All marriages end – either by death or divorce.
The ease, simplicity and fairness of that ending is determined by the matrimonial property regime you chose before getting married.
If you do not enter into a antenuptial agreement before you get married you will automatically be married in community of property.
This means that:
- All debts and assets of both parties are joined into what is called a ‘common estate’, which is owned equally by both.
- Everything earned, bought, inherited or acquired in any way during the marriage goes into the common or joint estate.
- Money in either spouse’s bank account legally belongs to the joint estate.
- Any debts incurred by either party bind the joint estate. This can be a serious problem in the case of insolvency because no assets are protected and both parties will be deemed insolvent.
- If one party enters the marriage with significantly more assets that the other, they immediately forfeit ownership of half of everything to the other.
- When the marriage ends, the entire estate, including debt, is equally divided. Whether it ends by death or divorce, this process can be complicated and take a long time.
This is the way people traditionally married, but it is perhaps not best suited to modern reality.
Today, the better alternative to consider while planning your wedding: out of community of property by signing an antenuptial contract.
An antenuptial contract, also commonly called an ANC or prenup in South Africa, regulates the terms and conditions of a marriage between prospective spouses.
To some people an antenuptial agreement seems like a sign of mistrust between partners.
In fact, it gives a couple the opportunity to agree on their financial future and how their assets and gains will be distributed or divided when their marriage comes to an end because of death or divorce. It also prevents the marriage from automatically being one of in community of property.
An antenuptial agreement is entered into where couples do not want to get married in community of property and is concluded before marriage. An antenuptial agreement might be especially important for someone who already has assets like a business, or family obligations like children from a previous marriage.
The contract ensures that partners retain their own separate estates and are not liable for each other’s debts for instance, unless they have taken out the debt jointly or a spouse provided personal security for the debt of the other spouse.
Antenuptial agreement with or without the accrual
If it’s without the accrual, the partners keep what is theirs before marriage and also keep what becomes theirs after marriage. If the agreement is with the accrual system, each party still retains his or her own estate, but the agreement determines how the growth in each partner’s estate will be shared.
The accrual takes effect when the marriage ends – because of divorce or death. You can’t make a claim for the accrual while still married. But when the marriage ends, the partner with the smallest accrual has a claim against the estate of the other. The claim is for 50% of the difference between the growth in the values of the two estates or any percentage as agreed to by the parties in their antenuptial agreement.
When you sit down with your attorney to draw up an antenuptial, you’ll first be asked for a list of assets and the current market value of each item. These are included in the contract and will be used to work out the accrual later. You and your partner can agree to specifically exclude any asset – but the details of the listed assets must be very accurate to prevent legal problems in the future. Some assets will automatically be excluded for example any inheritance that you obtain during the existence of your marriage. The document is signed in front of two witnesses and sent off for registration.
It is important to leave enough time for a contract to be drawn up by an attorney who is a registered notary and who will deliver it to the deed’s office. There it will be registered for a fee. This must happen before the wedding day. Apart from the registration fees, the usual attorney’s fees for having the agreement drawn up will apply.
If you get married without having your antenuptial contract signed or registered in time, you need to apply to the High Court jointly to be granted permission to have the late signature or registration after the marriage accepted as soon as possible and also inform the deeds office of this. This will mean more costs as well.
Contact Nagel Attorney & Notary today and put our years of practical knowledge and experience to use. You can be assured that we will guide you to make the best decisions.