In this article we will consider estate planning and how it relates to the 3 main types of marriage.
During the planning of an estate it is worth mentioning that a married spouse is exempt from having to pay donations tax and estate duty on any donations received from the other spouse. This is in terms with both Section 4(q) of the Estate Duty Act and the Income Tax Act.
Also, the Taxation Laws Amendment Act and the Pension Funds Amendment Act now open this provision up to spouses existing in a cohabitative or stable unmarried monogamous relationship so that they can benefit from it as well.
For a marriage in community of property, no contractual agreement exists between spouses. And instead of each spouse having a separate estate they have a joint estate.
The share of each spouse in the joint estate is 50% regardless of the name it is registered in. This joint estate includes all the assets which were acquired prior to and during the marriage.
As such, in the event of one spouse incurring debt the other spouse will be liable also for any amounts owed. Should one spouse become insolvent, the joint estate will be sequestrated.
If a spouse should die, then only 50% of the value of the combined estate can be claimed for by the surviving spouse. The value of the estate will therefore decrease by 50%. Once all the debts of the deceased estate have been settled, then the estate is divided. This excludes the costs for burial and estate duty.
A spouse can only bequeath half of the joint estate to the other spouse if they are married in community of property. This is something to remember when the Last Will and Testament is being drafted.
All bank accounts are frozen when one spouse dies which may have an effect on the liquidity of the estate. This takes place regardless of whose name the account was registered in.
If a donor specifies that a donation is to remain separate from the joint estate, then it can be excluded from the joint estate and can be used by the donee to build up a separate estate. The returns which are gained from the donation will, however, be added to the joint estate.
If a couple are married out of community of property without accrual a contractual agreement in the form of an antenuptial contract will be entered into prior to the marriage. As a rule, any couple who marries and doesn’t have an antenuptial contract before are married in community of property automatically.
In the contractual agreement, each spouse will stipulate the value of his or her estate on entering into the marriage. Possession of all assets acquired before the marriage is retained by each estate planner or spouse.
While both estates remain separately owned and controlled by each spouse, they both have a duty to contribute to household expenses within their means.
Both spouses have to specifically state that they wish for the accrual system to be excluded from the antenuptial contract, if they wish to solely own all assets they acquire during the marriage.
When married out of community of property with accrual, the growth of each spouse’s estate after the date of marriage is addressed.
Any donations that are given from one spouse to the other will not be included into the donees separate estate when each spouse’s accrual is being calculated. Therefore, the donee doesn’t count the donation as growth and the donation amount is taken off the accrual of the donor.
Should the marriage be dissolved by court decree as a result of divorce, then issues relating to the maintenance of children, access, guardianship and custody, spousal maintenance, the division of assets, the division of pension interests etc. will be addressed.
Contact us for professional legal advice, preferably before getting married and before drafting your will.
Subscribe to our Newsletter
Estate Agent Training
Bond & Transfer Calculator
Get the latest updates in your email box automatically.