Married with accrual? Your ANC with accrual creates a shared claim on growth accumulated during your marriage. Unlike ANC without accrual (where assets remain completely separate), ANC with accrual means your spouse is entitled to a share of the increase in your estate’s value during marriage. When you die, your ANC with accrual calculates what your spouse is owed.
ANC with accrual works this way: you each retain assets acquired before marriage. But any increase in asset value during the marriage is shared. If you entered marriage worth R500,000 and die worth R1,500,000, your accrual is R1,000,000. Your spouse’s accrual claim is half of that: R500,000.
This is very different from community of property (where everything is automatically half-owned) and from ANC without accrual (where spouses have no automatic claims). ANC with accrual sits in the middle: separate property with shared growth.
According to Tasneem Mahomed, director at Engelsman Magabane Incorporated, “ANC with accrual creates complexity in estate planning. Many testators underestimate their spouse’s accrual claim. When the spouse claims half a million rand, the children inherit far less than expected.”
How accrual is calculated in estate planning
Your ANC with accrual estate value at death is key. Everything you own on the day you die – property, investments, bank accounts, vehicles – is included in your estate value. Your spouse’s accrual claim is: (your estate value at death minus your estate value at marriage) divided by two.
But certain assets are excluded from accrual calculation under ANC with accrual rules. Inheritances received during marriage are typically excluded unless your ANC agreement specifies otherwise. Gifts are usually excluded. Some insurance proceeds are excluded.
Your ANC with accrual agreement should clarify which assets are excluded. Without clarity, disputes arise at death about what counts toward accrual.
ANC with accrual and your will
Your ANC with accrual will must account for your spouse’s accrual claim. If your spouse will receive a significant accrual claim, less is available for children or other beneficiaries.
Many testators make this mistake: they draft wills leaving R1,000,000 to their children and R500,000 to their spouse. But their ANC with accrual spouse has a R600,000 accrual claim. The spouse gets R600,000 (the accrual), not R500,000. The children receive R900,000, not R1,000,000.
ANC with accrual and blended families
ANC with accrual creates tension in blended families. Your new spouse’s accrual claim competes with your children’s inheritance. If your estate has grown significantly during your current marriage but your previous marriage produced most of the assets, your children may resent their sibling’s huge accrual share.
Trusts can help manage ANC with accrual in blended families. A trust can hold assets for your spouse’s benefit while preserving principal for your children.
ANC with accrual and taxes
Your ANC with accrual spouse’s claim affects estate tax. If your spouse receives an accrual claim of R500,000, that reduces your taxable estate by R500,000. Tax on R1,000,000 estate is higher than tax on R500,000.
But this tax benefit assumes your spouse actually receives and keeps the accrual. If your will doesn’t account for it, disputes erupt.
For legal advice, contact Engelsman Magabane Incorporated:
Phone: 053 832 8134 or 053 832 8135
Email: [email protected]
*This article was provided by Engelsman Magabane Incorporated for use on Legal Notice Publishing as part of the Estate Matters series.
