Sunday, 23 August 2009

reckless, superficial and irresponsible advice

Roland Darroll BA.LLB (UCT) BA (Psych) (UNISA) Tax Cert (UCT)
Si parla Italiano. Entitled to appear in the High Court
In association with Ince Wood & Raubenheimer,
Attorneys, Notaries & Conveyancers, Cape Town

Dear Robert

Your “rough guide” [Sunday Times “Money” 23 August 2009, page 16] was alarmingly rough:

1. “Customary marriages are deemed to be in community of property unless couples draw up an ante-nuptial contract.” Section 1 of The Recognition of Customary Marriages Act 120 of 1998 defines a “customary marriage” as a marriage concluded in accordance with customary law, ie the customs and usages traditionally observed among the indigenous African peoples of South Africa and which form part of the culture of those peoples. This has nothing to do with the choice of matrimonial property regimes under the South African common law. Customary marriage has concepts such as the kraal (household); the kraalhead; the payment of ikhazi, the ubulunga beast and so on. It applies only to the tribal facet of our common society’s diamond. It is also polygamous in that a husband in a customary marriage is able to have more than one wife. It is not legally possible for a party contemplating a customary marriage to enter into an ante-nuptial contract because its matrimonial property regime is predetermined. It certainly is not possible for a customary marriage to be “deemed to be in community of property” as you allege. The matrimonial property regime that applies to customary marriages provides that the kraalhead is the sole owner of the “household property” as a whole, while the wife concerned has “full status and capacity” on the basis of equality with her husband in relation to her own “house property” only. I doubt whether you were addressing yourself to that audience. Few of them would be reading the Sunday Times.

2. “Bonds are registered in the names of both spouses, so cannot be bought or sold without consent.” Bonds as such cannot be bought or sold at all. A bond is security over property belonging to the debtor for money which he has borrowed from the bondholder, entitling the latter to have a secured claim against the proceeds of the sale of such property should the amount of the loan not be repaid. It is the underlying property that is bought and sold. A bond is then registered against that property in favour of the person or entity that has granted a loan to the owner of the property.

3. “Community of property complicates divorce”. Why ? Just because a divorcing party delays regularising the provisions of the divorce order, which you cite as an example ? This is a very narrow and unusual circumstance. In a community of property divorce the net assets of the joint estate are simply split down the middle with each party taking their own half. There are therefore normally no complications whatsoever.

4. ”... widows starving while waiting for their late husband's estate to be wound up”. This can occur just as easily in a community of property marriage or one without accrual where the survivor has no significant assets.

5. “ANC with accrual means that while assets owned before marriage remain separate, wealth acquired through joint effort after the marriage is pooled.” Wrong. In a with-accrual marriage, wealth is acquired by each of the parties separately both before and after the marriage. There is no change in the patrimonial marriage relationship between the parties to the marriage before as opposed to after the marriage. This is because the accrual only comes into effect once the marriage has come to an end. Only then, and not when “wealth is acquired through joint effort after the marriage”, is such wealth pooled and divided.

6. The accrual system “will be a problem should the first-dying spouse have the larger estate. The accrual claim will then be a liability in the estate and the accrual claim will be paid out ... before any bequests and inheritances.” Why should this be a problem ? It is in fact an advantage to the surviving spouse because, as you rightly state, payment of liabilities are generally made before those of bequests and inheritances.

7. “If you are planning to get divorced at the time of marriage...” Come again ? Can you possibly be serious? I know we are pretty cynical about marriage these days but I didn't realise that anyone could be planning to get divorced at the time of marriage.

8. “ANC without accrual is probably the way to go.” This is a crassly simplistic view. The accrual system has been carefully sculpted and introduced into our contemporary marriage law in order to gain the benefit of the separate estates regime during the marriage combined with what is in effect a community of property situation at its end. It allows maximum freedom to both parties to act in their own financial interests during the marriage. It also offers a great benefit to the spouse (generally the wife) who has sacrificed her financial earning capacity for a period in the interests of supporting her husband and bearing and caring for their children. Should the parties go their different ways, she is at least entitled to a significant share of the increase in his estate while she was busy caring for his offspring and providing a nest for himself and his family being therefore unable to increase hers.

ANC without accrual is probably the best way to go for middle-aged couples who have already built up substantial financial estates in their own right. Younger couples just starting out should consider the accrual alternative.

I hope that, from the above, you will realise that the reckless and superficial advice and analysis that you have offered to your readers is irresponsible to say the least. You owe them both an apology and a clarification.

Best wishes

Roland Darroll
Darrolls Attorneys

Member No. 10772

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