The validity of an antenuptial contract
John and Susan are getting married on the 5th of October 1993. They have chosen to get married by way of an Antenuptial Contract. John and Susan signed the contract on the 3rd of October 1993 in front of their attorney who had a Power of Attorney on their behalf to sign in front of a Notary, as the attorney was not a Notary, as well as in front of two witnesses. The attorney had the contract executed in front of the Notary on the 23rd of October 1993. John and Susan got married on the 5th of October 1993, in the knowledge that their marriage was out of community of property as they had signed the Antenuptial Contract on the 3rd of October 1993. John and Susan lived happily ever after or did they? John and Susan never followed up with their attorney to confirm that their Antenuptial Contract was executed by the Notary before they got married on the 5th of October 1993. They simply assumed all was in order. Once the Antenuptial Contract was registered at the Deeds Office on the 5th of November 1993, the attorney forwarded the Antenuptial Contract to John and Susan for safekeeping. Some years later, Susan decided to purchase a property in Camps Bay. She applied for a bond at Investment Bank on her name only and furnished them with all the necessary documents to assist with the qualification of the Bond, including the Antenuptial Contract. The Legal Risk department, after perusing Susan’s documents, questioned the legality of the Antenuptial Contract. It was signed on the 3rd of October 1993, two days before the marriage, and registered at the Deeds Office on the 5th of November 1993, within the three months of execution, so why is the legality of the Antenuptial Contract being questioned? Upon closer scrutiny of the Antenuptial Contract, it was noticed that the Antenuptial Contract, although signed by John and Susan two days before their marriage, was only executed by the Notary on the 25th of October 1993, which is after their marriage was solemnised. In terms of Section 87 of the Deeds Registry Act 47 of 1937, the contract must be executed by a Notary before the date of marriage, failing which the contract is invalid and the parties are declared to be married in community of property. Thus, Investment Banking will now require John to sign a spousal consent form, and the property will form part of both John’s and Susan’s estate. In terms of Section 21(1) of the Matrimonial Property Act 88 of 1984, John and Susan may approach the High Court by bringing an application to have the Antenuptial Contract declared valid. Although a lengthy and expensive process, it is not impossible to have the marriage regime rectified to constitute marriage out of community of property. In summary, if you are marrying and your intention is to be married out of community of property, you should be aware that entering into an Antenuptial Contract is not a quick process. The governing legislature must be taken into account and followed precisely in order for the Antenuptial Contract to be valid. Therefore, contact your attorney at least three months before the wedding date to ensure that there is adequate time for the Antenuptial Contract to be signed by you and your partner, in front of two witnesses and attested before the Notary before the wedding date. If you have not signed in front of the Notary but in front of your attorney who has a power of Attorney, follow up with your attorney if to ensure that the contract has been attested by the Notary before you get married so that you can ensure you live happily ever after. Reference List: Deeds Registry Act 47 of 1937 Matrimonial Property Act 88 of 1984 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)
Vital changes coming to the Maintenance of Surviving Spouses Act
“Should a person who has shared her home and life with her deceased partner, born and raised children with him, cared for him in health and in sickness, and dedicated her life to support the family they created together, be treated as a legal stranger to his estate, with no claim for subsistence because they were never married? Should marriage be the exclusive touchstone of a survivor’s legal entitlement as against the rights of legatees and heirs?” SACHS J Volks N.O. v Robinson [2005] ZACC 2; 2009 JDR 1018 (CC) In 2016, statistics revealed that approximately 3.2 million South Africans live together as co-habitants outside the boundaries of marriage. South African common law has also significantly been developed to accommodate the rights of people who choose to cohabit outside of marriage. In light of this, it seems that South African Courts have accepted that cohabitation outside of marriage is now widely practised and accepted across the globe. This is evidenced in the Judgment handed down by the Constitutional Court in Bwanya v The Master of the High Court Cape Town (The Bwanya Case). The Apex court was left with the task of deciding whether the definition of “Survivor” as defined in Section 1 of the Maintenance of Surviving Spouses Act was invalid and resultantly unconstitutional to the extent that it does not include the words “surviving partner of a permanent life partnership terminated by death”. Ms Bwanya and the deceased Mr Anthony Ruch were involved in a relationship that consisted of all the characteristics of a marriage. In 2014, Ms Bwanya moved in with Mr Ruch on a permanent basis, they attended many social gatherings together, and Mr Ruch often introduced Ms Bwanya to his friends as his wife. In 2015, the couple even planned to conceive a child to solidify their relationship. In the same year, Mr Ruch also proposed to Ms Bwanya and they planned to get married in 2016, after the Labola negotiations. Mr Ruch, however, passed away in November 2016. After Mr Ruch’s passing, Ms Bwanya lodged a claim for maintenance against Mr Ruch’s estate in terms of the Maintenance of Surviving Spouses Act. The basis for her claim was that the permanent life partnership shared between herself and Mr Ruch had most, if not all, the characteristics of a marriage. Her claim was rejected by the executor on the basis that she was not married to Mr Ruch. Ms Bwanya then challenged the constitutionality of sections 1 and 2 (1) of the Maintenance of Surviving Spouses Act. Section 2(1) of the Maintenance of Surviving Spouses Act provides that a surviving spouse has the right to lodge a maintenance claim against his or her deceased spouse’s estate if they are unable to support themselves. Section 1 of the Act defines a “survivor” as the surviving spouse in a marriage dissolved by death. The Court in the Bwanya Case had to consider whether the exclusion was still merited. The Apex Court took cognizance of the increasing popularity of permanent life partnerships and the creation of many families within this category. In the words of J. Madlanga, “We should be wary not to so emphasise the importance of the institution of marriage as to devalue, if not denigrate, other institutions that are also foundational to the creation of other categories of families. And this must be so especially because the other categories of families are not only a reality that cannot be wished away, but are on the rise.” The court found that all categories of families deserve legal protection, including permanent life partnerships. The court also emphasised that permanent life partnerships are intimate relationships that are meant to last until the death of one or both partners and that it is a relationship that is often characterised by a reciprocal duty of support. In light of the above, the Constitutional Court ruled that the exclusion of permanent life partnerships in the definition of “survivor” as found in Section 1 of The Maintenance of Surviving Spouses Act was constitutionally invalid. In the same breath, the Court also found that Section 2(1) of the Maintenance of Surviving Spouses Act was constitutionally invalid to the extent that it only confers a maintenance benefit on a surviving spouse. The order in the Bwanya Case brings about a significant change in South African Law. Prior to the judgment, a surviving partner of a permanent life partnership could not claim maintenance from their deceased partner’s estate. Now, both heterosexual and same sex life partners can now claim maintenance benefits from their deceased life partner’s estate. The Legislature has now been given 18 months to take steps to cure the constitutional defects in the Maintenance of Surviving Spouses Act. Our family law experts are more than capable to provide sound legal advice to anyone seeking further advice on maintenance claims. 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)
Can I claim interim relief pending my divorce suit?
Divorce can often be an extremely stressful and exasperating process, and even more so when one spouse enjoys complete financial stability and the other has to endure a dire financial position. Such cases clearly create a huge imbalance amongst parties to the divorce suit. South African law, however, provides relief for a party who may be prejudiced by this imbalance. A spouse who plans on filing for a divorce or is currently in the process of getting divorced, may bring an application to the High Court for interim relief in terms of Rule 43 (or in terms of Rule 58 if the application is brought in the Magistrate’s Court) for an order granting any of the following: Interim Maintenance (including child and spousal maintenance); interim custody of the children and/or interim access to the children; and/or a contribution towards the legal costs of the pending divorce proceedings. The purpose of a rule 43 application A rule 43 application provides a relatively speedy and inexpensive remedy when maintenance is sought while the divorce proceedings are pending. Divorce proceedings can often be an extremely lengthy process and can, in some instances, take years to finalise. It is for this reason that a rule 43 application is available to a party seeking interim relief. The procedure to obtain interim relief in terms of rule 43 An application for interim maintenance can be served on the other spouse prior to the issuing or service of a divorce summons, simultaneously with the divorce summons, or after a notice of intention to defend is received. The spouse seeking interim relief (the applicant) will have to file what is known as a ‘founding affidavit’ with the High Court. The founding affidavit must set out all the relevant facts related to the divorce and why the applicant is of the opinion that they are entitled to interim maintenance/relief from the other spouse (the respondent). The applicant will need certain prescribed documentation to file an application for interim maintenance, including: A notice in terms of rule 43, requesting the respondent to file an opposing affidavit within 10 days from receipt of the application; an affidavit accompanying the rule 43 notice; and an annexure setting out the applicant’s assets and expenses. It should be kept in mind that a rule 43 order is an interim order and thus cannot be appealed. The rule 43 order remains in force until the parties to divorce proceedings settle or until the divorce is finalized. It is, therefore, of extreme importance that all relevant documents needed for the application are in order and sound legal advice is sought and obtained before bringing the application before a court. We have a number of professionals in our family law department who can assist you with your application. 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)
Transfer of assets between spouses: What are the tax implications?
Section 9HB of the Income Tax Act provides for a roll-over of a capital gain or loss when an asset is transferred between spouses during their lifetimes. The roll-over is mandatory, and spouses do not have the option to elect out of it. The policy rationale for the roll-over is that the transferor spouse must benefit from not immediately having tax exposure on a transaction since the transferee spouse will pay the downstream tax when they eventually dispose of an asset, or when it becomes part of the estate. Importantly, the roll-over relief in section 9HB will not apply when a person disposes of an asset to a spouse who is not a resident. On a practical level, the relief works as follows: The disposing spouse (transferor spouse) must disregard any capital gain or loss when disposing of an asset to his or her spouse (transferee spouse). The transferee spouse takes over all aspects of the history of the asset from the transferor spouse. The transferee spouse is deemed to have: acquired the asset on the same date that the asset was acquired by the transferor incurred an amount of expenditure equal to the expenditure that was incurred by the transferor in respect of that asset incurred that expenditure on the same date and in the same currency that it was incurred by the transferor used that asset in the same manner that it was used by the transferor Notably, apart from outright transfers, the following events are treated as disposals between spouses: (a) A deceased spouse In the event of the death of one spouse, the resident surviving spouse must be treated as having disposed of an asset to that spouse immediately before the date of death – if the deceased estate of that spouse acquires ownership of that asset in settlement of a claim arising under the Matrimonial Property Act. (b) A divorce or court order A person must be treated as having disposed of an asset to his or her spouse if that asset is transferred to that spouse in the following cases: Divorce A religious marriage or civil union, where an agreement of division of assets has been made an order of court. The special rules under section 9HB must be considered to determine the tax implications when a person disposes of an asset to his or her spouse. While providing for a roll-over of a capital gain or capital loss when an asset is transferred between spouses during their lifetimes, it also ensures that a resident spouse to whom an asset is disposed of, takes over all aspects of the history of the asset from the transferor spouse. 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)
Matrimonial property regimes
My partner and I are getting married soon and have heard about the different matrimonial property regimes one can enter but I am not sure what the difference is and what each one entails. There are three types of matrimonial property regimes in South Africa. The three are marriage in community of property, marriage out of community of property with the inclusion of the accrual system and marriage out of community of property with the exclusion of the accrual system. When parties decide on either of the two latter, they must enter into a contractual agreement with one another before a notary public. It is important to understand what they all entail before one gets married. Marriage in community of property is the so-called “default” regime, because all marriages are deemed to be in community of property if an Antenuptial Contract is not concluded before the marriage. This is also the most popular regime because it is the easiest one to conclude. When two parties get married in community of property, their estates will be joined together. Every asset and liability each party had before getting married and acquires during the marriage will become one estate and on dissolution of the marriage, the estate will be divided equally between the parties. This system is based on the theory that each spouse, whether employed or at home running the household, contributes equally to the marriage and on dissolution of the marriage is entitled to share equally in the joint estate. It is important to note that when one enters this type of matrimonial regime, in some instances consent will be needed from the other party. One of the biggest disadvantages of this system is that if one party incurs debt, the debt will form part of the joint estate. When one enters into a marriage out of community of property with the accrual system, it means that the parties entered into a contractual agreement with one another, which is known as an Antenuptial Contract. This contract must be entered into before a notary public and has to be registered at the Deeds Office. In this regime, the two estates of the spouses before the marriage remain separate. No consent will be needed from the other spouse in order to handle his/her own affairs. The accrual system will be applicable at the dissolution of the marriage or upon death, whichever may occur first. What happens with the accrual is that whatever the parties acquired during the existence of the marriage, will be compared and the half of the difference in accrual will be owed by the estate which shows a larger accrual. On dissolution of a marriage out of community of property with the accrual system, inheritances and donations received by a spouse from a third party will not be included in the accrual. In a marriage out of community of property without the accrual system, each party’s estate will remain separate. This system enables parties to control their own estate and affairs independently and on the dissolution of marriage, the parties will retain their own assets and liabilities. It is important to note that even if parties are married out of community of property excluding the accrual system, both parties will have to contribute to the household as a married couple – it is one of the duties that arises from 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)
Matrimonial property regimes
My partner and I are getting married soon and have heard about the different matrimonial property regimes one can enter but I am not sure what the difference is and what each one entails. There are three types of matrimonial property regimes in South Africa. The three are marriage in community of property, marriage out of community of property with the inclusion of the accrual system and marriage out of community of property with the exclusion of the accrual system. When parties decide on either of the two latter, they must enter into a contractual agreement with one another before a notary public. It is important to understand what they all entail before one gets married. Marriage in community of property is the so-called “default” regime, because all marriages are deemed to be in community of property if an Antenuptial Contract is not concluded before the marriage. This is also the most popular regime because it is the easiest one to conclude. When two parties get married in community of property, their estates will be joined together. Every asset and liability each party had before getting married and acquires during the marriage will become one estate and on dissolution of the marriage, the estate will be divided equally between the parties. This system is based on the theory that each spouse, whether employed or at home running the household, contributes equally to the marriage and on dissolution of the marriage is entitled to share equally in the joint estate. It is important to note that when one enters this type of matrimonial regime, in some instances consent will be needed from the other party. One of the biggest disadvantages of this system is that if one party incurs debt, the debt will form part of the joint estate. When one enters into a marriage out of community of property with the accrual system, it means that the parties entered into a contractual agreement with one another, which is known as an Antenuptial Contract. This contract must be entered into before a notary public and has to be registered at the Deeds Office. In this regime, the two estates of the spouses before the marriage remain separate. No consent will be needed from the other spouse in order to handle his/her own affairs. The accrual system will be applicable at the dissolution of the marriage or upon death, whichever may occur first. What happens with the accrual is that whatever the parties acquired during the existence of the marriage, will be compared and the half of the difference in accrual will be owed by the estate which shows a larger accrual. On dissolution of a marriage out of community of property with the accrual system, inheritances and donations received by a spouse from a third party will not be included in the accrual. In a marriage out of community of property without the accrual system, each party’s estate will remain separate. This system enables parties to control their own estate and affairs independently and on the dissolution of marriage, the parties will retain their own assets and liabilities. It is important to note that even if parties are married out of community of property excluding the accrual system, both parties will have to contribute to the household as a married couple – it is one of the duties that arises from 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)
Maintenance of surviving spouse
The idea of freedom of testation is a core value of South African law and enjoys wide protection. The Maintenance of Surviving Spouses Act, 27 of 1990, was drafted to give a spouse legal recourse if disinherited or negatively affected by the wishes of the testator, or in the case of intestate succession. The goal of this piece of legislation is to ensure a person is not left destitute after the death of their spouse. Who can claim? The definition of the Act describes a surviving spouse as follows: “survivor means the surviving spouse in a marriage dissolved by death.” What can be claimed? Section 2(1) of the Act determines as follows: “If a marriage is dissolved by death after the commencement of this Act the survivor shall have a claim against the estate of the deceased spouse for the provision of her reasonable maintenance needs until her death or remarriage in so far as she is not able to provide therefor from her own means and earnings. What is the definition of own means? “own means” include any money or property or other financial benefit accruing to the survivor in terms of the matrimonial property law or the law of succession or otherwise at the death of the deceased spouse.” What is reasonable maintenance means? Section 3 of the Act determines as follows: “Determination of reasonable maintenance needs – In the determination of the reasonable maintenance needs of the survivor, the following factors shall be taken into account in addition to any other factor which should be taken into account: The amount of the estate of the deceased spouse available for distribution to heirs and legatees; The existing and expected means, earning capacity, financial needs and obligations of the survivor and the subsistence of the marriage; and The standard of living of the survivor during the subsistence of the marriage and age at the death of the deceased spouse.” The executor of the deceased estate has to take the requirements above into account when determining the amount of the claim against the estate. 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)