VALIDITY OF ANTENUPTIAL CONTRACTS

One must be careful when drafting and signing an Antenuptial Contract. Aside from ensuring that the contents is all correct, one must also ensure that all the necessary provisions are contained therein to make the contract valid. The consequences of neglecting to do so may result in a marriage in community of property even though the parties had no intention of this at the time of their marriage.

Attorneys are often trusted with the task of drafting an Antenuptial Contract. This is a contract, which one signs to regulate the property regime of a marriage. If a couple does not sign, an Antenuptial Contract then the marital property regime will be that of in community of property. The presence of an Antenuptial Contract means that the marital property regime is that of out of community of property and the parties must specifically stipulate whether they would like the accrual system to apply to their marriage or not.

The importance of ensuring that all the necessary provisions are contained in the Antenuptial Contract to result in a valid contract was discussed in the 2014 Supreme Court of Appeal Case of B v B[1]. In this case, no values were stated in respect of any of the assets listed in the Antenuptial Contract and they were also not properly identified. In B v B the court stated that if the terms of a contract are so vague and incoherent as to be incapable of a sensible construction then the contract must be regarded as void for vagueness.[2]

According to Section 6(1) of the Matrimonial Property Act[3] ,a party to an intended marriage which does not, for the purpose of proof of the value of his or her estate at the time of the commencement of the marriage, declare the value in the contract, then he or she may do so within six months of the marriage in a statement attested to by a notary. If this is not done, according to Section 6(4) of the Marital Property Act, the net value of the estate of a spouse is then deemed to be nil at the time of the marriage. In effect, such a contract is valid but it will effectively render the marriage in community of property since nothing was excluded from the accrual.

However, if a contract is contradictory and incoherent in other respects then it cannot be seen as a valid contract since there is no certainty as to the meaning of the contract and what the parties seek to achieve. This means that the contract would not embody terms that would enable to court to give effect to the intention of the parties at the time the contract was concluded.

The result of such a contract is that the Antenuptial Contract would be void for vagueness and that the marital property regime would be the default position according to the Marital Property Act, which is in community of property.

Therefore, parties are encouraged to read their contracts thoroughly and ensure that they understand the terms thereof and that the contract embodies their intentions without any further explanations or evidence.

[1] (952/12) [2014] ZASCA 14 (24 March 2014).

[2] B v B (952/12) [2014] ZASCA 14 (24 March 2014) par 7.

[3] 88 of 1984.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.

IMPLICATIONS OF ESTATE DUTY

Estate duty is charged on the dutiable value of the estate in terms of the Estate Duty Act. The general rule is that if the taxpayer is ordinarily resident in South Africa at the time of death, all of his/her assets (including deemed property), wherever they are situated, will be included in the gross value of his/her estate for the determination of duty payable thereon.

The current estate duty rate is 20% of the dutiable value of the estate. Foreigners/non-residents also pay estate duty on their South African property.

To minimise the effects of estate duty you need to understand the calculation thereof. The following provisions apply in determining your liability:

  1. Which property is to be included.
  2. Which property constitutes “deemed property”.
  3. Allowable deductions: the possible deductions that are allowed when calculating estate duty.

Property includes all property, or any right to property, including immovable or movable, corporeal or incorporeal – registered in the deceased’s name at the time of his/her death. It also includes certain types of annuities, and options to purchase land or shares, goodwill, and intellectual property.

Deemed property

  1. Insurance policies
    • Includes proceeds of domestic insurance policies (payable in South Africa in South African currency [ZAR]), taken out on the life of the deceased, irrespective of who the owner (beneficiary) is.
    • The proceeds of such a policy are subject to estate duty, however this can be reduced by the amount of the premiums, plus interest at 6% per annum, to the extent that the premiums were paid by a third person (the beneficiary) entitled to the proceeds of the policy. Premiums paid by the deceased himself/herself are not deductible from the proceeds for estate duty purposes.
    • If the proceeds of a policy are payable to the surviving spouse or a child of the deceased in terms of a properly registered antenuptial contract (i.e. registered with the Deeds Office) the policy will be totally exempt from estate duty.
    • Where a policy is taken out on each other’s lives by business partners, and certain criteria are met, the proceeds are exempt from estate duty.
  2. Benefits payable by pension and other funds by or as a result of the death of the deceased
    Payments by such funds (pension, retirement annuity, provident funds) usually consist of two components – a lump sum payment on death and an annuity afterwards. The lump sum component used to be subject to estate duty. However as from 1 January 2009, no amount received from such a fund is included in the estate of the deceased for estate duty purposes.
  3. Donations at date of death
    Donations where the donee will not benefit until the death of the donor and where the donation only materialises if the donor dies, are not subject to donations tax. These have to be included as an asset in the deceased estate and are subject to estate duty.
  4. Claims in terms of the Matrimonial Property Act (accrual claim)
    An accrual claim that the estate of a deceased has against the surviving spouse is property deemed to be property in the deceased estate.
  5. Property that the deceased was competent to dispose of immediately prior to his/her death (Section 3(3)(d) of the Estate Duty Act), like donating an asset to a trust, may be included as deemed property.

Deductions
Some of the most important allowable deductions are:

  1. The cost of funeral, tombstone and deathbed expenses.
  2. Debts due at date of death to persons who have their ordinary residence in South Africa.
  3. The extent to which these debts are to be settled from property included in the estate. This includes the deceased’s income tax liability (which includes capital gains tax) for the period up to the date of death.
  4. Foreign assets and rights:
    • The general rule is that foreign assets and rights of a South African resident, wherever situated, are included in his/her estate as assets.
    • However, the value thereof can be deducted for estate duty purposes where such foreign property was acquired before the deceased became ordinarily resident in South Africa for the first time, or was acquired by way of donation or inheritance from a non-resident, after the donee became ordinarily resident in South Africa for the first time (provided that the donor or testator was not ordinarily resident in South Africa at the time of the donation or death). The amount of any profits or proceeds of any such property is also deductible.
  5. Debts and liabilities due to non-residents:
    • Debts and liabilities due to non-residents are deductible but only to the extent that such debts exceed the value of the deceased’s assets situated outside South Africa which have not been included in the dutiable estate.
  6. Bequests to certain public benefit organisations:
    • Where property is bequeathed to a public benefit organisation or public welfare organisation which is exempt from income tax, or to the State or any local authority within South Africa, the value of such property will be able to be deducted for estate duty purposes.
  7. Property accruing to a surviving spouse [Section 4(q)]:
    • This includes that much of the value of any property included in the estate that has not already been allowed as a deduction and accrues to a surviving spouse.
    • Note that proceeds of a policy payable to the surviving spouse are required to be included in the estate for estate duty purposes (as deemed property), but that this is deductible in terms of Section 4(q).
    • Section 4(q) deductions will not be granted where the property inherited is subject to a bequest price.
    • Section 4(q) deductions will not be granted where the bequest is to a trust established by the deceased for the benefit of the surviving spouse, if the trustee(s) has/have discretion to allocate such property or any income out of it to any person other than the surviving spouse (a discretionary trust). Where the trustee(s) has/have no discretion as regards both the income and capital of the trust, the Section 4(q) deduction may be granted (a vested trust).

Portable R3.5 million deduction between spouses

The Act allows for the R3.5 million deduction from estate duty to roll over from the deceased to a surviving spouse so that the surviving spouse can use a R7 million deduction amount on his/her death. The portability of the deduction will only apply when the entire value of the estate of the first dying spouse is left to the surviving spouse.

Life assurance for estate duty

Estate duty will also normally be leviable on these assurance proceeds.

Source: Moore Stephens’ Estate Planning Guide.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.

ROAD CYCLISTS vs. MOTORISTS

The popularity of road cycling as a competitive sport and a form of transportation is on the rise. This naturally leads to major safety concerns and serious accidents among both groups of road users.

Both the National Road Traffic Act[1] and the Western Cape Provincial Road Traffic Act[2] regulate the rights of and rules for pedal cyclists and motor vehicle drivers on roads in the Republic of South Africa. The National Road Traffic Act has specific regulations pertaining to cycling safety and every cyclist should be alert to these regulations. Regulation 311[3] states as follows:

  1. No person shall ride a pedal cycle on a public road unless he or she is seated astride on the saddle of such pedal cycle.
  2. Persons riding pedal cycles on a public road shall ride in single file except in the course of overtaking another pedal cycle, and two or more persons riding pedal cycles shall not overtake another vehicle at the same time.
  3.  No person riding or seated on a pedal cycle on a public road shall take hold of any other vehicle in motion.
  4. No person riding a pedal cycle on a public road shall deliberately cause such pedal cycle to swerve from side to side.
  5. No person riding a pedal cycle on a public road shall carry thereon any person, animal or object which obstructs his or her view or which prevents him or her from exercising complete control over the movements of such pedal cycle.
  6. A person riding a pedal cycle on a public road shall do so with at least one hand on the handle bars of such pedal cycle.
  7. Whenever a portion of a public road has been set aside for use by persons riding pedal cycles, no person shall ride a pedal cycle on any other portion of such road.
  8. A person riding a pedal cycle on a public road or a portion of a public road set aside for use by persons riding pedal cycles, shall do so in such manner that all the wheels of such pedal cycle are in contact with the surface of the road at all times.

The Western Cape Provincial Road Traffic Act was passed on the 29th November 2012 and this Act has implications for both pedal cyclists and motor vehicle drivers. The Act empowers the Provincial Minister of Transport to regulate[4] certain matters to increase road safety in the Province. Amongst others, regulations requiring all vehicles overtaking cyclists to ensure that there is a safe distance of at least 1.5 metres between them before passing, and law enforcement actions against cyclists who do not ride in single file, or who fail to stop at red traffic lights or stop streets were enacted.

Cyclists have the right to expect motor vehicles to overtake them safely and be on the look-out for them at intersections. The Road Traffic Act is clear where it states that drivers must take other road users into account in whatever they do. Cyclists also have the right to the left-hand side of the road (not the extreme edge of the left-hand side). We tend to forget that there are cyclists around us who are also using the roads as a means of transport. Apart from the recently built cycle-lanes in Cape Town, we do not have dedicated lanes in South Africa for cyclists to use. This means that every day cyclists are fighting for road space amongst often aggressive and ignorant drivers, according to the Automobile Association of South Africa (AA).

While the law states that cyclists must wear protective headgear while riding a bicycle, for many this is a cost that they simply cannot afford, making them almost invisible to the drivers on the road.

Therefore, as a driver, ask yourself what you can do to avoid colliding with a cyclist. The AA provides some safety tips for drivers:

  • Yield to cyclists, especially at intersections and circles.
  • Check your blind spots and make sure the way is clear before changing lanes or direction.
  • Do not drive, stop or park in a bicycle lane.
  • Give cyclists enough room when overtaking – at least 1.5 metres.

Changing the behaviour of drivers will assist in the fight to stop cyclist crashes and deaths on our roads. However, cyclists also have to do their part by following the rules and making sure they are visible. Here are some safety tips for cyclists on the road:

  • Obey the traffic signs and rules.
  • Keep left and keep at least one metre clear of the pavement and parked cars.
  • Ride with the traffic and not against it.
  • Be visible – wear reflective clothing and a bright-coloured helmet at all times.
  • Use lights at night – a white headlight and a red rear lamp.
  • Use hand signals when turning or changing lanes.
  • Always cycle in single file.

In order to reduce the level of carnage on our roads we need to work together as road users, and this means that both cyclists and drivers need to follow the rules. The first step in doing this is to become aware of the rules and regulations in place to protect and serve the interests of both groups of road users.

[1] 93 of 1996

[2] 6 of 2012

[3] National Road Traffic Regulations, 2000. Government notice R225 in Government Gazette 20963, dated 17 March 2000. Effective as from 1 August 2000 (page 340/389).

[4]Dec 6, 2013 – Province Western Cape: Provincial Gazette 7208.

Bibliography:

  1. aa.co.za
  2. arrivealive.co.za
  3. acts.co.za/national-road-traffic-act-1996
  4. polity.org.za

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.

INTERNATIONAL LOVE MEETS THE LAW

A South Africa citizen “x” decides that he is going to study in England after leaving school. During this time abroad he meets the love of his life “y”, a British citizen. Both parties decide that they want to marry each other and are now unsure if the marriage will be valid once they return back to South Africa.

The abovementioned marriage and/ or relationship adequately demonstrate the need for private international law. Men and women of different domiciles and nationalities may fall in love and marry in the country where they happen to reside. Generally speaking, the formal validity of a marriage is determined by the law of the place where the marriage was solemnized. This is based on the common law doctrine of the law of the country were the marriage was solemnized ( lex loci celebrationis).

This rule is also subject to the  fraud of the law (fraus legis) doctrine that will prevent parties from deliberately solemnizing their marriage elsewhere to escape some essential requirements of the law of the place of a party’s dwelling house (lex domicilii). Kassim v Ghumran & another 1981 Zimbabwe LR 22, may be considered more fully to illustrate the principle of evasion. Here Ghumran and Kassim had eloped from Zimbabwe to Malawi in order to marry. Kassim was only 15 years old and the consent of her parents, which was not obatined, was required for her marriage under the law of Zimbabwe. Kassim’s father sought an order declaring that the Malawian Marriage is void. The court held that where one or both parties were

domiciled in the area of the court and had their marriage deliberately solemnized elsewhere to escape an essential requirement of the lex domicilii acted in fraudem legis.

The last exception to the lex loci celebrationis is the principle of public policy. The marriage will be against public policy if it offends fundamental moral principles of that society. Since the marriage relationship is one of the fundamental institutions of our society, it follows, none the less, that public policy will raise its head here. It does so primarily in two broad areas; marriages tainted by incest, want of age, or lack of consent and polygamous marriages, especially before the recognition of customary marriages is South Africa. The consensus seems to be that the union of siblings (whether of half or full blood) and the union of any blood relatives in the direct line will be against public policy (contra bonis mores).

Therefore their marriage will be valid in South Africa if they complied with the abovementioned international private law principles and that the marriage was legally conclude in accordance with the laws of England. It is also important to note that the legal consequences of the marriage will be governed by different international private law principles and the validity of the marriage will be determined according to the abovementioned principles.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice.