Antenuptial Contracts And Different Marital Regimes-Nuptial Agreements

Getting engaged is one of the most exciting events in any couples’ life.  We realise that dealing with contracts is the last thing you want to do at such a happy time.  Our firm prides itself on explaining in detail to the parties the different types of marital regimes available to them and assisting them on selecting the right marital regime to suit their lifestyles and particular circumstances. We view a well drafted ante-nuptial contract as an investment in your future.

An antenuptial contract is undoubtedly one of the most important agreements that you will ever enter into. These notarially executed documents not only come into play should the parties decide to get divorced but also greatly impact how spouses’ assets will be distributed when one of them passes away.

The Matrimonial Property Act 88 of 1984 provides for three different marital regimes –

  1. a marriage in community of property;
  2. a marriage out of community of property and
  3. a marriage out of community of property with the application of the accrual system.

Each of these matrimonial property regimes has its advantages and disadvantages.

In Community Of Property

 If a couple does not conclude an antenuptial contract before they are married, the South African law dictates that such a couple will automatically be married in community of property. This means that from date of marriage there is one estate, namely the joint estate, which consists of all the assets and liabilities of you and your spouse, irrespective of whether the assets (such as a house) are registered in only the one party’s name. You and your spouse are joint owners of all the assets and are jointly liable for all the debts.

Should either spouse die or in the event of the parties divorcing, the joint estate is divided equally.  Each party is entitled to half of all the assets and is responsible for half of all the debts.

While this may sound like exactly what marriage should be, this marital regime may have consequences which are less than ideal.  For example:

  1. In the event of the death of one of the spouses, the joint estate will need to be wound up in order to perform the necessary division of the joint estate and to distribute the proceeds of the deceased spouse’s estate. This often means that the surviving spouse finds their bank accounts frozen and has to live in legal limbo whilst the winding up process occurs.
  2. There is no financial independence.
  3. Since you and your spouse share one joint estate, your spouse’s debts are half your debts and, if they become over-indebted, creditors may lay claim to “your” assets to pay your spouse’s debt off.
  4. Taken further, if one spouse goes insolvent, the entire joint estate can be appropriated and put towards paying that spouse’s creditors, leaving both spouses in a precarious financial situation.

To avoid these negative consequences, an antenuptial contract must be entered into by couples before they get married.  Concluding an antenuptial contract means that you will be married out of community of property – that is, the spouses will each have their own separate estate, with separate assets and liabilities.

There are two marital regimes which are regulated by antenuptial contracts – a marriage out of community of property without the accrual and a marriage out of community of property with the accrual.

Out Of Community Of Property – With Accrual

This is the default out of community of property marital regime.  If the antenuptial contract does not specifically provide that accrual is not excluded, it will automatically apply.  

The accrual system is helpful to protect a spouse who may, for various reasons, earn substantially less than their spouse, for example where one spouse elects to remain at home to raise the couple’s children.

When parties enter into this form of marital regime, each spouse will record their estate’s value at the time of entering into the marriage.  This is done by calculating the value of the party’s assets and subtracting the amount of all that party’s liabilities.

The accrual system works as follows:

  • Each party remains the owner of the assets that he / she bought before the marriage and all assets that he / she bought since the commencement of the marriage.
  • At the dissolution of the marriage, either by death or divorce, you determine by how much (if any) the estate of the husband increased (from the date of conclusion of the antenuptial agreement until the dissolution of the marriage) and how much the estate of the wife increased (from the date of conclusion of the antenuptial contract until the dissolution of the marriage).
  • If for example the husband’s estate increased by R10 million and the wife’s estate increased by R5 million, the husband (or his estate) will have to pay half the difference between the respective accruals to the wife. Using the above example, the difference between the different accruals is R5 million, so the husband will have to pay R2.5 million to the wife.

The advantages of this marital regime are that:

  1. This system allows the spouses to retain their financial independence and each spouse can manage his / her estate as he / she sees fit.
  2. Only insofar as the parties purchase property together (such as a house) will they be joint owners of that property.
  3. Since each spouse manages his / her own estate, the spouse’s creditors cannot look to the other spouse for payment (unless the latter signed a suretyship).

Out Of Community Of Property – Without Accrual 

 Under this marital regime, assets acquired before or during the marriage remain separate throughout the course of the marriage.  Each spouse has a separate estate, which remains completely separate from the other spouse’s estate.  Assets are not shared.  We often recommend this marital regime to couples who accumulated substantial assets prior to their marriage.

There is complete financial independence under this form of marital regime.  Should the one spouse become insolvent, that spouse’s creditors are, once again, unable to lay claim to the other spouse’s assets to pay for the insolvent spouse’s debts.

However, in the case of divorce or of one spouse dying, each spouse’s estate remains completely separate and each spouse is only entitled to those assets that fall in his / her estate.  They will have no claim against each other.

The antenuptial contract needs to be signed before the conclusion of the marriage in front of a notary and the said antenuptial contract must be registered at the Deeds Office within 3 months of the conclusion of the marriage.

Although it is possible to change your chosen marital regime once you are married, this is a very long and expensive process involving a High Court application.  Allow us to help you get it right the first time!

Antenuptial Agreements Enquiry

"*" indicates required fields

Your Name*
This field is for validation purposes and should be left unchanged.