Justice Minister Mmamoloko Kubayi is preparing to introduce the General Laws Amendment Bill, 2025, to Parliament, which will have significant implications for married couples, property owners, banks, and legal professionals.
These changes have been mandated by the Constitutional Court to adjust how property is divided between married parties in situations of divorce or death. These changes create further protection for some parties, however, it also creates a grey area of uncertainty.
Whilst the Bill is not yet made into law, it is important to stay abreast of the potential impact that it may have when it is promulgated into law.
So, what is the proposed amendment?
The Bill intends to simplify and clarify the rights of spouses who have married out of community of property without the application of the accrual system, to allow the more vulnerable spouse to claim for an equitable redistribution in the event of divorce or death.
The proposed amendment will give our courts the discretion to redistribute assets between parties who are married out of community of property, whereas, our law has not in the past made provision for this if there was no accrual and no sharing of assets.
What are the key implications and risks?
- Uncertainty in Property Ownership Structures – Where there was once protection under the matrimonial property regime, separating assets of the parties, the proposed Bill removes the certainty of this protection by empowering the courts with the discretion to override the general application of the matrimonial property regime.
- Potential Legal Disputes Increase – Divorces are already filled with a number of complex issues and the issue of redistribution will likely be added. This will mean that divorce proceedings, which would ordinarily be simple with regards to the patrimonial consequences of a marriage out of community of property, may become longer, more expensive and more complex.
- Financial and Tax Consequences – There is likely to be an increase in the number of people who restructure their property ownership, through the use of trusts or companies, however, these options entail legal, tax and financial costs and risks, and may not be the successful vehicle of protection, as courts have frequently “pierced the veil” to include trust and company assets in divorce proceedings. This further complicates divorce proceedings.
- Impacts on Lending and Mortgages – It may be necessary for banks to adjust their risk models and there is a higher risk of forced sales of property in order to satisfy the redistribution orders between divorced parties. This affects the mortgage terms for Lenders.
- Estate Planning Complications – Spouses are now empowered to approach the courts for a redistribution order, which may affect the rights of heirs, both for intestate (without a will) and testate (with a will) estates.
What should you do now?
- Get Legal Advice Early – If you are not married, ask the Notary Public, who drafts your ante-nuptial contract to give you a clear idea of your rights and the implications of the respective matrimonial property regimes. If you are already married out of community of property, consult with your attorney to find out what your legal rights are now, versus what they might be if the new Bill is made into law.
- Consider Ownership Structures – Trusts, companies or other ownership vehicles may assist in protecting your assets, however, it is important to consult with your attorneys due to the fact that these structures have been the centre of judicial scrutiny in the past. Furthermore, your attorney should advise you of the tax, administrative and cost implications of the different ownership vehicles.
- Estate Planning – If you are married out of community of property, consult your attorney to draft or update your wills and make sure that your estate planning accounts for the possibility of a redistribution claim by your spouse.
- Keep a record of your contributions – If one spouse foregoes income or a career for the sake of the family, and makes domestic non-financial contributions, keep a record of these contributions in the event that these records will need to be used to motivate a claim for redistribution.
These changes mark a significant shift in the law and how property is treated in marriage, divorce and death. Whilst these changes are underpinned by concepts of fairness and constitutional mandates, they also create the potential for legal uncertainty, for the possibility of expensive divorce proceedings and new of future risks for property owners.
Once the Bill is promulgated, it would be advisable to consult an attorney to review your present marital status and to advise you on the potential impacts on it.
Whether you are considering getting married, or you are already married in community of property, or if you own property, or are planning your estate, now is a critical time to seek legal counsel and get tailored-made, legal advice.