ATTORNEYS | CONVEYANCERS | NOTARIES
MENU
Menu
Wedding planning is often a vibrant and joyful experience, filled with ribbons, flowers, and cake tastings, but amidst all the excitement, have you taken a moment to consider the black and white? And no, we’re not referring to the groom’s suit, we’re talking about your antenuptial contract.
Whether you’ve just gotten engaged or are already knee deep into your wedding planning, one thing is certain: you’ve likely encountered the topic of entering into an antenuptial contract with your future spouse. Although the idea of an antenuptial contract is often cast in a negative light in pop culture and movies, importance of considering one cannot be stressed enough!
An antenuptial contract is a legal agreement entered into by two people intending to marry. It determines the ‘marriage regime’ that will apply to the couple, and outlines how their property, assets, and liabilities will be treated during the marriage and upon its dissolution.
The phrase “dissolution of the marriage” often causes discomfort, with many couples saying, “We’re not getting divorced, why would we need a contract about that?” But dissolution doesn’t only refer to divorce, it also includes death of a spouse. That’s why entering into an antenuptial contract is not only wise, but essential to ensure clarity, fairness and future proof your finances.
In this article, we’ll explore the different civil marriage regimes that couples can choose from. These regimes include, ‘In Community of Property’ and ‘Out of Community of Property’, with or without the accrual. Each regime carries distinct legal implications for the spouses on how their estate is managed during the marriage and after the marriage.
This is the default regime that applies if the parties do not sign an antenuptial contract before their wedding day. You might think, “Easy enough, let’s just go with the default.” However, this regime can have serious consequences for your financial independence and financial future.
When married in community of property, the parties’ respective estates merge into a single joint estate. This means that all assets and liabilities are shared. This includes both premarital assets and liabilities, as well as those acquired during the marriage. Upon dissolution of the marriage, the estate is divided equally.
While this might sound appealing if the estate is asset-rich, it also means that each party shares equally in the other’s debts and liabilities. Creditors of either party may look to the joint estate to satisfy their claims, regardless of which spouse incurred the debt.
This regime also impacts the contractual freedom of the parties. Both spouses must consent to acquiring assets or incurring debts during the marriage, and neither can deal with their estate freely without the other’s approval.
Most couples choose to avoid this regime due to the far reaching consequences of having a single joint estate.
To avoid being regarded as married in community of property by default, the parties should consult a qualified attorney and notary to draft and execute an antenuptial contract. In the antenuptial contract the parties can elect to be married out of community of property (total separation) or for the accrual system to apply.
Choosing to marry out of community of property means that each party retains a separate estate throughout the marriage and upon its dissolution.
All assets and liabilities, both before and after the marriage, remain the sole responsibility and property of the individual who acquired them. There is no sharing of growth in either estate, and each party is free to manage their assets and liabilities as they see fit.
To be married out of community of property, the couple must sign an antenuptial contract before the wedding, clearly stating that they wish to be married out of community of property and specifically that they do not wish the accrual system to apply.
Under this regime, each spouse maintains a separate estate during the marriage, but any growth in the estates is shared upon dissolution. The sharing of the growth is however a little more complicated.
The accrual calculation entails that the parties’ respective estate values at the end of the marriage is compared to the starting values declared in the antenuptial contract. The growth in each estate is then determined. The growth in the two estates is then compared to determine the difference in value between the two. The party showing a smaller growth is entitled to half the difference between the two estate values from the other spouse. In effect the parties will then have equal estate values at the end.
There are several automatic exclusions from the accrual calculation and the parties can elect to exclude specific assets or declare starting values for their respective estates.
During the marriage, each party manages their own assets and liabilities independently, without needing the other’s consent. The spouses are also protected from creditors seeking to claim against the estate of the other spouse.
The accrual system allows for flexibility, certain premarital assets or other specified items can be excluded from the accrual calculation. This regime offers a fair balance between financial independence during the marriage and equitable sharing of growth at its end.
It is no surprise that this is a very popular choice among couples today. A couple wishing to elect this regime will need to consult a qualified attorney and notary to assist in drafting and execution of their antenuptial contract.
At LS Incorporated, we guide couples through the various marital regimes, helping them navigate sensitive conversations with confidence and ease, while ensuring the antenuptial contract is finalised smoothly, memorably, and affordably.
Contact us today to schedule a consultation or pop us an email to info@ls-inc.co.za.
BY KARLIEN SEARLE-STEENKAMP