087 822 1639
Skip to content 087 822 1639
What happens when an excluded asset is sold, replaced, reinvested or mixed with other funds
If an asset is specifically excluded from accrual in an antenuptial contract, the exclusion is not automatically lost when that asset is later sold or replaced — but the spouse relying on the exclusion must prove that the asset now owned at divorce is genuinely connected to the one originally excluded. South African law recognises that a later asset may also be excluded where it was acquired by virtue of the spouse’s possession or former possession of the original excluded asset. The connection between the two must be established, and that is where most disputes arise.
The legal question is often no longer simply:
“Was the original asset excluded?”
It becomes:
“Can the spouse prove that the asset now owned at divorce is genuinely derived from the asset that was originally excluded?”
This article provides general information about South African matrimonial property law. It does not constitute legal advice and does not predict the outcome of an individual matter.
| Question | General position |
Can an excluded asset remain protected after it is sold? | Potentially. The proceeds or replacement asset may remain excluded if the required connection can be established. |
Is a replacement asset automatically excluded? | No. The spouse relying on the exclusion must establish the legal and factual basis for it. |
Who bears the burden of proof? | The spouse alleging that the present asset is excluded. |
What if excluded and non-excluded funds are mixed? | A partial rather than complete exclusion may result, depending on the facts and the wording of the ANC. |
What if borrowed money is also used? | The source of the loan, repayments and other contributions may become relevant. |
Does every later asset linked to the spouse remain excluded? | No. A genuine replacement or derivative asset is different from an unrelated asset acquired later. |
Why do records matter? | Because the connection between the original excluded asset and the present asset may need to be proved many years later. |
An ANC subject to accrual may expressly exclude a particular asset.
Examples include:
Our guide to excluding assets from accrual deals with the drafting and identification of those exclusions.
This article deals with a different problem: what happens when the original excluded asset later changes form?
For example:
The original shares no longer exist. The issue is whether the later property can still be linked to the excluded shares.
Section 4(1)(b)(ii) of the Matrimonial Property Act 88 of 1984 recognises that, when accrual is calculated, an asset excluded in terms of the ANC may be left out of account together with another asset acquired by virtue of the spouse’s possession or former possession of that excluded asset.
The wording is important. It does not create a blanket exclusion over everything the spouse acquires after marriage. There must be a sufficient connection between the asset originally excluded and the asset later claimed to be excluded.
The Supreme Court of Appeal dealt directly with this issue in ST v CT (1224/16) [2018] ZASCA 73; [2018] 3 All SA 408 (SCA); 2018 (5) SA 479 (SCA).
The Court confirmed that the spouse who alleges that an asset should be excluded from accrual bears the burden of proving the exclusion. Where a current asset is said to derive from an earlier excluded asset, that spouse must also establish the necessary nexus between the two.
That principle is central to replacement-asset disputes. A spouse cannot simply say: “I had excluded assets when we married, therefore my present assets are excluded.” The connection must be demonstrated.
Assume a spouse owned shares before marriage. The ANC specifically excluded those shares from accrual.
Ten years later:
If the documentary evidence establishes that sequence, there may be a strong basis for treating the property as an asset acquired by virtue of the original excluded shares. The key is the evidential chain.
Tracing is the process of following excluded value as it changes form. A simple chain may look like:
Excluded shares → sale proceeds → investment account → replacement property
The longer and more complicated the chain becomes, the harder it may be to prove. Over a long marriage:
Tracing therefore becomes an evidential exercise, not merely an accounting label.
This is one of the most important practical issues. An asset does not necessarily become wholly excluded simply because some excluded money was used to acquire it.
In ST v CT, the Supreme Court of Appeal dealt with an asset whose value was attributable partly to excluded resources and partly to non-excluded resources. The Court rejected an all-or-nothing approach and assessed a fair and reasonable ratio between the excluded and non-excluded contributions to the asset’s value.
That is a significant principle. Where mixed funding exists, the real question may be: what proportion of the present value is fairly attributable to excluded resources?
Assume an excluded investment is sold for R4 million. The spouse then buys a property for R6 million using:
It would be unsafe simply to assume that the whole R6 million property is excluded. The source of each contribution, the wording of the ANC and the later financial history of the asset may all matter. Depending on the facts, only part of the present value may qualify for exclusion.
Borrowed funds can complicate the analysis further. Suppose a spouse uses R3 million from an excluded asset as a deposit and a R4 million mortgage loan to purchase a R7 million property.
If the mortgage is later repaid from salary or other non-excluded resources, the property is not necessarily attributable entirely to the original excluded capital. Relevant questions may include:
ST v CT demonstrates that liabilities and later contributions cannot simply be ignored when determining the excluded and non-excluded components of an asset.
The same difficulty arises where excluded funds are used not to buy a new asset, but to improve one that already exists. Examples include:
Using excluded capital does not automatically convert the entire improved asset into an excluded asset. The relationship between the excluded contribution and the later value must be analysed.
A replacement asset must also be distinguished from an entirely new asset acquired independently during the marriage.
In B F v R F (2017/5018A) [2018] ZAGPJHC 699; 2019 (4) SA 145 (GJ), the husband had excluded minority shareholdings he owned at the commencement of the marriage. By dissolution, he owned additional shares acquired during the marriage.
The full bench held that the additional shares were not automatically excluded merely because the original shareholding had been excluded. The judgment emphasised that section 4 does not permit a spouse to exclude unrelated assets simply because they are acquired later in the same company.
The distinction is therefore: replacement or derivative asset versus unrelated future asset. That difference is central to the accrual system.
The Gauteng High Court revisited ANC validity and future-asset exclusions in W.L.F (nee V.F) v R.S.F (Trial-within-a-trial) (2019/15013) [2026] ZAGPJHC 228.
The judgment discusses and relies on B F v R F — referred to in the judgment as “the Sutherland judgment” — for the principle that an ANC cannot be used to exclude assets that did not yet exist and were not connected to existing excluded property at the commencement of the marriage.
The case is useful as recent supporting authority. Because it arose as a trial-within-a-trial ruling, and its own central question concerned whether the ANC had been validly executed before the marriage rather than the future-asset exclusion point directly, this article treats it as supplementary rather than primary authority. The main replacement-asset principles remain most securely grounded in the Matrimonial Property Act, ST v CT and B F v R F.
Business interests can create particularly difficult tracing problems. During a marriage:
The fact that a present asset is commercially connected to the original business does not automatically prove that it is legally derived from the excluded asset. The corporate history and the source of the later asset need to be reconstructed.
Depending on the asset, useful documents may include:
A clear documentary chain can materially reduce the cost and complexity of a later dispute.
Moving excluded proceeds through several accounts does not necessarily destroy the exclusion. But it may make proof considerably harder. A possible chain might be:
Excluded asset → sale proceeds → current account → investment account → new asset
If the transfers can be reconstructed from bank and investment records, the connection may still be proved. The problem becomes more difficult where the same accounts also contain salary, bonuses, ordinary savings, business income, investment income, and other non-excluded funds. Repeated mixing, withdrawals and reinvestment can make attribution increasingly difficult.
A person who excludes a substantial asset in an ANC should retain records showing what happens to that asset during the marriage. Ideally, those records should show:
This is particularly important for businesses, private-company shares, investment portfolios, and high-value property.
The statute provides the legal framework, but the wording of the ANC remains important. Some ANCs expressly refer to sale proceeds, substituted assets, replacement assets, assets acquired with the proceeds of excluded assets, or other consequences of an excluded asset changing form. Others are less precise.
Where the wording is disputed, the court may need to interpret what the spouses actually agreed and determine how that agreement operates together with the Matrimonial Property Act. That is why careful drafting at the outset remains important.
If divorce proceedings are already under way, the tracing exercise becomes retrospective. The legal team may need to reconstruct many years of transactions through bank records, company records, property transfers, investment statements, financial statements, valuations, and forensic accounting evidence.
The more complex the history, the more expensive the exercise may become. That is particularly true in high-value divorces involving companies, trusts, investment structures, multiple properties, and mixed sources of funding.
Potentially. The spouse relying on the exclusion must be able to establish the legal and factual connection between the original excluded property and the proceeds.
Possibly, but not automatically. The replacement property must be linked sufficiently to the excluded resources.
A partial exclusion may result. ST v CT confirms that where excluded and non-excluded resources contribute to an asset, the issue should not necessarily be treated as all-or-nothing.
That can create a serious evidential problem because the spouse relying on the exclusion bears the burden of proving it.
No. A replacement asset derived from excluded property is different from an unrelated future asset acquired during the marriage. B F v R F confirms this distinction.
Martin Vermaak Attorneys Inc. advises on South African matrimonial-property disputes involving antenuptial contracts, excluded assets, accrual calculations and the tracing of replacement assets.
Where an excluded business, shareholding, property or investment has been sold, restructured, reinvested or mixed with other resources, the legal analysis should begin with: what the ANC excluded; what happened to that asset; what proceeds or value were received; how those proceeds were used; whether other resources were introduced; and whether the present asset can be proved to derive from the original exclusion.
The question is not simply whether an excluded asset once existed. The question is whether the excluded value can still be identified and proved.
For related guidance, see MVA’s articles on Marriages with Accrual in South Africa.
Author: Martin Vermaak, B.Proc, LLB
Attorney of the High Court of South Africa | Director, Martin Vermaak Attorneys | Over 20 years’ experience in divorce and family law
Disclaimer
This information has been prepared for general educational purposes only and is not intended to constitute legal, financial, tax or other professional advice. South African family law is fact-specific, and the applicable legal position may depend on the circumstances of the individual matter. Readers should obtain independent professional advice appropriate to their circumstances before making legal, financial or other decisions.
Copyright © 2026 Martin Vermaak Attorneys. All rights reserved.
Terms of Use Privacy Policy
BannerText_Seraphinite Accelerator