A sequestration that involves a married couple is not a one-person matter. The matrimonial property regime determines whether the sequestration sweeps in one estate or two, what the trustee can reach, and what rehabilitation has to undo. This article sets out the position for marriages in community of property and notes the comparison with marriages out of community, because the difference matters.
Marriages in community of property — the core principle
In a marriage in community of property, the spouses are joint owners of one joint estate. There are no separate estates in the proprietary sense — what each spouse owns is held jointly with the other. The Matrimonial Property Act 88 of 1984 governs the regime.
The Insolvency Act treats this regime accordingly. When the estate of a person married in community is sequestrated, the joint estate is sequestrated. That is not a quirk. It is a consequence of there being a single estate that legally belongs to both spouses.
In practice this means:
- both spouses’ joint property vests in the trustee;
- both spouses are treated as insolvent debtors for purposes of the sequestration;
- both spouses have obligations toward the trustee and the Master; and
- both spouses are subject to the disabilities that follow from being insolvent.
This is often a shock to the spouse who did not personally cause the financial difficulty. The legal answer is unyielding: in community of property, there is one estate, and when it goes, it goes for both.
Marriages out of community of property — the comparison
In a marriage out of community of property — typically with an antenuptial contract, with or without the accrual system — each spouse has a separate estate. The Insolvency Act does not, by reason of the marriage alone, draw the non-insolvent spouse’s estate into the sequestration of the other.
That said, section 21 of the Insolvency Act has its own reach over the property of a solvent spouse married out of community: the Act provides that property of the solvent spouse vests in the trustee on sequestration of the insolvent spouse’s estate, until the solvent spouse proves ownership of it. This is a limited and procedural mechanism, not a sequestration of the solvent spouse, but it has practical consequences and produces a great deal of confusion.
Section 21 is its own subject and we deal with it separately.
Rehabilitation in a community-of-property matter
Because the joint estate is sequestrated, and because both spouses are treated as insolvent, rehabilitation is something both spouses need. The application typically deals with both. The waiting periods under section 124 run from the date of the joint sequestration in the same way they run for a single applicant.
The founding affidavit must address:
- the position of both spouses;
- the conduct of both spouses during the administration of the estate;
- the suitability of both spouses to be rehabilitated; and
- any factors relevant to one or the other.
The Master’s report under section 125 generally addresses the conduct of both spouses. Where one spouse cooperated and the other did not, this needs to be handled carefully and candidly.
What if the marriage has since ended?
It is common for a marriage in community to end — through divorce or death — between the date of sequestration and the date of the rehabilitation application. The legal position becomes more layered but does not disappear. The fact of the joint sequestration remains, and the rehabilitation analysis still has to deal with both spouses’ positions, even if their relationship has ended.
For divorced clients we typically need:
- the divorce order;
- the settlement agreement, if any;
- proof of any division of the estate; and
- contact details for the former spouse, where cooperation is needed.
Where one spouse is uncooperative, the founding affidavit has to deal honestly with that fact. There is no clean way around it.
What if the marriage continues and both spouses want to move on?
This is the easier scenario. We draft the application to address both spouses, gather supporting documentation from each, and run a single application that resolves both positions. The cost is not double a single application. There is overlap in the work, and we quote accordingly.
A common misconception
We sometimes hear: “My spouse was sequestrated, but I was not, so I am unaffected.” In a marriage in community of property, that is not accurate. The legal effect of the regime is that the joint estate was sequestrated, and you were sequestrated with it.
The opposite misconception, in marriages out of community, is also common: “My spouse was sequestrated, so I must have been too.” That is not accurate either. In a marriage out of community, the non-insolvent spouse’s estate is not sequestrated. The section 21 mechanism applies, but it is not the same thing as sequestration of the spouse’s estate.
The matrimonial property regime is therefore the first question we ask in screening, and it shapes every subsequent step.
A practical note on documents
For marriages in community, we typically need:
- the marriage certificate;
- both spouses’ identity documents;
- proof of address for both spouses;
- the sequestration order;
- the trustee’s accounts;
- any divorce or death documents that have arisen since;
- any antenuptial contract (only relevant to confirm that there is not one, in community-of-property cases); and
- supporting financial information for each spouse.
For marriages out of community where section 21 has operated, the document set differs and is more focused on the property of the solvent spouse and the steps taken to release it.
Next step
If your sequestration involved a marriage in community of property, the rehabilitation application has to address both spouses. Send a confidential enquiry. We will scope the work for both of you in one screening consultation.
This article is general information about South African law as we understand it on the date of publication. It is not legal advice. Each matter turns on its own facts. Speak to a legal practitioner before acting.