Why is marriage with the accrual system a popular choice?

If you and your partner marry out of community of property with accrual, you agree to keep your estates separate but to share in property accrued during the marriage. This arrangement suits couples who want to keep their financial independence yet benefit mutually from the wealth they build together.

On the dissolution of the marriage an accrual calculation determines what the estate with the greater accrual owes the estate with the lesser accrual, taking into account each estate’s commencement value and end value. Read more: How do I calculate an accrual claim?

How to marry out of community of property with accrual?

Marriage under this property regime requires that you draw up an antenuptial contract before the marriage date. The contract must state the commencement value of the assets and liabilities in each partner’s estate at the beginning of their marriage. You can also list any assets that should be excluded from the accrual calculation. Alternatively, these details and values may be specified separately in a written statement made not later than six months after the marriage.

If you are a young couple who have not yet accumulated meaningful assets and are willing to share the assets you have, you can set the commencement values of your estates at zero.

What happens with what I own?

You keep what you already have – this is recorded in your antenuptial contract. Any further assets you acquire in your name during your marriage are included in the accrual. However, there are exceptions – certain assets are excluded, as follows:

• Inherited assets and donations: any inheritances or donations received by either spouse during the marriage are excluded from the accrual, unless the will or donor states otherwise.
  
  
• Assets excluded in the antenuptial contract: specific assets whose value may appreciate during the marriage, such as a residential property, may be excluded in the contract.
  
  
• Legal compensation for personal injury or damages: these amounts are usually excluded as they are considered personal property.

Note that, unless excluded in the antenuptial contract, the net appreciation in the value of assets in your estate, such as on a residential property, during your marriage, is included in the accrual calculation.

What happens with any debts we have?

You are each solely responsible for your own debts. If, for example, your partner owes money, his or her creditors cannot go after you. The right to share in the accrual only arises on the dissolution of the marriage, meaning that during the marriage your estates are entirely separate for legal and financial purposes. However, when the marriage ends, the debts (liabilities) of both spouses affect the accrual calculation.

What are my obligations to my partner?

Under this regime, because you each have a separate estate, property acquired or sold by you during the marriage does not require input or consent from your partner, as it would if you were married in community of property.

Spousal support obligations, common to all marital property regimes, still hold – spouses owe a duty of support to each other.

Each partner has an obligation not to “hide” assets in structures, such as trusts, in order to reduce the value of their estate for accrual calculation purposes. If a court sees evidence of this, it may take those assets into account in determining a claim.

What happens if we get divorced?

On divorce, unless you and your spouse come to a different arrangement in a divorce agreement, the estate with the smaller net accrual can claim half the accrual difference from the estate with the larger net accrual.

The accrual on each estate is determined by subtracting the estate’s commencement value from its end value. The calculation is complex because it must take into account excluded assets, retirement fund assets, insurance policy payouts, liabilities including tax, and inflation.

What are my obligations to a spouse after divorce?

The law in South Africa favours a clean break between divorcing spouses to minimise ongoing financial obligations and give each party the chance to begin their life afresh.

However, the court will make provision for the maintenance of any minor children from the marriage and may order maintenance for a spouse. This is not dependent on the couple’s marital regime.

What happens when one of us dies?

On the death of you or your partner, the estate of the deceased spouse will be wound up by an executor according to the instructions in the will. If there is no will, the deceased estate is distributed according to the law of intestate succession.

In winding up the deceased estate, the accrual calculation is the same as that for divorce – the executor calculates the accrual on the estates of the deceased spouse and the surviving spouse, using the end values at the date of death. Depending on which spouse had the larger accrual, the deceased estate will claim against the surviving spouse or will compensate the surviving spouse. Such claims, either way, need to be settled before a final distribution of the deceased estate can occur.

Where the deceased estate has a claim against the surviving spouse, the surviving spouse may have to liquidate assets, such as sell shares or a property, to settle the claim. Where the surviving spouse has a claim against the deceased estate, the deceased estate may have to liquidate assets to settle the claim.

Are life insurance benefits on the death included?

On the death of a spouse, a life insurance policy payout awarded to a nominated beneficiary, including the surviving spouse, is not included in the accrual calculation. If the payout goes to the deceased estate – in cases where there are no nominated beneficiaries or the estate is a nominated beneficiary – the amount forms part of the deceased spouse’s assets in the accrual calculation.

If the surviving spouse owns a policy on the deceased spouse and that policy is paid to the surviving spouse’s estate, this will be included in the accrual calculation.

Are retirement fund benefits included on death or divorce?

On the death of a spouse, the deceased spouse’s retirement fund assets do not form part of the accrual calculation. Death benefits in a retirement fund are distributed according to the Pension Funds Act. The fund trustees consider family members who were financially dependent on the deceased as well as any nominated beneficiaries and how to distribute between them.

On divorce, a retirement member’s pension interest is included in his or her estate for the accrual calculation, as required under the Divorce Act, taking into account the commencement and end values. However, a court may decide differently on how a member’s pension interest must be divided.