What couples need to know about community of property and estate planning

IN A marriage in community of property, both spouses jointly own a single estate in equal, undivided shares. However, what many couples fail to consider is that the death of one spouse triggers the winding-up of the entire joint estate. This process can have far-reaching and sometimes unintended financial consequences for the surviving spouse, especially where no proper estate plan is in place.

- SHERRY TAPFUMA

Winding up your joint estate

On the death of the first-dying spouse, the joint estate ceases to exist, and the appointed executor is legally required to wind it up in its entirety. This includes settling all liabilities in the estate, regardless of which spouse incurred the debt or whether it was acquired before or after the marriage. In other words, both spouses are jointly and severally liable for the debts of the estate, even if a specific debt was registered in only one name. Once debts are settled, the surviving spouse must formally claim their 50% share of the net estate, while the deceased's remaining 50% is distributed to their heirs and beneficiaries.

Problems can arise where the first-dying spouse dies heavily indebted or where assets are bequeathed in a way that conflicts with the surviving spouse's financial needs. Case study: Consider Mr and Mrs Dlamini, who are married in community of property. Their estate comprises a R2 million home and R3m in unit trusts. Unknown to Mrs Dlamini, her husband owes R2m to creditors due to a failed business venture.

In his will, Mr Dlamini bequeaths his 50% share of the family home to his adult daughter from a previous relationship.