When you are getting married that are many things that need to be considered and not all of them are romantic. One of the most important things to consider is how you will enter into your marriage and what will happen should you one day get divorced. It’s not something a couple in love would want to think about but with South Africa’s high divorce rate there’s a good chance that most couples will end up in ‘splitsville’ rather than ‘happy-ever-after-ville’.
Geraldine Macpherson, senior legal adviser at Liberty Group Advisory Services states: “Times have changed and so have the ways in which people choose to spend their lives together. The legal framework in which people get married will have an impact on their financial planning going forward. As such, more people who are thinking about marriage are seeking advice from their financial advisors about which regime (type of marriage) would be most suited to them.
Not all relationships are geared for marriage and this may not be something you want. But being married to your partner, still has its perks. “This can become complicated as more South Africans follow the world-wide trend of not getting married, and choosing instead to cohabitate. While marriage is supported by many legal statutes; cohabiting, traditional and same sex marriages, don’t enjoy the same privilege.”
This guide looks at the various ways of getting married, including in community of property, out of community of property, and common law marriage.
Marriage in community of property
If a couple get married without entering into a contract, such as an ante-nuptial contract (ANC – see below), then the marriage is in community of property.
Macpherson explains: “[Marriage in community of property] means that all [the couple’s] assets and liabilities pre and post marriage fall into a single joint estate, in which they have an equal share. If either of the partners wishes to enter into a legal contract or deal with any of the property in anyway, both spouses must consent to this. This extends to life insurance as well, which means financial planning is required for both spouses.”
This type of contract is fine if both parties are entering into the marriage with an equal amount in assets or if they have no assets. However, it could get tricky for a spouse who comes into the marriage with assets that are worth a lot of money. It may not be a romantic thing to protect these assets but you have to think what would happen in the event that you do split from your partner one day. Would you be happy if he/she left you and claimed half your assets in the process?
Ante-nuptial contract (ANC)
An ANC is a contract that is entered into between two people who are about to get married. The contract states what property and support rights will be applicable in the event of a divorce or the death of a spouse. In some instances, an ANC can also list property rights that are in effect during the marriage.
Macpherson adds: “Any asset that you enter into the marriage with, you will leave with. Should you, during the time that you are married, obtain any form of asset, [for example] a car or a house, when you purchase this item it will be in the name of one or the other spouse. Should the marriage come to an end, each partner walks away with exactly what they own and neither partner can claim against the other.”
Kabelo Makeke, head of customer financial solutions for personal banking at Standard Bank says: “These days’ [an ANC] in a marriage are no longer interpreted as distrust as there are too many benefits to keeping some of your interests separate. An ANC must be structured well to offer both protection and benefit. Make sure you know and understand what is in the contract before signing and seek advice from a trusted lawyer if necessary.”
Accrual
Gillian Lowndes, a partner at Lowndes Dlamini and Associates explains: “The accrual system in terms of an ANC is a system where, for the duration of the marriage the spouses’ estates are completely separate.”
An accrual offers the benefit of financial independence, as a spouse cannot be sued for debts that were incurred by the other spouse. However, they also “have no claim to any assets the other spouse accrues during the course of the marriage unless they get divorced. Should they divorce, the accrual system comes into play and the estates of the spouses are valued for the purposes of the accrual sharing,” says Lowndes.
“When you enter into the ANC, you may decide to include what is known as a “commencement value”, which is the nett value of your estate as at the date of the marriage. You may also exclude certain assets in the ANC. In addition, you could also elect to state a nil commencement value in the ANC, which is usually the case with young married couples who have as yet not accumulated any assets,” adds Lowndes.
Out of community of property with accrual
Meumann White Attorneys says: “This form of marriage also excludes, by means of ANC, community of property and profit and loss, but provides for a system of asset sharing. This marriage system is a popular choice for couples who have not established themselves financially at the time of marriage.
“Upon dissolution of the marriage, whether it be by death or divorce, the estate values are determined separately, and the larger estate values are determined separately, and then the larger estate must transfer half the net difference to the smaller estate.”
Out of community of property without accrual
According to the Meumann White Attorneys website, a marriage out of community of property without accrual community of property and profit and loss are excluded according to a notarial ante-nuptial contract.
However, each person has the right to dispose of their own assets without prior consent of their spouse. “Very basically, this regime is one which stands for the description of “What’s yours is yours and what’s mine is mine”. This model is most often chosen by parties who have substantial estates or incomes at the time of marriage.”
Common law marriage
Macpherson and Meumann White Attorneys both emphasise that there is no such thing as a common law marriage in terms of South African legislation.
It adds: “If parties have cohabited and they can prove that a universal partnership exists between them, all property of such a partnership is deemed to be jointly owned by the parties and debts are the joint liability of the parties.
“Where there is no express agreement, a tacit agreement may be proved if it is found that it is more probable than not that such an agreement had been reached between the parties at the time of cohabitation.”
Macpherson reveals: “From a tax perspective, persons who cohabit in a permanent relationship are afforded all of the tax benefits available to those formally married, such as the section 4(q) estate duty deduction, the CGT spousal rollover and tax free donations to each other (Taxation Laws Amendment Act, 2001), but in terms of the actual regulation of the “property” of the parties there is no governing legislation. That means that if the relationship terminates, there could be all sorts of unintended consequences.”
The Domestic Partnership Bill of 2008 caters for both same sex and opposite sex relationships. Macpherson explains that “in both cases the parties will be treated as if they were marked ANC excluding accrual, but [same sex couples] will automatically qualify for claims in terms of legislation that deals with spouses’ rights such as the Maintenance of Surviving Spouses Act, the Intestate Succession Act.
“[Opposite sex couples on the other hand] will have to apply to court in order to benefit from those different pieces of legislation.”
Macpherson adds: “A final word of caution for those people who do cohabit, is the term “Universal Partnership”. In this case, if the Universal Partnership can be proven then the parties are in the same situation as those married in community of property – where they own 100% of the property in undivided shares and where they are jointly and severally liable for the partnership debts. Either an agreement may be entered into to create the Universal Partnership or the party alleging it will have to prove that it has been tacitly formed.”
Customary marriage
Bernadette Menezes, director of TGR Attorneys noted that in South Africa the Recognition of Customary Marriages Act 120 of 1998 (RCMA) recognises a traditional marriage ceremony as legally binding.
Menezes stresses: “Most African couples have two weddings; a traditional wedding, which is a ‘lobola’ ceremony; followed by a white wedding celebration in the presence of a marriage officer, which is recognised as a civil marriage in terms of the Marriages Act of 1961. As the ‘white’ wedding is often the larger of the two ceremonies, couples would usually aim to get the ANC signed and concluded before the second ceremony, but after the lobola ceremony has been held.
“What couples should be aware of is the fact that by the time the second ceremony is conducted, they are already deemed legally married in community of property according to the RCMA, which sees the traditional wedding as a legally binding marriage.
“In other words, a valid and legally recognised marriage already exists even before the two parties sign the ANC in front of the notary. The RCMA states that the matrimonial property regime automatically kicks in at the conclusion of the lobola negotiations, and the two would be classified as married in community of property, in terms of section 7(2) of the RCMA.”