Understanding marriage contracts: a guide to matrimonial property regimes

ONE of the most important decisions you'll make before getting married is choosing a matrimonial property regime. Your choice of a marriage contract can have far-reaching financial consequences, so it's essential to understand the pros and cons of each system before tying the knot.

- ALEX ODENDAAL

(i) In community of property

In community of property is the default marital regime where no antenuptial contract (ANC) has been signed. In the absence of an ANC, couples are automatically married in community of property - often without realising the long-term implications. One perceived advantage of this regime is that there are no upfront legal costs required to draft an antenuptial contract, although the reality is that these costs are nominal. Under this system, all assets and liabilities are merged into one joint estate, subject to a few exceptions.

As both parties are effectively working together for the benefit of the joint estate, this form of marital regime can encourage togetherness and oneness of purpose, although the fact remains that community of property remains a flawed system that has numerous disadvantages, with the management of debt being the most notable one. In a community of property marriage, both spouses are jointly liable for all debts, including debts incurred before the marriage. In a joint estate, one spouse can bind the joint estate through their actions, which can have devastating effects, especially in the case of insolvency. If one spouse is unable to pay their debts, their creditors have a claim to the joint estate, which can lead to both spouses being declared insolvent.