Antenuptial Contracts & Prenuptial Contracts

The ANC will be the most important contract you and your spouse will sign in your lifetime.

In order for you and your spouse to get married out of community of property, you will need to enter into an ANC before the marriage is solemnised. Often referred to as a “Prenuptial Agreement” or “PreNup,” Antenuptial Contracts are an effective way for a couple intending to get married to make decisions regarding a number of issues in the event of dissolution of the marriage, whether by divorce or death. A carefully drafted marriage contract can save a lot of the time, stress, and costs associated with the dissolution of marriage. We can help you determine which matrimonial property regime makes sense for your particular situation and will tailor the document to ensure that it suits the needs of you and your spouse. South African law recognises three matrimonial property regimes, namely:

1. Marriages in community of property
2. Marriages out of community of property without accrual
3. Marriages out of community of property with accrual

In community of property:

In community of property means that everything each individual spouse owns and each of their individual debts from before their marriage are put together in a jointly owned marriage estate. From this point onwards everything they earn or buy after their marriage will also form part of this joint estate, including any debt and liabilities incurred by either one of them.

Should one spouse be reckless with his or her financial affairs in a marriage in community of property, it will adversely affect the other spouse, as they will be liable for each other’s debts. The spouses will however also be joint owners of all property in the estate. Both spouses therefore have equal rights of ownership and administration over all the assets.

There are various transactions that require the consent of both spouses. The most prejudicial consequence of marrying in community of property, is that assets in the joint estate are vulnerable to the claims of creditors of both spouses and very little can be done to protect against this vulnerability. This marital regime is not recommended for spouses running independent businesses.

The only real advantage of being married in community of property is that it is based on the fact that marriage is a partnership and as such it can be conducive to a harmonious marriage relationship as it promotes both legal and economic equality of the spouses.

Out of community of property WITHOUT the accrual system:

If you do not want the accrual system to apply, it must specifically be excluded in the Antenuptial Contract. This achieves a complete separation of assets of spouses – not only those brought into the marriage but also those acquired during the marriage. Each spouse will retain ownership of completely separate estates.

There is no sharing and on dissolution of the marriage, neither spouse has any claim against the assets of the other. Similarly, neither spouse is liable for the debts of the other. In other words, there is no sharing of profit or loss and the Court has no discretion whatsoever to adjust the division of assets on the basis of equity or fairness.

Out of community of property WITH the accrual system:

In most cases the accrual system is, perhaps, the fairest marriage system for the majority of couples. Before the introduction of the accrual system in 1984, if prospective spouses chose to be married out of community of property there was no form of sharing between them of what was built up during the marriage. The accrual system was introduced to remedy this. It is applicable to all marriages out of community of property, unless the prospective spouses specifically exclude the accrual system in their contract.

In terms of this regime, both spouses have separate estates during the subsistence of the marriage and do not share each other’s profits or losses during the marriage. This system has all the advantages of the protection afforded to marriages concluded out of community of property i.e. that assets of one spouse are secure from the creditors of the other spouse, but it incorporates the ethic of sharing, which is the basis of an ‘in community of property’ marriage. In other words, while neither spouse will be liable for the other spouse’s debts, the parties will, however, share what they have acquired during the subsistence of the marriage. This sharing only occurs upon dissolution of the marriage. This regime of marriage allows for very imaginative and flexible estate planning.

The ‘accrual’ is the extent to which the respective spouses have become richer by the end of the marriage, in other words, the amount by which the spouses’ joint wealth has increased over the period of the marriage. The spouse with the smaller accrual has a claim against the one with the greater accrual for half of the difference between the two amounts to create an equalisation of accrued wealth.

An accrual claim can only be made on dissolution of the marriage, not during the marriage. If the marriage is dissolved by death, a claim in terms of the accrual system must be paid before the will (or intestate succession) is given effect to. If the estate of the first dying spouse has a greater accrual, the surviving spouse would have a claim against the deceased estate. If the estate of the surviving spouse has a greater accrual, the estate of the deceased spouse would have a claim against the surviving spouse. If the surviving spouse is the sole heir/heiress by virtue of the will or of intestate succession (i.e. how an estate devolves when a person dies without leaving a will) then it is academic. It is not necessary to work out the accruals as the surviving spouse receives everything anyway.

Why should I consider registering an Antenuptial Contract?

There are various reasons why some people prefer to enter into an Antenuptial Contract in order to be married out of community of property.

The most common reasons are that:

• They do not want to be held liable for any debts that the other spouse may have incurred prior to the marriage;
• They do not want to be held liable for any debts that the other spouse may incur during the marriage;
• They want to protect assets such as a house from creditors, particularly if one of the spouses has a business of his or her own, and they would therefore want to be able to register the house in the name of the other spouse;

• One or both spouses have assets at the time of the marriage that they don’t want to become part of a joint estate;

• They want to be able to enter into transactions without having to obtain the consent of the other spouse;
• During the marriage each spouse retains control of his or her own property, builds up his or her own estate and each is responsible for his or her own debts.