When a couple gets married and enters into an ante nuptial contract the accrual system is automatically included in terms of the Matrimonial Property Act No. 88 of 1984. The accrual system should be expressly excluded in the ante nuptial contract, if the intention is that it should not be applicable to the marriage.
At the dissolution of the marriage, by way of divorce or death of one or both the spouses, the spouse or estate which shows the smaller accrual acquires a claim against the other spouse or estate for an amount equal to half the difference between the accrual of the respective estates of the spouses. This could become problematic in the case of the spouse with the smaller accrual dying first and that estate having an accrual claim against the surviving spouse. One way to overcome this issue is for the spouse with the smaller accrual to bequeath an amount equal to the accrual claim to the surviving spouse in his/her Will.
The application of the accrual system can also mean that bequests to beneficiaries in a Will do not end up in their hands, as the accrual claim has to be settled first. An option is for the bequests to the surviving spouse with the accrual claim, to specifically include the accrual claim, or for bequests to him/her to be subject to him/her renouncing the accrual claim. Careful planning needs to be done in such a case, as donations tax may be levied if the inheritance received by the spouse with the accrual claim is less in value than what the accrual claim would have been.
When an ante nuptial contract is entered into, the spouses may specify in the contract which assets are to be excluded from the accrual system- this has to be done and signed before the date of marriage. There are, however, certain assets which are excluded from the accrual system in terms of the Matrimonial Property Act No. 88 of 1984. These include an inheritance, a legacy or a donation which accrues to a spouse during the subsistence of his/her marriage, as well as any other asset which was acquired by virtue of the possession of or former possession of such inheritance, legacy or donation.
Other exclusions from the accrual calculation are donations between spouses, any amount which accrued to a spouse by way of damages other than for patrimonial loss, the proceeds of a ceded policy on the life of a deceased spouse, the proceeds of a policy on the life of a deceased spouse payable to a nominated beneficiary, and lump sum benefits payable to a nominated beneficiary on the death of a member from a pension or retirement fund or group life insurance.
Kindly contact marteen@fidelisvox.co.za or tamryn@fidelisvox.co.za for any advice with regard to the structure of your Will or estate plan when you are married with the accrual system applicable to your marriage.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)