Latest news with #MatrimonialPropertyAct88
IOL News
02-06-2025
- Business
- IOL News
Navigating spousal status and marital regimes for better financial planning
Explore the critical aspects of spousal status and marital regimes in South Africa, and learn how these factors influence your financial and estate planning decisions. Determining whether a person is married for legal purposes and tax purposes is paramount in their financial or estate planning journey. Of further importance is whether a marriage is in or out of the community of property. The proprietary ownership of assets in marriages in South Africa is governed by the Matrimonial Property Act 88 of 1984. The Act requires that people who wish to marry need to decide, before their marriage, whether they wish to enter into an ante-nuptial contract or not. In financial planning and estate planning, there are certain benefits that come with being a spouse, and because of this, the definition of 'spouse' is important. These benefits include: · Bequests (in terms of a will) to a spouse are free from estate duty in terms of the Estate Duty Act · Transfers of assets between spouses are free of capital gains tax in terms of the Income Tax Act · Donations to a spouse are free from donations tax in terms of the Income Tax Act. · Transfers of property between spouses are free from Transfer Duty With so many blurred areas on what exactly defines a spouse, let us have a look at what qualifies one as a spouse, specifically in the context of income tax, capital gains tax, estate duty, transfer duty, and donations tax. The following people are considered to be spouses: A partner in a marriage or customary union recognised in terms of South African law. A partner in a union recognised as a marriage in accordance with the requirements or practices of any religion. A partner in a same-sex or heterosexual union, which the Commissioner is satisfied is intended to be permanent. Partners, therefore, do not have to be married to enjoy the tax benefits of married spouses. There are, however, certain instances where these partners will not automatically benefit from the same protection that a married spouse has, for example, on death if there is no will. There are three marital regimes in the Matrimonial Property Act: Marriages without an antenuptial contract, called in community of property marriages Marriages with an ante-nuptial contract, with accrual Marriages with an antenuptial contract. without accrual Marriage in community of property A marriage is in community of property if no antenuptial contract is entered into by the spouses before marriage. On the date of marriage, the spouses' assets and liabilities are joined into one estate, with each spouse having an equal 50% claim to it. All assets and liabilities accumulated during the marriage will form part of the joint estate in the future and are shared equally between the spouses when the marriage ends, either at death or in divorce. Each spouse owns half of the joint estate, irrespective of how much they had at the beginning of the marriage or how much they each added during the marriage. On the first death, only half of the joint estate will be subject to estate duty. Any amount bequeathed to (left to) the surviving spouse is not subject to estate duty, and that spouse benefits from any unused estate allowance when they pass away. The full estate is subject to the executor's fees. Gifts or inheritances that are specifically stipulated to be excluded from the community of property estate do not form part of the joint estate. This is for example, if a spouse inherits a property, the other spouse will not be able to benefit from it at divorce, as it does not form part of the joint estate. The law also states that spouses married in community of property may not perform certain juristic acts without consent from both spouses. For example, one spouse cannot take on debt without the other's consent, as it affects their joint estate. Where this becomes important is when one spouse is sequestrated or becomes insolvent, the other immediately becomes sequestrated as well, and their joint estate becomes insolvent. If one spouse wants to set up a business when they get married, it might be prudent to set up an antenuptial contract when they get married to protect the other spouse's assets if the business fails. Marriage out of community of property The accrual system automatically applies to a marriage out of community of property after 1 November 1984 with an Ante Nuptial Contract (ANC). It can be excluded in terms of the antenuptial contract signed before the marriage. It is a document drawn up and signed in front of a notary public (such as an attorney) and is registered at the Deeds Office. A post-nuptial agreement can be entered into during the marriage, but there has to be a valid reason for this, and the application must be made to the High Court, showing that no creditors will be harmed or disadvantaged by this agreement. It is a costly application, and it is therefore easier to set it up from the start. Where there is an out-of-community property accrual system, each spouse's estate remains separate and will not require the other spouse's consent for transactions. When the marriage ends through death or divorce, the wealth acquired by the two spouses during the marriage is shared equally between the spouses. The additional value that each spouse brought into the marriage is considered, and the difference between the value gains is split so that each person's estate after marriage becomes equal. This way, a spouse who did not work and whose investments didn't grow as much will benefit from the other spouse's assets as an equal partner and is not left destitute when the marriage ends. The accrual claim by the surviving spouse reduces the value of the deceased's estate for Estate Duty purposes. If the antenuptial contract excludes accrual, there is no accrual claim. However, this is far less clear-cut these days as there are fairness issues that have come before the Constitutional Court. Amendments to the law might shortly be made to provide a sharing regime to spouses who had uneven bargaining power in marriage. Before getting married, it is essential to understand the legal and financial implications of the different marital regimes available in South Africa. The choice you make will significantly impact your future financial well-being, asset protection, and estate planning. Always consult a qualified financial adviser before entering into marriage to ensure your financial plan is aligned with your personal circumstances and goals. * Nxumalo is a financial planner at Alexforbes. PERSONAL FINANCE
IOL News
28-05-2025
- Business
- IOL News
From R200 to redemption: Soweto woman wins back home after 20-year battle with Standard Bank
After a two-decade long battle, a Soweto woman has finally got her home back Image: Standard Bank/Facebook After fighting for 20 years, a woman from Soweto has finally regained ownership of her home, where she had lived for 23 years. The house was unlawfully auctioned by Standard Bank and bought by the bank itself for just R200. It was then sold to another buyer, who later obtained a court order to evict her. This happened despite Mogudi Batsile Mosai not having signed anything – as was meant to be the case under the law – nor having received eviction papers or being aware of the eviction. In fact, her family was so in the dark as to what was going on, they even improved the property. The lengthy court matter went on for so many years until landing up in the Johannesburg High Court to finally be settled that Mogudi's husband died, she managed to get to the point where she went from studying a Masters degree (although not in law) to being accepted for a PhD on a bursary, running out of money because of her husband's medical bills, and the law and other lawyers being of no use. Mogudi, who was married to the now deceased Meshack Mogudi who died in 2013, likely due to and was a beneficiary and executor of his will, took Standard Bank to court because she wanted to reverse judgements that saw her home, which she had been living in for 23 years, sold out from under her feet and her and her children evicted. Meshack died in 2013, likely due to kidney failure, and his hospital bills for dialysis ran to some R20 000, even though the couple relied on government treatment. In July 1991, Meshack acquired a grant of leasehold from the Soweto City Council, which preceded him mortgaging the property to Standard Bank to fund a business venture. However, Mogudi didn't sign any papers, which the bank not only admits, but is also in contravention of some sections of the Matrimonial Property Act 88 of 1984. This law states that one spouse in a marriage in community of property cannot, among other things, mortgage any immovable property without their partner's signature – a clause that extends to houses. Whether the Mosais were married under this regime was a matter of some dispute, although Standard Bank conceded that the couple were married in community of property, with 'the usual consequences of such a marriage setting in,' the decision stated. In the ruling, the judge, as a side note, said that 'although nowadays academic, it should be remembered that during the apartheid regime a marriage between a black woman and a black man was taken to be out of community of property unless the parties made a declaration to the contrary to the marriage officer at least a month prior to the marriage itself'. Unfortunately, Meshack's business failed, and he fell behind on payments, which led to default judgment being granted against him in 1993 for payment of R109 011.49, interest on that amount at 16% a year from November 1993 until he settled the outstanding amount, as well as that the house could be sold to defray Meshack's liabilities in terms of the court order. The annual interest rate for the full year was 15.5% in 1993. What is key, however, as Acting Judge S van Nieuwenhuizen pointed out, was that Mogudi said that neither she nor Meshack received summons. 'The executrix [Mogudi] is adamant if it was served on the deceased she would have been made aware thereof. She also annexes a copy of the Sheriff's return of service which asserts that the summons was served on Mrs Lethollo, a person who is unknown to her. What followed was Standard Bank buying the property at auction for what the Judge called a 'paltry amount of R200'. This, said Van Nieuwenhuizen, was 'an unhealthy practice which was particularly rife amongst banks at the time,' even though the interim Constitution had come into effect. Neither of the Mosais were aware that the property had been sold to Standard Bank for a measly R200, so they carried on living there. In 2001, Servcon Housing Solutions – which the Judge said was 'purporting to act on behalf of the bank' asked Mogudi to sign a lease agreement, which she did after consulting with her husband, who was in Kenya. The judgement indicated that Mogudi was 'unaware of the significance of the document'. However, she received a letter indicating that Standard Bank accepted the rental at R904 a month, and she was also provided with a copy of the lease agreement. Mogudi argued that, as long as they continued to pay this amount, the property would remain theirs – although there were arguments before the Judge that she wasn't illiterate and should have known that there was something 'amiss' especially as, by 2007, she was studying towards a master's degree in chemistry. Yet, the Judge said that her studies didn't mean that she understood the law, and 'I have no reason to suspect that she had any comprehension of [her] legal position,' under several Acts, said Van Nieuwenhuizen. This was the case until she and her husband were advised by Fluxmans attorneys about their legal rights in 2007. Even though they were renting, they fixed the property up, spending R100 000 and the value of the property increased to around R450 000. The bank disputes these improvements in the absence of documentation, read the ruling. And then, without Mogudi's knowledge, the house was sold out from under her feet for R50 000 and then the new owner managed to, in November 2007, get the couple evicted. This is when they went to Fluxmans, which sought to halt the eviction until they could act against the bank. The application was struck down because that judge didn't view it as urgent. Then, before Meshack died, the new owner tried to confirm the validity of the eviction order, while the couple could no longer afford Fluxmans, and their new attorney who vanished, and other attorneys couldn't deal with the matter because it was complicated and complex. Even the Constitutional Court and the Public Protector were of no use as she was ignored even though Mogudi had supplied contact details. 'She and the deceased were never referred to pro bono organisations or legal aid clinics,' stated Van Nieuwenhuizen. By the time the matter got to the Johannesburg High Court, Mogudi was studying towards a PhD on a bursary and as a part-time tutor, while two of her children were also studying. Only her daughter was in full-time employment and, in addition to the sparsity of income, the family was also supporting a grandchild and an unemployed son. The judge ruled that Mogudi was entitled to get the property back from its new owner and that it can be treated as part of Meshack's estate, which means, as he had no will, it goes to the Mosai family. IOL
