Getting married is not just a matter of the heart, it is also a legal contract with far-reaching financial consequences. One of the most important decisions couples face is how they will be married.
In South Africa, the default marital regime is In Community of Property. This arrangement can work well when neither partner enters the marriage with significant assets, or when one partner is unlikely to earn income, such as a stay-at-home parent taking a career break to raise children.
However, community of property comes with serious drawbacks. Chief among them: both spouses become equally liable for each other’s debts, regardless of who incurred them.
As a result, many couples now opt to marry Out of Community of Property with Accrual. This regime is often seen as the “best of both worlds”. Each spouse retains control over their own assets during the marriage however, shares in the growth of the joint estate upon divorce or death. It is especially popular among couples marrying later in life, who have already built up individual wealth. And with nearly 40% of South African marriages ending within the first decade, it is easy to see the appeal.
But while accrual may seem fair in theory, it can produce unexpected and sometimes deeply unfair outcomes in practice. This is especially true in blended families, where one spouse has children from a previous relationship.
Let’s consider a real-world example.
A Cautionary Tale: Mr and Mrs A
Mr and Mrs A were happily married for 12 years. They married later in life. Mr A had been previously married and was a father to three adult children from his first marriage, while the couple themselves had no children. At the time of their wedding, Mr A’s assets were worth R35 million. He was generous throughout their marriage: he bought their home, paid for travel, covered joint expenses, and supported his one child financially, all with Mrs A’s full backing.
Mrs A entered the marriage with R1 million in savings. Thanks to Mr A covering most living costs, she was able to save and invest her income. By the time Mr A passed away, her assets had grown to R6 million. His had grown modestly to R40 million.
In his will, Mr A left the marital home to Mrs A. The remainder of his estate was to be divided equally between Mrs A and his children. A plan both spouses believed would preserve Mrs A’s lifestyle while honouring his children.
But under the accrual system, the executor must calculate the growth of each spouse’s estate. The executor adjusts the starting value of each spouse’s estate to reflect inflation between the date of marriage and the date of death. This ensures that growth is measured in real terms—not just nominal amounts.
Here’s how it works:
- Mr A’s estate was worth R35 million at the time of marriage. At the start of their marriage, the Consumer Price Index (CPI) was 57.2. On his death, it was 100. His starting value is adjusted as follows: (R35 million x 100) ÷ 57.2. This adjusts the starting value to R63.8 million.
- Mrs A’s starting value of R1 million is similarly adjusted to R1.75 million.
Next, the executor compares these inflation-adjusted figures to the actual value of each estate at the time of death:
- Mrs A’s estate grew from R1.75 million to R6 million, a real increase of R4.25 million.
- Mr A’s estate grew from R35 million to R40 million—but when adjusted for inflation, it actually declined by R23.8 million.
Under the accrual system, the spouse whose estate grew more owes half the difference to the other. In this case, Mrs A’s estate grew more than Mr A’s— she therefore, now owes his estate nearly R2 million.
This outcome is not only counterintuitive, it is emotionally fraught. Mr and Mrs A never anticipated this. If Mr A’s children choose to enforce the claim, Mrs A could face a significant financial burden. Worse still, the goodwill between her and his children may be irreparably damaged.
Conclusion: Fairness Is Not Always Simple
The accrual system is designed to promote fairness. But as this example shows, fairness on paper does not always translate to fairness in life. Inflation adjustments, asset growth, and family dynamics can combine in ways that produce outcomes no one intended.
For couples, especially those with blended families or unequal financial starting points, it is essential to seek expert advice and consider bespoke arrangements. A well-drafted antenuptial contract can protect not just your assets, but your relationships.
Marriage is a leap of faith. Your financial planning should not be.
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