Division of Assets during a Divorce

What happens to your property during a divorce? 

Unless you enter into a settlement agreement about the division of your assets, the answer to this question depends on the marital property systems (or marriage regime) applicable to your marriage at the time of the divorce.

Regardless of the marriage regime, you may enter into a settlement agreement. This will record, amongst other things, what will happen to their property after the divorce. If you can’t reach a settlement agreement as to how your property should be divided, the court will decide this as a dispute between the parties during trial.

Married out of community of property with the inclusion of the accrual system

The accrual of the estate of a spouse is the amount by which the net value of his or her estate at the dissolution of the marriage exceeds the net value of his or her estate at the commencement of the marriage. The spouse with the least growth, will have an accrual claim against the estate of the spouse which estate showed a larger growth.

Accrual can ensure that a spouse who indirectly contributed towards the growth of the estate of the other spouse is not left high and dry should the marriage be dissolved. The typical example would be where a husband leaves his full-time employment to care for the parties’ children and manage the family affairs at home. As a result of the husband leaving his full-time employment his personal estate will not continue to grow. However, due to the husband managing the family affairs at home and caring for the children, his wife has more free time to focus on her career and work longer hours.

The husband therefore puts his wife in the position to further her career and increase the value of her estate. If the husband did not leave his full-time employment to manage the family affairs at home and care for the children, the wife would not have been in a position to spend as much time in the furthering of her career. After some time, and as a result of the wife spending time in the furthering of her career, the wife’s estate will grow and increase in value while the husband’s estate will remain stagnant. The husband therefore contributes indirectly to the growth and accrual of his wife’s estate.

In the example above, if the wife’s estate has accrued more than the estate of the husband, the husband has a claim against the wife, when the marriage comes to an end, for an amount equal to half of the difference between the accrual of the respective estates.

In accordance with the provisions of the Matrimonial Properties Act 88 of 1984 every marriage entered into after 1 November 1984 out of community of property will automatically be subject to the accrual system, unless the application of the accrual system has expressly been excluded in the antenuptial contract.

In order to be married out of community of property, the parties have to sign an antenuptial contract prior to the commencement of the marriage. An antenuptial contract must be signed in the presence of a notary and thereafter be registered in the deeds office.

Upon the dissolution of the marriage, the accrual system will become applicable. The value of the accrual claim which one party may have against the estate of the other is determined by using a calculation, taking into consideration the commencement values of the spouses’ respective estates recorded in the antenuptial contract, the end values of the spouses’ respective estates at the dissolution of the marriage and all assets excluded from the accrual as recorded in the antenuptial contract.

Each party’s property acquired during the course of the marriage, will remain his or her own property after the divorce. The accrual claim will be claim in value and not for a share in any specific property.

When calculating the accrual of the estate of one of the spouses, not all of that spouse’s property will necessarily be considered when determining the end value of that spouse’s estate. Section 4 of the Matrimonial Property Act of 1984, notes the following to be excluded when the accrual is calculated:

  • Any asset specifically excluded in the antenuptial contract ;
  • Any inheritance, legacy, trust or donation received by a spouse during the marriage from any third party (Section 5 of the Matrimonial Property Act);
  • Any donation between spouses;
  • Any amount that has accrued to a spouse by way of damages, other than damages for patrimonial loss, by reason of a delict committed against him or her (e.g. slander or a personal injury)

Married out of community of property with the exclusion of the accrual system

In this marriage regime, each party retains his or her own estate accumulated before marriage and throughout the course of their marriage. All assets gained or lost by any party, will be considered as assets gained or assets lost by that specific estate.

This system provides the parties absolute independence and protects each spouse’s estate against claims by the other spouse’s creditors.

As stated herein above, the provisions of the Matrimonial Properties Act 88 of 1984 determines that every marriage entered into after 1 November 1984 out of community of property will automatically be subject to the accrual system, unless the application of the accrual system has expressly been excluded in the antenuptial contract.

If parties therefore wish to be married out of community of property and that the accrual system must not be applicable to their marriage, they must specifically state in the antenuptial contract that the accrual system will not be applicable to their marriage. An antenuptial contract must be signed in the presence of a notary and thereafter be registered in the deeds office.

Married in community of property

Where parties are married in community of property they share in one joint estate. Upon the dissolution of marriage, the assets (and liabilities) of the joint estate will be divided equally between the parties (unless they enter into a settlement agreement during an uncontested divorce with alternative terms).

Parties may enter into a settlement agreement wherein they agree amongst themselves how the joint estate should be divided. If they cannot agree, the Court will order that the joint estate be terminated and that a liquidator be appointed to realise all the assets and liabilities of the joint estate and to divide the proceeds (if any) equally between the parties or as specified by the court.

Next Steps

Should you wish to make contact with one of our team members, kindly e-mail us at divorce@barnardinc.co.za or phone us on 0861 088 088.

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