SA’s marital regimes and their impact on an individual’s estate

The Matrimonial Property Act 88 of 1984 is the cornerstone of South African family law and governs the property rights of spouses married under civil law. It plays a crucial role in ensuring fairness and legal certainty in the distribution of assets, both during marriage and upon its dissolution.

It has a significant impact on the property rights during the marriage and on how the estates are dealt with upon dissolution of the marriage, i.e. death or divorce. Understanding these regimes is beneficial for effective estate planning, particularly when drafting a will, calculating estate duty, and considering the financial security of a surviving spouse.

There are three marital property regimes in SA:

1. Marriage in community of property
2. Marriage out of community of property with accrual
3. Marriage out of community of property without accrual

Each regime affects the ownership of assets, liability for debts, and distribution of the estate differently. We discuss them below, and in particular, their effect on deceased estates.

1. Marriage in Community of Property

Overview:

This is the default marital regime if the couple does not sign an antenuptial contract (ANC) before the marriage. Under this system, all assets and liabilities of the spouses are combined into a joint estate.

Key features:

• Each spouse owns an undivided half share of the joint estate.
• Assets acquired before and during the marriage form part of the joint estate (except for specific exclusions like inheritances or donations with conditions).
• Each spouse is jointly and severally liable for the debts of the other, regardless of who incurred them.

Effect on the deceased estate:

• When one spouse dies, only 50% of the joint estate belongs to the deceased and falls into the deceased’s estate.
• The surviving spouse retains the other 50% as their share.
• This 50% division simplifies ownership but can also be problematic if the deceased had wished to bequeath more than half the total assets to the surviving spouse.

Estate planning considerations:

• The testator can only bequeath their half of the joint estate.
• If the will bequeaths more than 50% of joint assets, those provisions cannot be fulfilled.
• Executor’s fees, capital gains tax (CGT), and estate duty are calculated based on the deceased’s half.
• It is important to define which assets are excluded (e.g., inheritances) to avoid disputes.

2. Marriage out of community of property WITH accrual

Overview

This regime, which is the most common for modern marriages with antenuptial contracts in SA, strikes a balance between financial independence and equitable sharing of growth during the marriage. This balance ensures that both spouses’ financial rights are protected.

Key features:

• Each spouse retains a separate estate during the marriage.
• On death or divorce, the net increase (accrual) in each spouse’s estate is calculated.
• The spouse with the smaller accrual is entitled to half the difference between their accrual and that of the other spouse.
• Assets excluded in the ANC (e.g., inheritances or trusts) are not taken into account.

Effect on the estate:

• On death, the accrual claim is calculated as it would be if the marriage ended due to divorce.
• The surviving spouse can claim their accrual share from the deceased estate before any inheritance is distributed.
• Alternatively, the deceased estate can have a claim against the surviving spouse’s estate if the deceased had the smaller accrual.

Example:

If the deceased’s estate grew by R6mn during the marriage and the surviving spouse’s estate grew by R2mn:

• The difference in accrual is R4mn.
• The surviving spouse can claim R2mn from the deceased’s estate.

Estate planning considerations:

• The accrual claim must be settled before any heirs inherit.
• The claim can affect liquidity in the estate, especially if the estate comprises mostly fixed assets (e.g., property).
• The executor must calculate and settle accrual claims as a debt of the estate.
• The will must be drafted with accrual implications in mind, especially if the estate is intended to be distributed not only to the surviving spouse but to other heirs, e.g. children.

3. Marriage out of community of property WITHOUT accrual

Overview:

In this regime, the spouses sign an antenuptial contract that excludes community of property and the accrual system. Each spouse maintains a completely separate estate, both during the marriage and at death.

Key features:

• No sharing of assets or liabilities.
• Each spouse remains the sole owner of their property.
• Debts incurred by one spouse do not affect the other.
• Each estate is managed independently.

Effect on the estate:

• Upon death, only the assets in the deceased’s personal estate are included in the estate.
• The surviving spouse has no automatic right to claim from the deceased estate unless provided for in the will.

Estate planning considerations:

• This regime provides maximum independence, but it may lead to unfairness if one spouse has accumulated significantly more wealth.
• The testator can freely bequeath all their assets.
• No claim can be made by the surviving spouse based on marital property principles unless supported by a maintenance claim under the Maintenance of Surviving Spouses Act 27 of 1990.
• It is useful where spouses have complex or risky financial affairs, or where one party wishes to protect assets.

Practical tips for estate planning

1. Review your ANC: Understand the contents and implications of your antenuptial contract. Make sure your will is consistent with your marital regime.
2. Clarify asset ownership: Especially important for in-community marriages or those with business assets, property, or offshore assets.
3. Consider liquidity: In accrual marriages, ensure there is enough liquidity in the estate to settle claims and taxes.
4. Protect the surviving spouse: If the marriage is out of community without accrual, the surviving spouse may need protection via life insurance or a bequest in the will.

Conclusion

SA’s marital property regimes—in community of property, out of community with accrual, and out of community without accrual—each have distinct legal and financial implications, particularly on death. The choice of regime affects asset ownership, debt liability, and the ability of spouses to benefit from each other’s estates. Careful consideration and proper estate planning are vital to ensure your intentions are honoured and that your spouse or heirs are adequately provided for.

If you wish to discuss with us, please contact Kate (kate@rcinv.co.za) or Juane (juane@rcinv.co.za).