Monthly Archives: February 2014

How to change your marital status to another form of marriage contract

1BSection 21(1) of the Matrimonial Property Act provides that a husband and wife may apply jointly to court for leave to change the matrimonial property system which applies to their marriage.

Requirements

The decision of Lourens et Uxor 1986 (2) SA 291 (C) sets out guidelines that the court follow with regard to applications in terms of section 21(1) of the Matrimonial Property Act No. 88 of 1984.

In order for the parties to change their matrimonial property system, the act mentions the following requirements:

There must be sound reasons for the proposed change.

According to South African Law, the parties who wish to become married out of community of property must enter into an Ante nuptial contract prior to the marriage ceremony being concluded. If they fail to do so then they are automatically married in community of property.

Of course, many people are unaware of this provision and should be able to satisfy the court that it should change their matrimonial property system if it was their express intention that they intended to be married out of community of property.

Sufficient notice of the proposed change must be given to all creditors of the spouses.

The Act requires that notice of the parties’ intention to change their matrimonial property regime must be given to the Registrar of Deeds, must be published in the Government Gazette and two local newspapers at least two weeks prior to the date on which the Application will be heard and must be given by certified post to all the known creditors of the spouses.

Moreover, the draft Notarial contract which the parties propose to register must be annexed to their Application.

The court must be satisfied that no other person will be prejudiced by the proposed change.

The court must be satisfied that the rights of creditors of the parties must be preserved in the proposed contract so the application must contain sufficient information about the parties’ assets and liabilities to enable the court to ascertain whether or not there are sound reasons for the proposed change and whether or not any particular person will be prejudiced by such change.

Once the court is satisfied that the requirements have been met, it may order that the existing matrimonial property system may no longer apply to their marriage and authorize them to enter into a Notarial contract by which their future matrimonial property system is to be regulated on such conditions as the court may think fit.

  • It should also be stated whether or not either of the applicants has been sequestrated in the past and, if so, when, and in what circumstances. The case number of any rehabilitation application must be furnished.
  • It should also be stated whether or not there are any pending legal proceedings in which any creditor is seeking to recover payment of any alleged debt due by the couple or either of them.

Care must be taken to motivate fully the proposed change in the existing matrimonial property system. Applicants must explain why no other person will be prejudiced by the proposed change. In any event, the order sought, and the contract which it is proposed to register, shall contain a provision which preserves the rights of pre-existing creditors.

  • The application must disclose where the parties are domiciled and, if they are not resident there when the application is made, where they are resident. If there has been a recent change in domicile or residence it should be disclosed so that the Court can consider whether the application has been brought in the appropriate forum and/or whether or not additional notice of the application should be given. Ordinarily the application should be brought in the Court in whose area of jurisdiction the parties are domiciled and ordinarily resident.

The Negative

Unfortunately, the application is expensive in that both spouses have to apply to the High Court on notice to the Registrar of Deeds and all known creditors, to be granted leave to sign a Notarial Contract having the effect of a postnuptial contract which, after registration, will regulate you new matrimonial property system.

It would thus be cheapest and best to see an Attorney or Notary prior to the marriage ceremony being concluded to draft a proper Ante nuptial Contract regulating the matrimonial Property of the parties involved without any confusion.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

Donations

2BWhether you are thinking of helping your son financially to enable him to purchase his first property or donating money towards a worthy cause, there are some things to keep in mind.

A donation is defined in the Income Tax Act No. 58 of 1962 as “any gratuitous disposal of property including any gratuitous waiver or renunciation of a right.”  The donor may therefore not receive anything in return from the donee, as this will constitute an exchange agreement.

There are two types of donation, viz. donatio inter vivos (donation between two persons who are both alive) and donatio mortis causa (a donation where the donee will only receive the donation on the death of the donor).

The requirements for both an inter vivos and a mortis causa donation are:

  1. The donor must make an offer to donate, which offer must be accepted by the donee;
  2. The donor must have the necessary legal capacity to make the donation and the donee must have the necessary legal capacity to accept the donation;
  3. Anything that a person can trade (in commercio), can be donated;
  4. A donation must be legal and feasible; and
  5. A donation must be identified or identifiable.

Donations can also be withdrawn.  In the case of an inter vivos donation, the donor can at any time before the donee accepts the donation, withdraw such donation.  After acceptance of the donation by the donee, a valid contract has been formed and the donor will only be able to withdraw the donation in the case of gross ingratitude on the part of the donee, e.g. if the donee threatens the donor’s life.  A mortis causa donation can be repealed at any time before the donor’s death, as the donation will only be ratified on the death of the donor.

Finally, and probably of the most importance to some people, is the matter of donations tax payable to the Receiver of Revenue.  Currently donations tax is calculated at 20% of the fair market value of the property donated.

In terms of article 59 of the Income Tax Act, the donor is liable for payment of donations tax within three months after the donation was made.  If the donor fails to pay the tax timeously, the donor and the donee will be jointly and severally liable for the payment thereof.  An individual can make a donation of R100 000 per annum, free of donations tax.

There are also a few exemptions in terms of section 56 of the Income Tax Act, which should be noted. They include the following:

  1. a donation in terms of a duly registered prenuptial or postnuptial contract to the spouse of the donor;
  2. a donation between spouses who are still married to each other;
  3. a donation in the form of donatio mortis causa (this donation occurs in terms of the donor’s will and is therefore not subject to donations tax);
  4. a donation that was cancelled within six months after it was made; and
  5. donations to certain public benefit organisations.

If spouses are married in community of property they should pay attention to section 57A of the Income Tax Act.  If any property, which forms part of the joint estate of both spouses is donated by one of the spouses, such donation shall be deemed to have been made in equal shares by each spouse.  However, if property that has been donated by one of the spouses belongs to only that spouse (the donor), the donation shall be deemed to have been made solely by the spouse who made the donation.

There are several factors to keep in mind when making a donation and it is therefore advisable to consult with an expert to discuss the tax and legal implications before a decision is made.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.