The importance of an antenuptial contract

An ANC can protect your assets and your marriage 

In South Africa, couples traditionally married in community of property. This is still the most common regime, here and in many countries. In this type of marriage both parties are the owners of the joint estate and, when they divorce, they split the marital property 50/50. But South African law recognises three matrimonial regimes. In addition to in community of property, you can be married “out of community of property” – either with or without accrual. This means that all assets owned by each party before the marriage remain the property of the individual. They do not become part of a joint marital estate. Marriage in community of property does not require an antenuptial contract (ANC), but marriage out of community of property does. What is the importance of an antenuptial contract?

Accrual

There are two types of antenuptial contracts: one that maintains a complete separation, and the other that keeps all assets and liabilities before the marriage separate, but allows any growth or accrual during the marriage to be shared equally according to the accrual formula. This corresponds to the matrimonial regime chosen. “With accrual” means that everything acquired after the marriage is considered part of the joint estate, and is divided equally in the event of divorce. This includes any increase in the net value of each individual’s estate. This prevents inequality, for example where one spouse may have stayed at home to look after the children while the other spouse built up a wealthy estate. On divorce there can be a complete disparity of personal wealth. This inequality is remedied by the accrual system. 

“Without accrual” – the complete separation of property – is the simplest marital arrangement, but  may not always be the fairest. In this case, all property owned prior to the marriage and all property acquired during the marriage belongs to the person who acquired it. 

Exclusions from accrual

It is permissible to exclude certain items of property from the accrual. There may be other arrangements in place that preclude further dividing an asset, for example a property may belong to a set of siblings. Paying over an accrual value to a spouse on divorce could be financially difficult or could result in a sale of the property, which may not be permitted by other conditions such as a family trust. Exclusions are permitted by the Matrimonial Property Act.

Role and importance of an ANC

The ANC sets out the rules and conditions that govern the division of assets, both during the marriage and on divorce. An ANC can be particularly helpful where both spouses run businesses or have high-earning occupations. The conventional sharing of assets implied by marriage in community of property assumed the presence of a non-working wife who would be disadvantaged on divorce without this protection under the law. But a modern couple may find it more useful to keep their assets separate, to ensure future business or financial endeavours are not compromised in the event of divorce. Each spouse is also protected from the other’s debts on divorce, unlike in community of property where debts are shared equally. If one party is a risk taker, it may be more responsible to protect the other from the consequences of their risk-taking.

The contract is straightforward, and spells out:

• The net values of the estates of the parties at the commencement of their intended marriage 
• Any exclusions, as noted above 
• The accrual calculation, for marriages with accrual
• Any other conditions that may impact the accrual, such as insolvency

Example of contract with accrual

The ANC is not meant to contain a detailed list of every item of property each party owns. It simply covers the contractual conditions the couple has agreed. As an example, the ANC for a marriage out of community of property with accrual includes the following:

• There will be no community of property between the parties
• There will be no community of profit or loss between the parties
• The accrual system referred to in the Matrimonial Property Act will apply to the intended marriage between the parties
• The net values of the estates of the parties at the commencement of their intended marriage are included
• Exclusions (as per Matrimonial Property Act) are noted
• Calculation of accrual is given
• Any other conditions that may impact the accrual, such as insolvency, are noted
• Both parties declare their intention to solemnise the marriage and promise each other the full force of their legal obligations with respect to the marriage and property

The contract for marriage without accrual is even simpler. It states:

• There will be no community of property between the parties
• There will be no community of profit or loss between the parties
• The accrual system referred to in the Matrimonial Property Act is expressly excluded 
• Both parties declare their intention to solemnise the marriage and promise each other the full force of their legal obligations with respect to the marriage and property

An ANC can strengthen marriage 

Couples often marry in community of property because they assume their marriage will last forever and “there is no need” for such a “cold” gesture as an ANC. Years later, when they become a divorce statistic, there is a lot of dispute over the division of assets and the divorce is acrimonious and painful. Divorce is painful whatever the regime, but an ANC can help to prevent conflict and protracted proceedings that wind up costing both parties considerably, both financially and emotionally. Forging an agreement when you are deeply in love that says you will behave in a caring and adult manner should the love die is actually a responsible, loving act. 

Moreover, an ANC can prevent friction. Some couples find an ANC makes the marriage more harmonious, as financial disputes are pre-empted by the terms of the contract. In the example given above of a disparity in risk appetite between a couple, the ANC may give the more risk-averse spouse some comfort (though it can’t prevent shared consequences of risk taking during the marriage).

Cape Town family lawyer can help

Simon Dippenaar and Associates are experts in family law. We can help you decide which type of marriage is best for you, and draft an ANC appropriate for your circumstances. If you choose marriage out of community of property with accrual, we can assist with the valuation of your respective estates prior to the marriage, and draw up the corresponding contract. If you would like to discuss your options in confidence, call Simon today on 086 099 5146 or email sdippenaar@sdlaw.co.za for a discussion in complete confidence.

Further reading:

• Antenuptial agreement now available to women in customary marriages
• Antenuptial contracts – the accrual system
• Antenuptial Contract in South Africa

Divorce Attorney Cape Town

http://divorceattorneycapetown.co.za/

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