agreement. Before tying the knot, partners can sign the agreement in which they specify assets that they want don’t want to be included in the joint estate.

Gifts and donations. These are assets that partners give to each other, including those given during their engagement.

Partners have an equal say in financial transactions that affect the joint estate. Transactions that require the written consent of both partners are for example when they buy or sell large assets that are part of the joint estate’s such as a house, taking out a bond, entering into credit agreements and ceding insurance policies or investments. Verbal consent between partners is required for transactions, such as the sale or disposal of household goods.

A major disadvantage for marrying in community of property is when one of the partners gets into debt and is declared insolvent then both spouses are equally affected. In other words, the joint estate becomes an insolvent estate. Creditors can then go after all the assets in the joint estate and also the assets excluded from it, such as inherited property.

What happens on divorce?

On divorce the joint estate will split equally between the separating partners even if one partner has contributed towards the bulk of the assets by for example being the sole breadwinner. The excluded assets remain in the names of the separated partners. However, the terms of the marital regime can be overridden. For example, if a couple is married in community of property and in filing for divorce one partner believes that the equal split of assets would unduly benefit the other party, the party can claim a forfeiture of patrimonial benefits. A classic example of where this could apply is where a young man with minimal assets marries an older wealthy woman and in the course of a short marriage has affairs with younger women. Hurt and humiliated the wife sues for divorce. In the event of such a claim under the Divorce Act, the divorce court will consider the misconduct by one of, or both of the parties, the duration of the marriage and the circumstances leading to the breakdown. A partner cannot forfeit assets that he or she had to before the marriage and brought into the joint estate. In the event of the court granting forfeiture it may be either wholly or partially in favour of the claimant. The Matrimonial Property regimes can also be overridden by the spouses themselves in the case of an uncontested divorce. One form of an uncontested divorce is where the parties enter into a settlement agreement also known as a consent paper which regulates property ownership issues arising from the termination of the marriage. The parties have full contractual freedom, either to apply the matrimonial property regimes applicable to their marriage or to draw up a settlement agreement. A settlement agreement will be made an order of the court when the decree of divorce is granted.

The Pension Funds Amendment Act, 2007, introduced the so-called clean-break principle for the treatment of retirement fund benefits upon the granting of a divorce decree. The Act allows retirement funds to deduct an amount or percentage upon divorce from a member’s benefit and pay it to the non-member spouse or to a retirement fund of his/her choice. The clean-break principle allows a non-member former spouse to access an agreed or court-ordered share of the member spouse’s retirement savings on divorce.

Any assigned amount may be paid from the member’s pension fund to a non-member spouse in terms of a divorce order granted under the Divorce Act, irrespective of the date of divorce, but may not be more than 100 per cent of the value of the member’s withdrawal benefit at the date of divorce. In order for the fund to make the deduction and payment to the non-member spouse, the fund must be ordered to endorse its records (make a note on the system) to such effect and/or to make payment to the non-member spouse. The non-member spouse can elect to receive a cash lump sum or to have the money transferred to an approved pension fund.

What happens if a partner dies?

You may be under the mistaken impression that on the death of a partner the joint estate simply passes to the surviving partner without the need of an executor. Unfortunately, life is not so simple. On the death of either party, the joint assets in the name of the decrease partner are frozen, which can leave the surviving partner with our immediate access to funds in the estate. On finalisation of the estate the surviving partner will automatically get his or her behalf. The other half is distributed according to the will of the deceased partner. If no will has been drawn up, the deceased half of the estate is distributed in terms of the laws that govern interstate succession.

Disadvantages of a marriage in community of property:

The economically stronger spouse has to share his or her assets with his or her spouse.

The spouses are jointly liable for each other’s debts. This is particularly problematic on insolvency.

The joint administration of the estate is quite complicated.

While the marriage is a happy one, it is no real problem to obtain your spouse’s consent. But when the marriage starts to fail, the requirement of joint consent is difficult to satisfy.

One thought on “A look at marriage in community of property

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s