An antenuptial contract may say that property is excluded, but that wording does not necessarily end the enquiry. A spouse relying on excluded assets from accrual must identify the legal basis for the exclusion and produce evidence showing what happened to the asset or its proceeds.
The distinction matters when a divorce approaches. An inheritance may have been reinvested, a donated amount may have moved through several accounts, or property named in an antenuptial contract may have been sold years earlier. The answer usually depends on the contract, the source of the asset, ownership, the movement of funds and the available documents.
This guide explains the main principles governing excluded assets from accrual. It also addresses inheritance and accrual, substitution, income, capital growth, commingling and proof. It provides general information and does not replace advice on a specific antenuptial contract or financial history.
Excluded assets from accrual and commencement values are different
A commencement value and an exclusion perform different functions under the accrual system.
A commencement value records the net value of a spouse’s estate at the start of the marriage. That value is adjusted to account for changes in the value of money and is deducted when the spouse’s accrual is calculated. The asset that contributed to the commencement value is not, for that reason alone, removed from the estate at divorce.
An excluded asset is treated differently. Section 4(1)(b)(ii) of the Matrimonial Property Act provides that an asset excluded from the accrual system in the antenuptial contract, and another asset acquired by virtue of possession or former possession of that asset, is left out when the estate is valued at commencement and dissolution.
A house owned before marriage is therefore not necessarily one of the excluded assets from accrual. It may simply have formed part of a spouse’s commencement estate. If the antenuptial contract expressly excludes that house, the legal analysis is different.
If there is uncertainty about whether the contract records a commencement value or creates an exclusion, obtain advice before accepting a proposed accrual calculation. Contact Vermeulen Attorneys to arrange a consultation.
Which assets can fall outside the accrual calculation?
The principal accrual exclusions arise from the antenuptial contract or the Matrimonial Property Act. They may include:
- an existing asset expressly excluded in the antenuptial contract;
- another asset acquired by virtue of possession or former possession of that excluded asset;
- an inheritance or legacy received during the marriage;
- a qualifying donation received during the marriage;
- an asset acquired by virtue of an inheritance, legacy or qualifying donation; and
- damages other than damages for patrimonial loss.
Assets excluded by an antenuptial contract should be described clearly. A property description, company name and shareholding, policy number, loan account, investment account or identifiable business interest can reduce later uncertainty. Vague or commercially inaccurate wording may lead to a dispute about what the parties intended to exclude.
Care is also needed with clauses that attempt to exclude broad categories of property that may be acquired in future. The enforceability and scope of such wording require analysis of the contract and current law. The safer approach is to avoid assuming that every future business, policy, trust-linked benefit or investment is covered merely because the antenuptial contract uses a broad label.
Inheritance and accrual during the marriage
Section 5(1) provides that an inheritance, legacy or donation accruing to a spouse during the marriage does not form part of that spouse’s accrual. The exclusion also extends to another asset acquired by virtue of possession or former possession of the inheritance, legacy or donation. The antenuptial contract, testator or donor can, however, provide otherwise.
This is why inheritance and accrual cannot be assessed by looking only at the date of receipt. The will, liquidation and distribution account, executor’s correspondence, proof of payment and later bank records may all matter.
Donations excluded from accrual require similar care. The person relying on the exclusion may first need to establish that the payment was genuinely a donation. An informal family transfer might instead be characterised as a loan, an advance, repayment of a debt or money intended for both spouses. Contemporaneous correspondence and banking records can help establish the legal character of the transaction.
Section 5(2) deals separately with donations between spouses. A donation between spouses, other than a donation made in contemplation of death, is left out of account in determining the accrual of both estates.
Who must prove an exclusion?
A spouse who asserts that property should be treated as one of the excluded assets from accrual should be prepared to establish the legal and factual basis for that position.
The evidence should explain:
- what the original asset or receipt was;
- why it qualified for exclusion;
- when and from whom it was received or acquired;
- who owned it;
- whether it was sold, exchanged, refinanced or reinvested;
- where the proceeds moved; and
- which present asset is said to have replaced it.
A statement that money came from an inheritance is unlikely to resolve a contested calculation by itself. Tracing must connect the original excluded property to its present form.
Full financial information may be needed to test both the exclusion and the broader accrual calculation. Where records are withheld or incomplete, read more about compelling financial disclosure in a divorce.
What happens when an excluded asset is sold or replaced?
The Act recognises that an excluded asset can change form. If an inherited amount is used to buy an investment property, or property excluded in the antenuptial contract is sold and the proceeds are reinvested, the replacement may remain outside the accrual. The critical questions are whether it was acquired by virtue of the original excluded asset and whether the link can be proved.
Consider a spouse who inherits R1.5 million. The executor pays the money into a separate investment account, and the full amount is then used to purchase a property. Executor records, bank statements and conveyancing documents show a continuous chain. That is a strong factual basis for treating the property as a substituted excluded asset.
The position becomes harder where money passes through several accounts, combines with other funds or contributes only part of the price of a later asset. It is unsafe to assume that whatever is bought next will qualify as one of the excluded assets from accrual.
Does the growth of excluded assets count?
The growth of excluded assets requires careful characterisation. Capital appreciation in the same validly excluded asset will ordinarily remain bound up in that asset. If an excluded property rises in value, the increase is not readily separated from the property as an independent asset.
Income generated by the asset may require a different analysis. Dividends, rent and interest might be treated as proceeds, fruits of the asset or independent amounts accruing to the estate. The wording of the antenuptial contract, the source of the exclusion, the nature of the receipt and the ability to trace it can affect the answer.
No general statement that all income or all growth of excluded assets is outside accrual will fit every matter. Improvements can add another layer. If ordinary income, bond finance or joint resources funded an improvement, the effect on the calculation may depend on ownership, funding and the contract.
If growth, income or improvements materially affect the proposed calculation, a review of the antenuptial contract and financial records should take place before settlement terms are accepted. Contact Vermeulen Attorneys for advice on the available evidence and the calculation.
When excluded funds become mixed with other money
Commingling does not necessarily erase an exclusion, but it can make proof substantially more difficult. Problems commonly arise when excluded money is paid into a joint or operating account, used with a mortgage to acquire a home, contributed to a business, or combined with salary and ordinary household funds.
Assume a spouse receives a R750,000 donation and deposits it into an account that already contains R400,000. Salary, business income and household spending then move through the account for five years. A later investment portfolio is said to have been acquired with the donation. Even if the original amount qualified as one of the donations excluded from accrual, the present claim depends on evidence connecting that donation to the investment.
Ownership remains a separate issue. Paying towards an asset does not by itself determine who owns it or whether it is excluded. Accrual and ownership should not be conflated.
If funds are being moved, disposed of or concealed during a divorce, the issue may extend beyond calculation. The article on protecting assets from dissipation during divorce explains the separate preservation considerations that may arise.
Documents needed to prove and trace an exclusion
Documentary evidence often determines whether claimed accrual exclusions can be sustained. Useful records may include:
- the registered antenuptial contract and the notary’s protocol copy;
- wills, liquidation and distribution accounts and executor correspondence;
- donation agreements or messages recording donative intent;
- bank statements showing receipt and later transfers;
- investment statements, share certificates and accounting records;
- sale agreements and proof of payment;
- title deeds, conveyancing statements and bond records;
- loan agreements, trust records and tax records;
- historical and current valuations; and
- proof of improvements funded from excluded money.
Incomplete records are not necessarily fatal. The chain may sometimes be reconstructed from bank archives, conveyancer files, executor records, tax documents, company accounts, emails, messages and evidence from people involved in the transaction. The longer the history and the more often the asset changed form, the more important a structured tracing exercise becomes.
Trust-linked interests require separate care. Trust property does not become a spouse’s personal asset merely because that spouse is a founder, trustee or beneficiary. Where trust information is relevant, see the guide to obtaining trust records in a divorce.
When a disputed exclusion requires legal or expert assistance
Legal assistance may be required when the parties disagree about ownership, value, source, contractual interpretation, substitution or tracing. The starting point is usually the antenuptial contract, full disclosure and the source documents.
A property valuer or business valuer may be needed where historical or current value is disputed. A forensic accountant may assist where money moved through several accounts, entities or assets. Expert evidence is not required in every matter. Its usefulness depends on the size, complexity and evidential gaps in the dispute.
Retirement interests are subject to their own legal framework and should not be treated as conventional asset exclusions without proper analysis. The practical guide to retirement funds on divorce addresses that topic separately.
Vermeulen Attorneys’ divorce and family law team assists with antenuptial contracts, accrual disputes, disclosure and financial evidence. If an alleged exclusion may materially affect the divorce settlement, contact Vermeulen Attorneys to arrange an initial consultation.
Frequently Asked Questions
Is an inheritance excluded from accrual in South Africa?
An inheritance received during the marriage is generally excluded under section 5(1), including an asset acquired by virtue of that inheritance. The antenuptial contract or testator may provide otherwise. Inheritance and accrual questions also depend on whether the original receipt and any substituted asset can be proved.
Are assets owned before marriage excluded from accrual?
No general rule makes every premarital asset an excluded asset. It may form part of the spouse’s commencement estate, or it may be one of the assets excluded by an antenuptial contract. The contract and commencement-value records must be considered.
What happens if I sell an excluded asset and buy another one?
The replacement may remain excluded if it was acquired by virtue of the original excluded asset and the connection can be established. Clear banking, sale and acquisition records materially strengthen the tracing exercise.
Does the increase in value of an excluded asset form part of accrual?
The growth of excluded assets that remains part of the same excluded property will ordinarily remain tied to that asset. Income, improvements and mixed funding may require a separate analysis based on the contract, the source of the exclusion and the evidence.
Are donations excluded from accrual?
Qualifying third-party donations are generally excluded under section 5(1), unless the antenuptial contract or donor provides otherwise. Donations excluded from accrual must still be proved as donations. A family payment may be disputed as a loan, advance or joint benefit.
Can I rely on an exclusion if the original records are missing?
You may still be able to reconstruct the history from bank, executor, conveyancing, tax, company or investment records. The strength of the position will depend on whether the available evidence proves the source, movement and present form of the asset.
