Protect your financial interests in marriage

When planning your wedding day, the last thing on your mind is a possible divorce, you or your future spouse passing away, or either of you plunging into debt.

The reality, however, is that marriage has a significant impact on your rights and responsibilities pertaining to your assets and liabilities. Your chosen ‘marital regime’ will determine whether or not you and your spouse will share assets and be responsible for each other’s debts.

It would be reckless not to familiarise yourself, before you get married, with the legal principles in this regard.

  • Different marital regimes.

• In community of property: Once married, assets acquired and liabilities incurred before or during the marriage merge into one estate. Both parties have an equal share therein. When the marriage dissolves (through death or divorce) each spouse is entitled to 50 per cent of the joint estate.

• Out of community of property, with profit and loss: Each party retains the assets and liabilities he or she had at the time of getting married. All assets and liabilities acquired or incurred thereafter are part of a joint estate.

• Out of community of property, without profit and loss: Estates remain separate. Each party retains assets acquired before or during the marriage and remains solely responsible for liabilities incurred before or during the marriage.

• Out of community of property, without profit and loss, with inclusion of the accrual system: The same as out of community of property without profit and loss, with the exception that, when the marriage is dissolved, the spouse whose estate has shown the smaller growth (accrual) is entitled to receive half of the difference between the two estates.

Example: Since marriage, X’s estate has grown by R200 000 and Y’s estate by R100 000. The difference is R50 000. Y is entitled to R25 000.

  • What determines my marital regime?

If you enter into a civil or customary marriage, you will automatically be married in community of property, unless you enter into an antenuptial agreement before you get married. This is a special contract which determines that you will not be married in community of property, and specifies which different regime you will follow.

  • Advantages and disadvantages of each regime.

• Spouses married in community of property share in each other’s prosperity. However, they also share in each other’s debts. Creditors may claim from either spouse, regardless of who incurred the debt. A negligent spouse, or a business that fails, can cause financial doom for both.

• If married out of community of property, spouses do not share each other’s financial risk. A disadvantage is that a spouse who is not economically active will not share in the wealth of the other spouse when the marriage is dissolved. Women who don’t work because they care for their children can be prejudiced.

• The accrual system brings balance: Parties are not liable for each other’s debts and do not share each other’s assets, but when the marriage is dissolved, the party whose estate experienced less growth (for instance a housewife who had to care for children) will be compensated by the application of the calculation as set out above. If a party has already built up a significant estate, it is possible to agree to exclude those assets from the accrual.

  • Can I change my marital regime?

Yes, however this requires an application to the High Court, in which compelling reasons for the change must be given. You will need to prove that no other person will be prejudiced by the change. Your creditors will need to be notified of the application and may oppose it.

  • How do I enter into an antenuptial agreement?

This must be drafted and signed before marriage, executed by a notary (an attorney with an extra qualification) and registered with the Registrar of Deeds.

If you fail to enter into an antenuptial contract, or fail to comply with the formal requirements thereof, you will be exposed to significant financial risk and your wishes regarding how your estate/s should be divided might not be implemented. Contact an attorney to assist you in this regard.

Article written by Francois de Kock. Juan Kotze Attorneys can be reached at 011 892 1019, [email protected] or [email protected]

Riaan Engelbrecht

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