The Ins and Outs of Marriage Systems

In the spirit of all the weddings and engagements happening recently, we thought we would write about one of the second biggest choice you have to make as a couple; the first being choosing each other.

This decision is one that many tend to make with their hearts – but really it’s one that needs strict consideration by rational minds. Choosing a matrimonial property system is just as important as choosing a life partner.

When choosing a matrimonial property system you have to carefully assess your future plans as well as potential risks that you need to protect yourself against. These risks can include anything from being declared insolvent to divorce.

We realise that considering these risks is a rather morbid thought when you are just about to be married, but the reality is that life is unpredictable and the best way to ensure you are secured is by making appropriate choices.

The law gives persons intending to marry three of these golden choices.

  1. A marriage IN community of property.

The traditional approach followed by most. This entails the “what’s mine is yours and what’s yours is mine” philosophy. A romantic notion indeed – but is it practical? In terms of this matrimonial property system, assets owned by both spouses before and after the marriage fall into one joint estate and both partners are regarded as having an undivided half share of the said estate. Each partner may deal with the assets as they wish, with the exception of a few specific circumstances.

The advantage is that each partner has equal rights and powers regarding the joint estate. However, it must be noted that this marriage regime provides for the community of profit and loss. This means that as much as the profits of the marriage are shared, so are the losses.

With the current economic situation, we no longer have the liberty of taking this aspect lightly. There are far too many people with debt recently, and it is no longer solely due to making bad financial decisions. The economy itself is simply unstable. Therefore it is vital that we consider whether having one joint estate will be beneficial.

The other factor that needs to be considered is what happens in the case of a divorce. When a couple married in community of property decides to get divorced, the estate has to be divided amongst them in equal shares. This can become problematic when there are assets like houses and vehicles forming part of the joint estate. In theory it is fair that you get half of everything but in reality it is not possible to simply split a house or vehicle in half, and this is where the complications arise. Spouses rarely amicably agree about the manner of the division, which means that either a mediator or liquidator has to be appointed. All this results in an expensive and lengthy divorce process.

The pinnacle aspect of this matrimonial property system is that you share both prosperity and unfortunately misfortunes, (a double edged sword or a lotto ticket), therefore the deciding factor is whether the benefit outweighs the risk.

 

  1. A marriage OUT of community WITHOUT Accrual

Here your estate is yours and theirs is theirs. You deal with your assets freely and independently. A bonus point if you choose this option is the fact that you do not share in each other’s poor financial decisions. Most people find this suitable as it’s more of a safety net should things not go as planned. This option is particularly appealing to those who are self-employed, as businesses are uncertain and it is important that your spouse isn’t exposed to the financial risks of your business.

If you want to be married in terms of this option, you have to explicitly exclude the accrual system from your ante-nuptial contract.

In cases of divorce, this property system will generally be the easiest to dissolve in terms the patrimonial consequences.

There is a common notion that this option is unromantic and that it does not allow for the sharing of a joint household, which many regard as a fundamental part of marriage. However, there is a simple solution to this – joint ownership. There is nothing stopping a couple married out of community of property from acquiring property together as joint owners, or even having a joint bank account for the purposes of running the household.

 

  1. A marriage OUT of community WITH Accrual

This system is very similar to the 2nd option, except that upon dissolution of the marriage (death or divorce) the accrual system comes into effect.

Whatever is acquired during the subsistence of the marriage will be divided equally between the spouses upon the dissolution of the marriage. Therefore anything acquired after the marriage will be for the joint benefit of both spouses. However any assets acquired by spouses prior to the marriage will remain their own and will not form part of the accrual. The calculation and division of the assets accrued after marriage is stipulated in the Matrimonial Property Act.

This is the ideal situation as only the profits acquired during the marriage will be divided equally, not the losses. But this is only beneficial if the partners actually have assets in their names at the date of the marriage. If not, then their entire estate will form part of the accrual.

 

In our opinion, there’s no right or wrong option. It’s your choice. Consider what you think best fits your life and your requirements and make an informed, apt choice. Remember that making the right choice now can eliminate the need to find a solution later.

 

Written by: Trushantha Maharaj and Vandana Maharaj

 

 

 

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