Ante-nuptial contracts and accrual.
Here is what you need to know about ante-nuptial contracts.
Marriage is one of the biggest choices you will make in your life. However, not everyone who enters a marriage knows that it burdens you and your partner’s estate.
Types of marriage regimes.
In marriage systems found in South Africa, we deal with three types of marriage regimes,
1) Married in Community of Property;
2) Married out of Community of Property with Accrual; and
3) Married out of Community of Property without Accrual.
Effect of marriage with or without an ante-nuptial contract.
If you choose to be married without an antenuptial contract, our law will view your marriage as a marriage in a Community of Property. In short and simple terms, you and your partner’s separate estates will form one new estate, and all assets held under your names will be seen to form one estate, bar a few exceptions.
The other two options entail an antenuptial contract, so what is an antenuptial contract?
What is and ante-nuptial contract?
An antenuptial contract is an agreement that you and your partner need to enter before your marriage date and has to be registered in the Deeds office within 3 Months of your marriage or, even better, before your marriage, should you wish to enter into such an agreement, your marriage will automatically be one of Out of Community of Property.
With or without accrual?
The question that will then be posed will be whether you wish to include Accrual or exclude Accrual.
So, what is Accrual? Simply put, this is the net value by which your or your partner’s estate has increased during the subsistence of your marriage.
The effect of accrual.
An Antenuptial contract with Accrual will work as follows: At the outset of your agreement, both parties’ starting values will be calculated. This calculation is done by assessing what assets each party has in their names before the subsistence of the marriage, along with any liabilities the parties wish to exclude from such contract.
In short, should the parties’ marriage come to an end by either divorce or death, then this contract will be the starting point in determining whose estate has grown more over time, allowing the courts or master to determine a suitable split of the estate to be distributed to the party entitled to Accrual.
An Antenuptial contract that excludes Accrual will work as follows: At the outset of your agreement, both parties’ starting value will again be calculated. This calculation is done by assessing what assets each party has in their names before the subsistence of the marriage, along with any liabilities the parties wish to exclude from such contract. However, in this instance, this is done more importantly to ensure that both parties’ assets are easily deduced from those they amassed after the marriage and not to assess a starting value for the subsequent growth of their estates.
Should the marriage end in either divorce or death, then in terms of this contract, both parties will still have a separate estate from the other, and all assets before the marriage and all assets amassed by each partner in their name will remain in their estate, and no claim will be had over such assets.
In summary.
An antenuptial contract offers a solid agreement in both situations that will provide clarity should there be a breakdown of the marriage and will assist the parties in determining whether they do or do not have a claim over the other partners’ estate.
Either partner will have protection over their assets brought into the marriage and be entitled to the asset value they bought in, and further be allowed to share what has been built up together, should they opt for the option including Accrual.
Should the parties opt for the exclusion of Accrual, both parties’ assets are then safeguarded, as the parties will have separate estates where nothing is shared.
Parties should, however, remember that the accrual system only comes into place at the end of their marriage, be it by death or divorce, and neither party may have a claim over the Accrual during the subsistence of the marriage.
If you would like to know more about estate planning click here.
If you would like to know more about postnuptial execution of Antenuptial contracts, click here.
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 errors, omissions, loss, or damage arising from reliance upon any information herein. Don’t hesitate to contact Meyer and Partners Attorneys Incorporated if you require further information or specific and detailed advice. Errors and omissions excepted (E&OE)
