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SIGNING AN ANTENUPTIAL CONTRACT BEFORE GETTING MARRIED DOES NOT MEAN YOU ARE ANTICIPATING DIVORCE

Discussing an antenuptial contract might not be the easiest of conversations to have with a prospective spouse. However, it is important to be aware of the benefits of an antenuptial contract while you are happily married.

Before we discuss the benefits of an antenuptial contract, let’s consider the different marital regimes couples can enter.

  1. In Community of Property

The first and very popular regime is a marriage in community of property. It is still a popular regime as it is quite an easy regime to enter. If you do not have an antenuptial contract you are automatically married in community of property, which is the default marriage regime in South Africa. In this case, the common law creates communal property. The parties’ two separate estates will become a joint estate.

  1. Out of Community of Property

Should the parties enter into an agreement in terms whereof community of property and profit and loss are excluded, they will be married out of community of property. The Matrimonial Property Act 88 of 1984 (hereafter referred to as “the Act”) introduced the accrual system which is applicable to marriages out of community of property. However, parties have the option to marry out of community of property with or without the accrual system. The two separate estates of the parties remain two separate estates for the duration of the marriage.

What is the accrual system?

Section 3 of the Act states that if the parties have agreed to a regime subject to the accrual system, at the dissolution of the marriage (by divorce or death of one or both spouses), the spouse, whose estate’s accrual is smaller than the other spouse, acquires a claim against the other spouse or their estate for an amount equal to 50% of the difference in the accrual of both estates.

A very simplistic explanation of how the accrual system works is portrayed in an example with the following facts:

  • A marries B out of community of property with the accrual system;
  • Both parties started with a commencement value of R0;
  • At the dissolution of the marriage (divorce or death) A’s estate increased in value to R100, while B’s estate is worth R200;
  • Therefore, at the dissolution of the marriage A has a claim against B’s estate for an amount equal to 50% of the difference (R100);
  • A can claim R50.

When the parties enter into an antenuptial contract with the accrual system, they are free to exclude any asset from the accrual system.
Additionally, section 5 of the Act determines that inheritances, legacies, and donations are excluded from accrual.

What are the effects of the different regimes?

Being married in community of property causes the two separate estates of the parties to form one joint estate. Therefore, both parties will share in the assets as well as the liabilities of the joint estate. Furthermore, spouses in community of property may need the consent, and in some cases the written consent, of the other spouse in order to execute certain actions in accordance with section 15 of the Act.

If the parties marry out of community of property, their respective estates remain separate so that if, for example, one estate becomes insolvent, the other party’s estate is not affected by it.

Should the parties marry out of community of property without the accrual system, the accrual of their respective estates will not be taken into account at the dissolution of the marriage.

WRITTEN BY Darryl Gantana

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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