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Marriage in Community of Property Pros and Cons
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Marriage in Community of Property Pros and Cons
What is a Marriage in Community of Property?
A Marriage in a Community of Property is a type of marital regime where the spouses elect to have only one estate, and all assets and liabilities are equally shared.
Usually, when a person gets married in a community of property, the spouses automatically become co-owners of all their combined assets.
The same principle applies to liabilities; the liabilities merge and form part of the joint estate.
A Marriage in Community of Property is the Default Marital System in South Africa
Should the spouses get married without signing and registering an antenuptial agreement, the marriage will automatically be “In Community of Property.”
What are the Advantages of a Marriage in Community of Property?
The main advantage is that you do not have to pay for the drafting and execution of an antenuptial agreement.
The spouses only have one estate and are equal concurrent managers of the joint estate.
If you marry a financially stronger spouse, you benefit as your estates will merge and become one joint estate.
What are the Disadvantages of a Marriage in Community of Property?
There are many disadvantages of an “In Community Estate.
The advantage that it is easy to manage a joint estate is also a disadvantage if the one spouse is financially irresponsible.
When one spouse becomes insolvent, both spouses will be declared insolvent.
Consent or even written consent is required of the other spouse in some instances.
If you are a financially successful spouse, you have to share your financial success with the financially less successful spouse.
If the spouses cannot agree about a financial transaction the transaction may not be completed if the consent of both parties is required.
If one spouse must be sequestrated, it will be the joint estate (both parties) that will be sequestrated.
The joint management of the estate can be problematic.
What powers do the spouses have when married in the community of property?
The spouses have the same powers regarding the disposal of the joint estate assets, the incurring of debts on behalf of the joint estate, and joint estate management.
Do all assets in a joint estate form part of the joint estate?
As a general rule, all assets brought into the marriage or acquired during the marriage will form part of the joint estate.
However, there are some exceptions, such as where a spouse inherits an expressly excluded asset in terms of the person’s will making the will.
An asset can also be excluded in terms of a deed of donation. For example, if a parent donates a car to one spouse and makes it a condition that the car does not form part of the joint estate, the car will be excluded from the joint estate.
Non-patrimonial Damages recovered by a spouse for a delict committed against them are their separate property and will not form part of the joint estate.
Similarly, damages resulting from a personal injury caused wholly or partly by the other spouse will not form part of the joint estate and belong to the injured spouse.
In terms of the Prevention of Organised Crime Act, a property that is, on a balance of probabilities, “an instrumentality” of an offence, the unlawful activities’ proceeds may be forfeited to the state.
When the spouses are married “In Community of Property,” it affects both spouses as they own the property in undivided shares.
This is a general discussion of the consent required by spouses in the management of the joint estate.
Written consent that two competent witnesses attest is required for the following types of transactions:
The alienation or burdening of immovable property or conferring any other real right in any immovable property that forms part of the joint estate. I.e. transactions that need to be registered at the Deeds Office.
Entering as a consumer a credit agreement in terms of the National Credit Act 34 of 2005.
As a purchaser, when entering a contract in terms of the Alienation of Land Act, 1981.
Written consent is required for the following type of transactions:
The buying or selling or disposing of shares, stock, debentures, debenture bonds, insurance policies, mortgage bonds, fixed deposits or any similar assets, or any investment by or on behalf of the other spouse in a financial institution, which forms part of the joint estate.
The selling of goods such as jewellery, coins, stamps, paintings, or any other asset that forms part of the joint estate as investments.
Withdrawing money held in the name of the spouse.
General Consent (in writing, orally, or tacitly) is required for the following type of transactions:
Alienating or burdening furniture or other everyday household items that form part of the joint estate.
Receiving any money due or accruing to the other spouse of the joint estate for any of the following.
Remuneration in any form.
Damages for loss of income in terms of any remuneration.
Inheritance, donations, bursary, or any award to the other.
Income derived from the separate property of the other spouse.
Interest or dividends derived from shares or investments.
Donate to another person any asset of the joint estate or alienate such an asset without value, excluding an asset of which the donation or alienation does not and probably will not unreasonably prejudice the other spouse’s interest in the joint estate.
No consent is required when a spouse in the ordinary course of their profession, trade, or business acts or concludes a contract to alienate immovable property, receive credit, alienate shares, buy land and sign surety, and institute or defend legal proceedings without the spouse’s consent.
Spouse’s and Third Party Rights with Joint Estates
If a spouse enters into an agreement with a third party, that does not know or cannot reasonably be expected to know that the spouse requires their spouse’s permission to enter into the transaction, that innocent third party will be protected and the transaction will be valid and enforceable.
The innocent spouse does have limited protection and can ask for an adjustment when the estate is divided at the end of the marriage.
The court may make an order on the application that waives the required consent. This type of application can be brought where the spouse’s consent cannot be obtained for whatever reason, and the court finds that a good reason exists for dispensing with the other spouse’s consent.
The court may also suspend any power a spouse has regarding the joint estate for a definite or indefinite period.
If one spouse seriously prejudices the other spouse’s interest in the joint estate, the court may order the immediate division of the joint estate.
Capacity to Litigate
Spouses that are married “In Community of Property” needs the written consent of the other spouse before they may enter into litigation unless the proceedings relate to the following:
The spouse’s separate property.
When a spouse must recover non-patrimonial damages for a delict committed against them.
In respect to the spouse’s profession, trade, or business.
Forfeiture of the Patrimonial Benefits
In terms of section 9 of the Divorce Act 70 of 1979, a court that grants a divorce has the discretion to make an order that the patrimonial benefits of the marriage be forfeited by one party in favour of the other, either wholly or in part.
It is my view that a marriage “In Community of Property” has more disadvantages than advantages, and you should avoid this marital regime.