Understanding how your marital property regime impacts estate planning is
crucial to ensuring your assets are distributed according to your wishes.
Eric Jordaan - Crue Invest (Pty) Ltd
Your marital property system determines how your assets and debts are
handled in the event of death, affecting estate administration and
inheritance. Image: AdobeStock
The legal implications of your marital property regime directly influence
the treatment of assets if your marriage ends due to death. Before drafting
your will, it’s crucial to understand how your marital property system
impacts your property rights and asset distribution. Your marital status,
previous marriages, and property regime can significantly affect estate
administration, as discussed below.
Marriage in community of property
If you are married in community of property, you and your spouse share a
single joint estate, meaning all assets are collectively owned, regardless of
whose name they are registered under. It’s important to understand that there
are not two separate estates, each containing 50% of the joint assets.
Upon the death of the first spouse, the entire estate must be administered.
However, there are exceptions to joint ownership, such as inheritances
specifically excluded or compensation received for personal injury claims,
which remain the separate property of the recipient spouse. In this system,
both spouses are jointly and severally liable for all debts within the
estate, including those incurred before and during the marriage, regardless
of whose name the debt is registered in.
If the first spouse dies, the executor will settle all debts, including
estate duty, excluding funeral and burial expenses. The surviving spouse is
entitled to 50% of the net value of the joint estate. The remaining 50% will
be passed to the deceased spouse’s heirs, in accordance with the will or
intestate succession laws. Understanding these provisions is essential for
ensuring that your estate is managed and distributed according to your
intentions.
Marriage out of community with the accrual
The accrual system is generally considered the most equitable marital
property regime, ensuring that both spouses share in the financial growth of
their marriage. However, it is crucial for testators to account for the
operation of the accrual when developing their estate plans.
The accrual system requires that, upon dissolution of the marriage, the
profit made by each spouse during the marriage is calculated and divided
equally. In their ante-nuptial contract, spouses can outline the financial
aspects of their marriage, including what assets they bring into the marriage
and whether any will be excluded from the accrual calculation.
Each spouse must declare the starting value of their estate in the
contract, which serves as the baseline for calculating the accrual upon the
first spouse’s death. During the marriage, both spouses retain full control
of their estates. Upon the death of the first spouse, the net value of each
estate is determined, and the spouse with the larger estate must transfer
half of the difference to the spouse with the smaller estate.
Consequently, it is essential to understand how the accrual system impacts
your estate to ensure your estate plan is effective and aligns with your
intentions. For example, if your estate is larger, your surviving spouse will
be entitled to their share of the accrual.
Marriage out of community without the accrual
The out-of-community of property marital regime, when chosen, offers
simplicity in estate administration but can be inequitable. To marry under
this regime, spouses must expressly exclude the accrual system through their
ante-nuptial contract, but they must be fully aware of the potential
consequences.
In the event of death, the estates of the spouses remain entirely separate,
much like unmarried individuals. Each spouse retains full control over their
own assets, and there is no sharing of growth in wealth during the marriage.
When the first spouse dies, their estate is settled separately from the
surviving spouse’s, without any division of wealth between them. This can be
particularly unfair when one spouse has accumulated wealth, while the other
has foregone personal advancement to focus on child-rearing or managing the
household. In such cases, the surviving spouse has no right to a claim on the
deceased spouse’s estate, despite potentially contributing significantly to
the marriage.
However, the surviving spouse is entitled to claim reasonable maintenance
under the Maintenance of Surviving Spouse Act, which aims to ensure that the
surviving spouse is not left destitute. This system should, therefore, be
carefully considered when deciding on the structure of one’s estate
plan.
Customary law marriages
Under the Recognition of Customary Marriages Act, couples are automatically
married in community of property. To marry out of community of property, they
must enter into an ante-nuptial contract before the wedding and specify
whether the accrual system will apply. In polygamous marriages, the husband
must apply to the High Court for approval of a written contract detailing the
chosen marital property regime. This process ensures that the legal structure
of the marriage is properly documented and enforced in line with the parties’
wishes.
Unmarried
If you are unmarried and have never been married, as the sole owner of your
assets and the only person responsible for your debt, your estate
administration would be relatively simple. Complications could, however,
arise where you are co-owner of property with another person or
persons.
Regardless of your marital status, it is always advisable to have a valid
will in place to ensure that your loved ones know your intentions in the
event of death. Note that if you are unmarried but in a life partnership,
dying without a valid will in place could inadvertently leave them
financially prejudiced.
Divorced
If you are divorced, it is crucial to consider the provisions of your
divorce order, especially regarding asset division or maintenance obligations
in the event of your death. The terms of the divorce order are legally
binding and will be taken into account by your executor when administering
your estate. According to Section 2B of the Wills Act, you have a three-month
window after your divorce to update your will. If you do not update it within
this period and your ex-spouse remains a beneficiary, it will be assumed that
you intended for them to benefit under your will.
Religious marriages
A religious marriage is one entered into in terms of a religion, such as
Islamic or Hindu, and such partners are not considered to be spouses when it
comes to marital property. There is no community of property in a religious
marriage, meaning that such a union is treated as an out-of-community
marriage with no accrual system. That said, note that in terms of the Income
Tax Tact, partners to a religious marriage fall within the definition of
‘spouse’. This is because the Act determines that the spouse of a taxpayer
includes anyone in a union recognised in accordance with the tenets of any
religion.
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