Being married in community of property basically means that all the assets and debts from before the marriage are shared in a joint estate between both spouses. Any assets, debts and liabilities acquired by either spouse after their marriage will then also added to this joint estate.
If the couple do not sign an Antenuptial Contract before their marriage, then by default they will be married in community of property in terms of South African Law. While a marriage in community is the cheapest and most popular matrimonial regime, it is deeply flawed.
When couples are married in community of property, their separate estates are combined, and each spouse has the right to dispose of the assets as they wish. They are also equal managers of the joint estate.
While the couple is equally responsible for the management of their joint estate, certain transactions require consent from the other spouse. In these cases, written consent might be required.
All assets that one spouse acquired prior to the marriage, as well as the assets accumulated during marriage, will fall into the joint estate. This means that once the marriage is terminated, all of the assets will be calculated and divided between the two parties.
The only asset that may be excluded from the joint estate is an inheritance.
The liabilities incurred either before or during the marriage forms part of the joint estate. This means that if one spouse enters the marriage with a lot of debt, that debt will form part of the joint estate, and both parties will be liable for the payment thereof.
When a spouse enters into a contract without the consent of the other spouse - when consent is required - the law will favour the third party with whom the contract was made.
If the third party was oblivious to the fact that consent was not given, the contract will be deemed valid. The innocent spouse is, however, protected in these situations, and when the marriage is terminated, that spouse will be compensated accordingly.
The disadvantages to a community of property contract will affect both spouses. For example, if a spouse is financially reckless, then a result will be that the other spouse becomes liable for those debts incurred.
Also various transactions will require both spouses to give consent before being completed.
If each spouse runs their own individual business, then being married in community of property will render their businesses vulnerable to creditors who will make claims against both spouses. Very little can be done in such instances to protect the other spouse from this vulnerability.
The reputation of both partners becomes endangered as a result of liabilities from before and during the marriage that were added to the joint estate.
In the end, the only advantage to couples marrying in community of property is that it encourages a relationship of equality for both legal and financial matters.
Hope is not lost for couples who married in community of property. Such couples who wish to change their matrimonial contract later on are able to do so.
For legal advice on matrimonial regimes like community of property, or to change your current matrimonial regime, contact our attorneys at Van Deventer and Van Deventer Incorporated today.
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Before registering an antenuptial contract, the agreement needs to be notarised by a practicing notary attorney who has no personal relation to either one of the spouses.
Read More ...Posted by Cor van Deventer on Tuesday, October 22, 2019 Views: 83