Divorce Attorney Cape Town

A look at marriage in community of property


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.

Rebuilding Your Financial Life After Divorce

After Divorce Divorce

Divorce is one of the most upsetting events a person can go through. It raises emotions such as hurt, anger and distress that are hard to control, and it can take a long time to recover fully. Everyone knows how annoying and emotionally difficult divorce can be, but often we overlook the more logistical challenges of separation.

Divorce brings major adjustment to nearly every aspect of your life, including your financial stability and future goals. Without a doubt, your life will be changed. But adjusting to and even accepting the changes will help you to get back on your feet faster and more effectively. You will now be fully in control of your own financial portfolio, which involves keeping a careful eye on your income and expenses, paying your own accounts, saving for university if you have children, and planning for the savings and investments you will need to enable you to succeed.

The list of responsibilities may seem a bit intimidating at first, particularly if you were not really involved in the family finances while you were married. But by learning along the way, you will likely find that it is empowering to make your own financial decisions and to be in control of your own destiny.

Things you should do post-divorce

Draft a new will

The law gives you a three-month window period after your divorce in which it is assumed that it is your intention to disinherit your ex-spouse. If you should pass away during that time, and you had not amended your will, a court will assume that you were going to. If, however, you pass away after the three-month period and had still not amended your will, all your assets will revert to your ex-spouse.

Invest wisely

It is vital to protect your future needs by means of reinvestments. When a divorce is granted, a redistribution of assets takes place, where often one spouse will receive a lump sum or several instalments from the other. As the recipient of these funds, it is critical that you look to the future and make sensible plans that will take care of your financial needs. It is equally important that you structure any reinvestments in the most tax-effective way. There are many financial products to choose from and you need to invest wisely in order to generate an income or future growth from your capital. Make sure that you investigate the different advantages of lump-sum investments or savings plans for regular payments, whichever may apply.

Change your policy beneficiaries

It is vital that you also amend your beneficiary nominations on all of your life-assurance policies within the three-month window after divorce. After the three months, should anything happen to you, your current beneficiary nominations will stand. Not changing these may result in your ex inheriting from you years after your divorce.

Change your bank account

Open your own bank account if you had a joint account. If you had your own accounts it may be wise to change your passwords. In the event of your spouse passing away, his account will be frozen and you will not be able to access any of the funds until an executor is appointed and they agree to release funds to you as they deem appropriate.

Make a budget

Whether you were the breadwinner or a stay-at-home mother, your financial status will certainly change significantly as a result of your separation or divorce. To start rebuilding your life, you need to start with an income and expenses budget to ensure that you have a precise idea of what your new cost of living will be in future, with or without the children.

Work out a financial plan

Finding a new rich husband/wife should not be part of your financial plan. Do not rely on any new partner for financial security. Life may change in an instant and you may suddenly be faced with all the financial responsibilities once again. Make sure that you have a good understanding of your financial affairs. Develop a comprehensive financial plan. Contact your financial adviser to assist you in creating such a plan.

Manage your debt

Make sure that you have as little debt as possible post-divorce. This will guarantee that you have a good credit record. Being single again means you have a single income and therefore you need to plan your retirement carefully. If you have a bond, try to pay it off as soon as you can. Always pay surplus cash or bonuses into your bond account. This will save on interest paid over the long term and you will own your property sooner.

Manage your savings

Always have at least one extra monthly salary available for emergencies. An access payment on the insurance on your car in case of accident can easily cost R1 500 or more. If you do receive maintenance for your children, ensure that you have at least one month’s maintenance in a savings account, should your ex default by any chance.

Look at your risk portfolio

With a single income your risk in terms of liabilities almost doubles. Make certain that you have a medical aid or hospital plan. If you did not belong to a medical aid for longer than two years and you are older than 35, a late-joiner penalty may be imposed on your monthly premium and a waiting period may exist. Remember to arrange short-term insurance on your car and household contents, life cover and severe illness and disability insurance.

Decide how to invest your retirement funds

If you were awarded a portion of your spouse’s retirement fund, you have the option to either withdraw the funds from their retirement fund or to transfer the funds to your own retirement or preservation fund. If you take a withdrawal, there will be a tax implication, whereas if you transfer the funds to another approved fund, the transfer will be tax free, provided your tax affairs at SARS are in order.

Making provision for your own retirement is key. When you were married, you were either jointly involved in your retirement planning or it was something that was taken care of by your spouse. Now that you are divorced, you will need to review your plans and take sole responsibility for your own retirement.

If you are not currently a member of a pension and/or provident fund, a contribution to one of a new generation retirement annuity fund may be appropriate in the circumstances. Alternatively, you can invest in a savings plan until retirement. The capital can then be used to provide you with an income. It is always best to discuss the options you may have with your financial adviser.

If you were the main breadwinner and the retirement fund member, you stand to lose a sizable portion of your retirement fund as part of your divorce settlement, in which case you will need to make additional retirement provisions for yourself.

Secure your maintenance

See whether it is possible to secure your maintenance by a life-assurance policy in terms whereof you are the owner of the life of the maintenance payer. On claiming either disability or critical illness benefits on the life of the maintenance payer, the life-assurance company will pay the benefits in terms of the policy directly to you. In the event of the maintenance payer’s death, you as the nominated beneficiary will be paid and not the deceased’s estate. As the owner, you can also appoint a beneficiary. Ensure that you have sufficient life, disability and severe-illness cover on the life of the non-custodian parent to protect your and your children’s financial needs.

Change your marital status

Home Affairs will not register a further marriage if you are recorded as ‘married’ on the system. Take your divorce certificate to Home Affairs and ask them to amend your marital status. This normally takes three months to change.

Change your surname

A woman may revert to her maiden surname or a prior surname she legally bore, or may join her surname with that of her ex-husband’s as a double-barrelled surname. If you took your husband’s name when you got married, and it reflects that way in your ID book, then there is a process you have to go through via Home Affairs to legally revert to your maiden name.

When the mother of a child born in wedlock divorces the child’s father, and wishes to change the child’s surname to her maiden surname, to another surname she bore legally or, if she has remarried, to the surname of her new husband, the natural father’s written consent, unless waived by a competent court, is a statutory requirement.

From the book: Everyone’s Guide To Divorce And Separation, by Bertus Preller

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