Whether spouses are married in community of property, out of community of property without accrual, or out of community of property subject to the accrual system will materially affect the manner in which their estates are dealt with on dissolution of the marriage. This article provides a concise legal overview of the principal regimes and related remedies that may arise in divorce proceedings.
Marriage in Community of Property
Where spouses are married in community of property, a joint estate comes into existence and, subject to limited exceptions, both spouses share in that joint estate in equal undivided shares. The marriage therefore combines both assets and liabilities into a single estate.
Upon divorce, the joint estate is ordinarily divided equally between the parties. In practice, this requires identification, valuation and distribution of the assets and liabilities comprising the joint estate.
A court may, however, consider a forfeiture order where one spouse would otherwise be unduly benefited. In determining whether forfeiture should be granted, the court may consider factors such as the duration of the marriage, the circumstances that gave rise to the breakdown of the marriage, and any substantial misconduct.
Forfeiture may be ordered either wholly or partially, depending on the facts of the matter and the extent of the undue benefit established on the evidence.
Marriage out of Community of Property Without Accrual
In a marriage out of community of property without accrual, each spouse retains a separate estate throughout the subsistence of the marriage.
As a general rule, assets and liabilities owned before the marriage, as well as those acquired or incurred during the marriage, remain the exclusive property or responsibility of the spouse in whose estate they vest.
This regime preserves patrimonial independence and generally protects one spouse from direct exposure to the other spouse’s personal debts and liabilities, subject to ordinary principles of law and any contractual arrangements to the contrary.
Upon divorce, each spouse ordinarily retains his or her own estate, unless a court grants further relief in terms of applicable legislation or the parties regulate their proprietary consequences by agreement.
Marriage out of Community of Property With Accrual
The accrual system, introduced by the Matrimonial Property Act 88 of 1984, is intended to ensure that spouses share in the growth of their respective estates during the marriage while retaining separate estates during the marriage itself.
The accrual system applies to marriages out of community of property where it has not been expressly excluded in the antenuptial contract. It is therefore necessary to examine the terms of the antenuptial contract carefully when determining the parties’ proprietary rights.
On dissolution of the marriage, the spouse whose estate has shown the smaller accrual acquires a claim against the spouse whose estate has shown the larger accrual, calculated as one half of the difference between the two accruals.
For purposes of the Act, “accrual” refers to the net increase in the value of a spouse’s estate between the commencement of the marriage and the date of dissolution, after taking into account commencement values, liabilities, statutory exclusions and any agreed exclusions in the antenuptial contract.
By way of illustration, if Spouse A’s estate increased from R10,000 to R100,000, the accrual would be R90,000. If Spouse B’s estate increased from R20,000 to R200,000, the accrual would be R180,000.
The difference between the accruals in this example is R90,000. The spouse with the smaller accrual would therefore have a claim for one half of that difference, namely R45,000, against the spouse with the larger accrual.
This mechanism reflects the statutory principle that spouses should share equally in the growth of their estates during the marriage, while maintaining separate ownership during the marriage itself.
Certain assets are ordinarily excluded from the accrual calculation, including assets specifically excluded in the antenuptial contract, as well as inheritances, legacies and donations, unless the governing instrument or agreement provides otherwise.
Because the practical application of the accrual system frequently turns on valuation evidence, documentary disclosure and the interpretation of the antenuptial contract, legal advice is often necessary in contested matters.
Values Considered in the Calculation of Accrual
Where parties marry subject to the accrual system, the commencement values of their respective estates should be recorded in the antenuptial contract or otherwise proved in accordance with the applicable statutory requirements. Those commencement values form the baseline against which later growth is measured.
Upon divorce, each estate must be valued on a net basis by deducting liabilities from assets and then applying the relevant exclusions and commencement values. Once the two accruals have been calculated, the spouse with the larger accrual becomes liable to transfer one half of the difference to the spouse with the smaller accrual.
The commencement value is generally adjusted to account for changes in the value of money, commonly by reference to the consumer price index, before it is deducted from the value of the estate at dissolution.
Redistribution of Assets and Older Out-of-Community Marriages
Historically, marriages concluded out of community of property before 1 November 1984 did not operate under the accrual system, because the system came into force only upon commencement of the Matrimonial Property Act 88 of 1984 on that date.
Section 7(3) of the Divorce Act 70 of 1979 created a judicial discretion to order a redistribution of assets in certain marriages out of community of property where strict adherence to separate estates would produce inequitable results. More recently, constitutional litigation has significantly affected the scope of this remedy, and the legal position has evolved beyond the original pre-1984 limitation. Any reliance on section 7(3) should therefore be assessed against the most current legislation and case law.
Older marriages concluded under historical legislation may raise additional transitional and constitutional issues. For that reason, parties in long-standing marriages or marriages concluded under prior statutory frameworks should obtain advice specific to the date of marriage, the wording of the antenuptial contract and the current state of the law.
In redistribution matters, the court will generally require a proper evidential basis before exercising its discretion.
· The spouse seeking relief must establish direct or indirect contributions to the maintenance or growth of the other spouse’s estate.
· The court must be satisfied that a redistribution order would be just and equitable in the circumstances of the particular case.
Settlement Agreements in Divorce Proceedings
Parties to divorce proceedings may conclude a settlement agreement regulating the division of assets, liabilities and other proprietary consequences of the divorce. Such agreements are often used to avoid protracted litigation and, when made an order of court as part of the decree of divorce, become enforceable in accordance with their terms.
Where the proprietary issues are complex or heavily disputed, the parties may agree, or the court may direct, that an independent expert or liquidator be appointed to assist in valuing and distributing the relevant estate or estates.
If no agreement can be reached, the court will determine the proprietary consequences of the divorce on the evidence placed before it.
This article is intended for general informational purposes only and does not constitute legal advice. The applicable outcome in any divorce matter will depend on the parties’ marital regime, the terms of any antenuptial contract or settlement agreement, the available evidence, and the current state of South African law.
