The consequences of marriages concluded out of community of property with the application of the accrual system
Written by Alisha Naik, Associate Designate and checked by Pierre van der Merwe, Partner
11 May 2021
Part 1 of this 2-part series explored the three options available to couples relating to the various matrimonial property regimes in terms of the Matrimonial Property Act 88 of 1984 (“the Act”) in South Africa. The three property regimes are in community of property, out of community of property (without the accrual system), and out of community of property (with the accrual system). This article aims to focus on the last-mentioned matrimonial property regime.
Spouses are generally free to include any provision or modification in their ANC (as long as it is not contra bonos mores or against nature, reason, morality, public policy or prohibited by any law and does not conflict with the essential consequences of marriage or is not calculated to lead to separation, dissolution of the marriage by divorce or to take over the powers of the court). Examples of these types of clauses which cannot be included in an ANC are as follows:
- An undertaking by a spouse to adopt or convert to the religion or faith of the other spouse.
- A clause stating that the marital disputes will be referred to arbitration.
- A clause recreating or retaining the husband’s marital power.
- A clause stating that the parties will not live together after their marriage.
- A clause permitting the parties to commit adultery.
- A clause stating that the wife shall stop working and become a housewife on a permanent basis from the birth of their first child.
- A clause stating that one spouse shall not have the power to bind the other spouse for household necessaries.
- A clause stating that neither spouse shall have the right to ask an order of forfeiture to share in the accrual of the other’s estate on divorce.
Some of the more popular modifications to ANC’s include the following: that the accrual system only be applicable on condition that the marriage has “lasted” for a certain time period, or when a child has been born of the marriage and a clause to the effect that the accrual system shall not operate on termination of the marriage if either party’s estate is insolvent – which clause is not detrimental to creditors.
The ANC may also include a provision that the spouses will share in the accrual in a different percentage as the prescribed 50/50 and they may include a clause wherein they agree on the manner in which the accrual claim shall be payable upon dissolution of the marriage.
It is important to note that inheritances, legacies, and donations from third parties (including donations between spouses) are not taken into account and are automatically excluded when calculating the accrual of a spouse’s estate unless the parties agree to include same in the contract.
THE EXCLUSION OF PARTICULAR ASSETS
Movable and immovable assets may be excluded insofar as a spouse wishes, as long as the asset is owned by the spouse at the time of execution of the ANC or will be owned prior to the conclusion of the marriage. The asset must be described in an objectively identifiable manner in the ANC. When a particular asset is excluded from the accrual of a spouse, such an asset will not be taken into account when calculating the accrual of that spouse.
By way of example, parties may exclude assets in the following circumstances:
- Where a spouse has promised a particular property to a third party;
- A share in a family business and whether income derived therefrom should be excluded;
- Shares held in a share incentive scheme by an employer of one of the spouses, or held by a spouse in their personal capacity;
- Where a spouse has speculative property, which may generate significant capital profits (ownership of immovable property, policies and annuities etc.)
- Where a spouse has an interest in a family trust and the capital therefrom may be distributed to them as a beneficiary of the trust.
Often spouses wish to exclude assets that they will own in future. Unfortunately, as the law currently stands, the clauses containing the exclusions of future assets may be deemed to be unenforceable.
The commencement value of spouses refers to the net value of each spouse’s estate prior to the solemnization of the marriage. Where a spouse’s liabilities exceed their assets, their commencement value will be recorded as nil.
It must be borne in mind that the ANC, by virtue of its being registered in the Deeds Registry, is a public document. Therefore, spouses who do not wish to disclose their commencement values in a publicly accessible document may declare their commencement values in a separate document referred to as a section 6(1) statement, which statement is not registered in the Deeds Registry, but is retained in the Notary’s protocol. This statement must be made before the marriage is entered into or within 6 months after the conclusion of the marriage.
The above is a high-level snapshot of some of the important provisions that ANC’s generally include. Whilst ANC’s may be daunting, it is advisable to have these discussions with your spouse in advance of the intended marriage. Kindly contact the authors of this article on 011 448 9600 for more information on the negotiating, drafting, executing, and registering of your ANC.
Please note: this article is for general public information and use. It is not to be considered or construed as legal advice. Each matter must be dealt with on a case by case basis and you should consult an attorney before taking any action contemplated herein.
Pierre van der Merwe
Partner at Schindlers Attorneys
Phone +27 (0) 11 448 9678
Associate Designate at Schindlers Attorneys
Phone +27 (0) 11 448 9679