ANTENUPTIAL CONTRACTS IN SOUTH AFRICA
TYPES OF MARRIAGE AGREEMENTS IN SOUTH AFRICA
In South Africa, there are three marriage regimes which a couple can choose from:
- Marriage In Community of Property;
- Marriage Out of Community of Property – subject to the Accrual System; or
- Marriage Out of Community of Property – with the Exclusion of the Accrual System.
It is vital that you fully understand each regime’s legal, financial and tax consequences to make an informed decision. The legal consequences of each different regime are briefly explained:
1. MARRIAGE IN COMMUNITY OF PROPERTY
If you get married without an antenuptial contract, it automatically means that you are married in community of property. This means that all debts and assets before and during the marriage form part of one joint estate.
Neither party will own any assets in their own name as both parties are now co-owners of one another’s property. This also means that the parties will become liable for one another’s debts and liabilities incurred before or during the marriage, even if they were unaware of these debts.
Marriage in community of property poses a risk to both parties in that when one party becomes insolvent, both parties will be declared insolvent since they share one estate.
The disadvantages of marriages in community of property:
- The financially stronger spouse will have to share their assets and profits made during and before the marriage with the financially weaker spouse;
- Both partners are jointly liable for each other’s debts and liabilities;
- The administration of the joint estate can become complicated and burdensome;
- The division of assets in a divorce can become complicated and burdensome;
- If one party becomes insolvent, both parties will be declared insolvent.
The advantages of marriages in community of property:
- Couples do not have to enter into a particular contract before getting married;
- The financially weaker spouse will have a claim against the other spouse for half of their assets and profits made during and before the marriage;
It is also important to remember that both spouses have equal powers to manage the joint estate. In the following circumstances, written consent should be obtained from both parties:
- alienating or burdening assets in the joint estate that is kept mainly for investment purposes. This includes items such as stamps, works of art, jewellery, coins etc.;
- alienating, ceding or burdening insurance policies, mortgage bonds, fixed deposits, shares, stocks or any of the other spouse’s investments at any financial institution;
- withdrawing money from any account held in the name of the other spouse;
- alienating immovable property belonging to the joint estate;
- entering a credit agreement in terms of the National Credit Act 34 of 2005; and
- entering into a contract to purchase immovable property.
2. OUT OF COMMUNITY OF PROPERTY WITH ACCRUAL
Parties electing to get married out of community of property subject to the accrual system require an agreement to be drawn up by an attorney before the date of marriage, indicating that community of property, profit and losses are excluded. This agreement is known as an antenuptial contract (ANC).
In terms of this regime, each spouse has their own separate estate, and assets are kept in their name. Â The spouse with the smaller estate will have a claim against the other spouse for half of the growth in their estate during the marriage. The net estate values will be determined separately upon death or divorce, and the more significant estate will have to transfer half of the difference to the smaller estate.
If either party owns assets before marriage, it must be expressly excluded in the ANC; otherwise, the asset will be included in the accrual calculation. The estate will have no commencement value if both parties have no or minimal assets.
Certain assets will be automatically excluded from the accrual calculation, like inheritances, donations or damages for personal injury. Assets jointly acquired by the parties are considered part of the accrual.
The net estate values will be determined separately upon death or divorce, and the more significant estate will have to transfer half of the difference to the smaller estate.
Advantages of marriage out of community of property with the accrual system:
- Both parties share in the assets accumulated during the marriage, and the spouse with the smaller estate benefits;
- All assets acquired before the marriage can be excluded;
- Each spouse retains their own assets and has their own discretion on how to deal with their finances;
- Spouses are not liable for each other’s debt;
- If one spouse becomes insolvent, creditors cannot touch the solvent spouse’s assets.
Disadvantages of marriage out of community of property with the accrual:
- The economically stronger spouse has to share the profits that they made during the marriage;
3. MARRIAGE OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACCRUAL
Parties electing to get married out of community of propery with the exclusion of the  accrual system also requires an antenuptial contract to be drawn up by an attorney before the date of marriage.
In terms of this regime, each spouse has their own separate estate, and all assets are kept in their own names. Each party will be liable for its own debts and liabilities as well.
Upon death or divorce, neither party will have a claim against the other party for assets. It protects each party’s estate against claims by the other spouse and their creditors, as spouses are not liable for one another’s debt.
The advantages of marriages out of community of property without the accrual system:
- Each spouse keeps their own assets and has their own discretion on how to deal with their finances;
- Spouses are not liable for each other’s debt;
- If one spouse becomes insolvent, creditors cannot touch the solvent spouse’s assets;
- The economically stronger spouse does not have to share their estate with the economically weaker spouse.
The disadvantage of marriages out of community of property without the accrual:
- The economically weaker spouse does not get to share in the estate of the stronger spouse
Each couple’s circumstances are unique, and they have their own way of dealing with finances, debts and assets. There is no marriage regime that one can recommend as a one-size-fits-all approach, and each couple’s circumstances need to be investigated prior to recommending a marriage regime.
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Choose Burger Huyser Attorneys to draw up your Antenuptial Contract as we have gained vast experience in dealing with these agreements over the years. We pride ourselves on delivering a discreet and confidential service while giving you peace of mind during this exciting time in your life.
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