In Community of Property - Marriage in Community of Property Explained


Marry without entering into Antenuptial Contract. Share in assets and liabilities before and after marriage. If you do not enter into an Antenuptial Contract prior to your marriage, you will automatically be married in community of property in terms of South African Law. Both parties’ individual estates will be combined into one jointly owned estate by the marriage. This means that all assets, debt and liabilities are all pooled into one estate once the marriage is concluded, from which point onward, only one jointly owned estate will exist. 

Both parties will be jointly liable for debt-repayment towards their combined creditors, irrespective whom incurred the debt. This means that if one of the parties behaves in a financial irresponsible way, the other party will also suffer because of it. Also the parties will be exposed to the business risks of the other party and will in practice not have freedom to trade. 'In community of property' means that everything each party had prior to the marriage, assets as well as liabilities, are pooled into one single jointly owned estate, once the parties marry. 

From this point onward everything they earn or buy will also form part of this jointly owned estate. This also pertains to any debt or liabilities either one of them incur during the marriage. Should one spouse be reckless with his or her financial affairs, it will adversely affect the other spouse, as they are both totally liable for the debts of their jointly owned estate. As both parties are joint owners of all property in their jointly owned estate, both parties have equal rights of ownership and administration over all the assets. 

Once married in community of property, there will be various transactions that require the consent of both parties. The most prejudicial consequence of marrying in community of property, is that assets in the joint estate will always be vulnerable to the claims of creditors of both spouses. This marital regime is definitely not recommended for spouses running their own independent businesses as premarital and post-marital liabilities will become communal, thereby endangering the good standing of not just one, but both spouses.


Due to the risks involved we strongly advise couples not to get married in community of property. 

SUMMARY 
When two persons that are about to be married enter into an Antenuptial Contract their marriage will be out of community of property. The most common consequences of a marriage out of community of property are as follows:

  • The parties will not be held liable for the debts of a spouse that such spouse may have incurred prior to the marriage; 
  • The parties will not be held liable for the debts of a spouse that such spouse may incur during the marriage; 
  • Assets may be protected, particularly if one of the spouses has a business in his or her own name. The parties may decide to register assets such as their residential property in the name of only one spouse, being the spouse with the lowest risk profile. The assets of each spouse will also be safe in the event that the other spouse is sequestrated; 
  • One or both spouses may have assets prior to the marriage that they want to exclude from the joint estate; 
  • Spouses may enter into commercial transactions without the consent of their spouse;
  • Each spouse retains control over his or her assets, builds his or her own estate and is responsible for his or her own debts. 

COMPARISON TABLE - MATRIMONIAL PROPERTY REGIMES


Marriage in community of property Marriage out of community of property with the accrual system Marriage out of community of property without the accrual system
Before Marriage No Antenuptial ContractAntenuptial Contract entered into before marriage is solemnisedAntenuptial Contract entered into before marriage is solemnised
On date of Marriage Both spouses estates join into one joint estate which belongs to both spouse in equal undivided sharesTwo separate estates. Each spouse may deal with his/her estate as he/she wishes.Two separate estates. Each spouse may deal with his/her estate as he/she wishes.
During the Marriage Joint estate comprises assets and liabilities that belonged to either spouse at the date of and during the marriage, excluding the following: •Property donated or bequeathed subject to the condition that it shall be excluded from a community of property marriage; •Certain life insurance policies;
  • Delictual liabilities.
-Husband and wife have equal powers with regard to disposal of assets, contracting of debts and management of the joint estate. Can perform any juristic act with regard to joint estate without consent of the other spouse, except acts set out in Sections 15{2) and 15(3) of the Matrimonial Property Act.
ASSETS EXCLUDED:
  • Assets excluded in terms of the antenuptial contract;
• Delictual damages for non-patrimonial loss; • Inheritances, legacies and donations; • Donations between spouses • Certain life policies.
Two separate estates. Each spouse may deal with his/her estate as he/she wishes. Any increase or decrease benefits or prejudices the relevant spouse only. Accrual system expressly excluded in the antenuptial contract.
End of marriage on death or divorce The estate is halved and each spouse is entitled to an undivided half share.Accrual = Difference between the net value at commencement (escalated) and the net value at dissolution of the marriage. -The net value at commencement is declared in the antenuptial contract / separate statement. If no net value stated in contract it shall be deemed to be NIL.Each spouse retains his/her own assets and own accrual – no sharing unless Antenuptial contract compels donations or court orders transfer of assets. An financially dependant party can still claim maintenance.
Advantages Promotes legal and economic equality.Both parties share in the wealth accumulated during marriage Each party is free to conduct his/her own independent financial affairs. • If party goes into debt, it cannot be claimed from the estate of the other party. • In the case of divorce, any assets made whilst married are shared – it doesn’t matter who acquired them; each partner’s current net asset value is calculated by subtracting all liabilities from assets • The antenuptial contract can be tailored to suit the parties needs • It protects the partner who remains at home to care for the familyIf one of the parties becomes insolvent, creditors may not attach the assets of the other • Each of the parties is still legally obliged to offer financial support to one another should one of the parties are unable to support himself/herself. • Full contractual freedom • In second marriages, marriages where the parties already have children , where both parties have already amassed a sizeable estate or in so called marriages of convenience it simplifies matters drastically.
Disadvantages If one of the parties goes into debt, creditors have claim to all of both parties assets • If one of the parties has his/her own business and becomes insolvent, both parties assets becomes fodder for debt collectors • There is no financial or even contractual independence, certain transactions need the written or oral consent of both parties • If one partner should die, the estate of both the deceased and surviving partner will be wound up jointly – not great for the surviving partner who will find themselves in legal limbo possibly without access to funds in addition to the trauma of losing a loved one.Need to keep accurate accounting records.In the case of death or divorce, a spouse is entitled only to those assets accrued in his/her name.
 Should one of the spouses stay at home to raise children, that partner would not be entitled to the assets accumulated by the other partner.
Best suited forYounger couples where there is no business risk from either of the spouses. Outdated. Not advisable.Younger couples. Especially where one of the spouses has his/her own business.Second marriages, marriages where the parties already have children, where both parties have already amassed a sizeable estate or in so called marriages of convenience.