How are assets redistributed if I change my marriage contract, which is in community of property?

The long answer

Changing your marriage contract or regime is something that has to be done through the High Court. It is a complicated process and you would not be able to do it without an attorney. It would involve both you and your wife jointly approaching the High Court to make an application asking that your marriage change from being in community of property to being out of community of property without accrual.

All your and your wife’s creditors would have to be notified of the proposed change and they would have the right to object. Credit providers like the banks might object if they felt it would prejudice their interests – in other words, make them less likely to profit. 

If your marital regime was changed from in community of property to out of community of property without accrual, you and your wife would have your own separate estates and there would be no sharing of assets on divorce, unless the court granting the decree of divorce ordered a redistribution of assets between you in terms of Section 7(3) of the Divorce Act.

The redistribution of assets by court order could be made by a judge if the court found it just and equitable in terms of the contribution, obligations and economic circumstances of the parties divorcing.

When the Matrimonial Property Act (MPA) came into effect in 1984, it introduced the concept of with or without accrual to out of community marriages. When accrual is included, a spouse is entitled to share in the growth of the two estates at divorce.

So, in 1984, there were three marital regimes that spouses could choose from: 

• In community of property;

• Out of community of property with accrual;

• Out of community of property without accrual.

But in terms of the MPA, Section 7(3) redistribution of assets by court order could only apply to marriages before 1984. 

However, on 22 May 2022, the Pretoria High Court ruled in the case of Greyling vs the Minister of Home Affairs that it was unconstitutional for the Divorce Act not to allow a court to make a “redistribution of assets” order in terms of Section 7(3) for spouses married out of community of property without accrual after 1984. The court found it was unfair to women, particularly, for redistribution of assets not to be allowed to be made an order of court upon divorce for marriages out of community of property without accrual that took place after 1984.

As the legal professionals note on divorcelaws.co.za, “The main downside of a marriage out of community of property with the exclusion of the accrual system, is that no matter how long the marriage has survived and how much the economically disadvantaged party has contributed to the other party's economic and financial success, the economically disadvantaged party does not have a right to share in the latter's increases. The benefit of a system of complete separation for the economically active party is that at the breakup of the marriage through divorce, he or she reaps the fruits of both spouses' contribution, since only one estate increased during the time of the marriage. Women are, still, predominantly found in the position of the economically disadvantaged party. This is an international phenomenon and not distinctive to the South African context.”

The Pretoria High Court ruling must still be confirmed by the Constitutional Court.

As you have noted in your email, it seems that your wife would prefer to divorce than to change your marital contract. Another article from divorcelaws.co.za notes that upon divorce, “The parties have full contractual freedom to either apply the matrimonial property regime applicable to their marriage or to draw up a settlement agreement that they find better suited to their specific circumstances.” In other words, a divorce settlement agreement can override the terms of a couple’s marital regime. 

If, upon divorce, you and your wife agreed on a division of your joint estate, a settlement agreement could be drafted to be incorporated into the decree of divorce and made an order of the court. If you and your wife did not reach an agreement on how to divide your joint estate, the court could appoint a liquidator to realise and divide the assets on behalf of the court.

So, whether you change the marital regime, which must be by agreement with your wife, or get divorced, there will likely be a great deal of discussion and negotiation and it would have to involve attorneys.

Wishing you the best,
Athalie