ANTENUPTIAL CONTRACTS

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GETTING MARRIED?

Firstly, we extend our warmest congratulations on your decision to tie the knot with someone extraordinary and unique. There’s no denying that marriage brings abundant love, joy, friendship, and family into one’s life and future.

However, it’s essential to understand that the type of marriage governance you choose can significantly impact your legal and financial standing. We are here to provide you with the necessary guidance and information to ensure that you fully comprehend the legal risks involved, enabling you to make an informed decision before tying the knot in marriage.

WHAT IS AN ANTENUPTIAL CONTRACT (ANC)?

An antenuptial contract (ANC) or prenup is a marriage out of community of property and consists of a written agreement entered into between a couple before marriage, giving the couple an opportunity to agree on the distribution of assets in the event of the marriage ending upon death or divorce of a spouse. The contract ensures that the partners retain their own separate estates and are not liable for the debts of each other.

WHAT HAPPENS IF YOU DO NOT DO AN ANC?

A marriage where no ANC is entered into is automatically one of in community of property which combines everything you and your partner owned before and during the marriage. In this instance each individual’s assets are not protected from creditors and spouses are liable for the debts of each other.

WHEN SHOULD AN ANC BE CONCLUDED?

Before the marriage ceremony, a couple establishes an Antenuptial Contract (ANC) to agree on the distribution of their assets if the marriage is terminated by divorce or death. This contract enables the partners to maintain their estates separately and provides protection from assuming liability for the debts of one another.

It is imperative to note that if an ANC is not executed before a customary marriage and lobola negotiations then the parties are married in community of property.

IMPLICATIONS OF A MARRIAGE OUT OF COMMUNITY OF PROPERTY

When a couple decides to sign an Antenuptial Contract before their wedding, their marriage is considered out of Community of Property. It is important to note several implications of such a marriage:

Firstly, neither spouse will bear responsibility for any debts incurred by the other spouse before or during the marriage.

Secondly, assets can be protected, mainly if one spouse, under their name, owns a business. The couple can register assets such as their home under the spouse’s name with the lower risk profile. If one spouse is sequestrated, the other spouse’s assets will remain secure.

Thirdly, either or both spouses can exclude assets they owned before the union from the joint estate.

Fourthly, spouses can engage in commercial transactions without the other spouse’s consent.

Finally, it is worth noting that each spouse has control over their assets, estate, and debts.

Antenuptial Agreements are not only reserved for the wealthy; they can benefit anyone who wants to secure their financial future, even if the couple does not own much. It is a common misconception that couples with fewer or no assets do not require one.

Signing an ANC agreement before tying the knot is vital to avoid any potential legal complications and is customisable and demonstrates a commitment to each other’s future and financial interests. While it may seem unromantic in considering these facts, being prepared for any situation is always a wise decision, and an antenuptial contract can offer essential protection during an unforeseen death or divorce.

TYPES OF MARRIAGE CONTRACTS IN SA

Three types of marriage contracts in South Africa:

In Community of Property
Out of Community of Property (without accrual)
Out of Community of Property (with accrual)

It is natural to feel inclined to share everything with your partner when entering into a marriage. However, it is important to pause and carefully consider the ramifications of such actions in our current society. Prioritising open communication and mutual understanding can be instrumental in fostering a resilient and rewarding partnership.

In Community of Property

Assets: A marriage where no ANC is entered into is automatically one of in community of property which combines everything (all assets) you and your partner owned before and during the marriage, and the estate is subsequently referred to as a joint estate. In the event of death or divorce, the assets are equally shared, irrespective of whether or not it’s in the name of only one spouse.

Liabilities: If either spouse is blacklisted or sequestrated, this would negatively affect the credibility of the other spouse or the granting of credit by any service provider, as all credit or commercial agreements have to be entered into by both spouses.

Protection from creditors: The joint estate is not protected from creditors who may attach assets in the joint estate for the repayment of any outstanding debt in the event of liquidation or sequestration.

Spousal consent: You require your spouse’s consent to sign any agreement and are both held equally accountable for the consequences of such a contract.

Out of Community of Property WITHOUT accrual

Assets: In this system, the estates of both spouses are separate. In the event of death or divorce, your spouse has no claim against any assets you have acquired before or during the marriage. You control your assets independently.

Liabilities: Any debts acquired before or after the marriage are that of each spouse, and the other spouse is not held liable.

Protection from creditors: If your spouse is sequestrated or their company is liquidated, your assets are protected from creditors.

Spousal consent: You do not require consent from your spouse to enter into any agreements.

No claim against the net increase in your spouse’s estate (referred to as the accrual): If you decide to become a housewife or house-husband, give up your career or stay at home to look after your children, then this system will not benefit you because, in the event of a divorce, you have no claim against the increase (if any) of your spouse’s estate.

This arrangement ensures that any assets acquired prior to or during their marriage will remain separate throughout their union. Each partner maintains a distinct estate, and no assets will be shared. To put it differently, what belongs to each partner will remain solely theirs and will not be shared with the other.

Marriage out of Community of Property WITH accrual

This type of marriage contract is subject to the same factors stipulated above for a marriage out of community of property. The only differentiating factor in this regime is that in the event of a death or divorce if you’re the financially stronger spouse, you are required to share in the growth of your estate, which you acquired during your marriage.

The word “accrual” refers to the net increase in the value of a spouse’s estate since the date of marriage.

In calculating accrual, the following are excluded:

Inheritances, gifts, and donations that either party received
A donation made by one spouse to another
Compensation for injury received during the marriage
Damages awarded to a spouse for defamation or pain and suffering

Let’s look at an example:

Net value (Assets minus liabilities) at the time of divorce of the wife’s estate is R 300 000, whilst the net value of the husband’s estate is R750 000. The accrual is calculated by taking the more considerable net value less, the smaller net value of the estates and dividing it by two.

Example: R750 000 – R300 000 = R450 000

R450 000 divided by 2 = R225 000

In the event of divorce, the husband must pay his wife an amount of R225 000.