It is worthwhile to scrutinising different forms of marriage contracts and how each of them affects assets. (Shutterstock)
Cape Town - It is said that nearly half of all marriages in South Africa end in divorce. And this figure might be conservative.
Unfortunately divorce usually goes hand in hand with great unhappiness about the way in which the assets the two parties have built up over the years should be divided.
The marriage contract will determine to a large extent how these assets are to be divided.
Therefore it is worthwhile to spend time on scrutinising different forms of marriage contracts and how each of them can affect the division of assets later, according to Clive Hill, legal adviser of Sanlam Trust.Here are a few examples:If you are married in community of property:
In terms of this marriage contract both parties are the owners of the joint estate.
From the start of the marriage all assets and liabilities are incorporated in a single, joint estate, with certain assets being excluded.
Assets accumulated by one or both parties prior to the marriage also become part of the joint estate owned by both parties.
In this case, assets that are excluded are, for example, those inherited by one of the parties on the distinct understanding that they will not form part of the joint estate.
Consequently all property in the joint estate will belong to the husband and wife as an equal, indivisible portion – and both of them will share in the profits or losses of the joint estate. A marriage out of community of property, without accrual:
This type of marriage becomes effective when the parties enter into an antenuptial contract.
This is a contract entered into by both parties and sets out the rules and conditions in respect of the division of assets, and which will apply during the marriage.
In the case of marriages out of community of property without accrual, the property owned by a person prior to the marriage, as well as all property accumulated during the marriage, belongs only to that person.
The same rule applies to liabilities. Each party’s debt remains his or her responsibility. Consequently each party may deal arbitrarily with his or her estate in a will. A marriage out of community of property with accrual:
In terms of this marriage contract the difference between the net increases in the respective estates during the duration of the marriage is divided equally between the two parties when the marriage is terminated.
The calculation of the accrual can briefly and generally be summarised as follows: It is important to determine the value of the estate at the time the marriage is contracted, for example R1m, and the value of the estate at termination of the marriage, for example R1.5m.
The amount by which the estate has increased (in this case R500 000) is then deemed the accrual.
The same calculation must be done for the other party to the marriage.
Say the value of the accrual (as calculated above in the other party’s estate) is R300 000. The difference in accrual between the estates of the two parties is therefore R200 000 (R500 000 less R300 000).
The party whose estate accrued by the smaller amount will then have a claim against the other party’s estate for half of the difference in accrual: therefore R100 000.
The accrual will consequently be divided equally (R300 plus R100 000 = R400 000 for the one party and R500 000 less R100 000 = R400 000 for the other party in the marriage).
Certain assets are excluded from the accrual in terms of the Matrimonial Property Act. These include, for example, the following:
* An inheritance received during the duration of the marriage;
* Donations made between the parties during the duration of the marriage;
* Assets explicitly excluded in terms of the conditions of the marriage contract.
Although each marriage partner may bequeath his or her separate estate at his or her discretion, it should be borne in mind that in terms of the accrual system the other party may have a claim that will have to be finalised before the testamentary distribution can take place.
The testator could be prevented from bequeathing his estate as he wishes if, after settlement of all claims, there are not sufficient assets or funds in his estate to carry out his wishes.
"Although no one wants to envisage a divorce, it is advisable to plan your life in such a way that you are not ruined financially if your marriage breaks down," Hill says.
"Women in particular should take cognisance of this, as they face new financial responsibilities when they have to take out risk and insurance policies and make investments."
Perhaps, he says, they should also consider the prospect of new financial constraints while bringing up their children without the daily, direct financial assistance or another parent.A few tips for women:
* Take part in financial decision making in your marriage right from the start.
Too many women leave financial matters in their husband’s hands.
And so-called homemakers in particular could suffer as a result of this when their marriage comes to an end and they discover that their husbands have disposed of their assets over the years by, for example, selling these to a family trust.
* Make sure you understand how your medical scheme cover works.
After a divorce the children are usually taken care of. But the wife could be pushed aside and might have to take out her own medical insurance or healthcare product.
You might realise suddenly that you are no longer covered by the medical scheme to which your family belonged.
* If the father pays maintenance, the order is usually not binding on his estate.
So make sure it is included in the divorce order and thus made binding on his estate.
* Be careful with your finances after the divorce.
Stress could make you spend money and forget about the future.
* Add your voice
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