Indisputably, organising a wedding is a time of great excitement and celebration. However, it also offers an ideal opportunity to safeguard one’s assets and financial future through careful planning. To that end, an antenuptial contract (‘an ANC’) is a valuable legal instrument that enables couples intending to marry to address sensitive financial matters upfront, clarify their specific needs, and reduce the risk of future conflict, particularly in the event of divorce.
Here are five mutually supportive reasons why prospective spouses should conclude an ANC:
Avoid a marriage in community of property
Under South African law, all marriages are automatically deemed to be in community of property and of profit and loss, unless proven otherwise. In accordance with this matrimonial property regime, spouses’ assets, including movable and immovable property, and liabilities – whether subsisting at the date of marriage or acquired during the marriage – are pooled under a joint estate, belonging to them in equal and undivided shares.
The legal implication of this arrangement is that spouses are precluded from performing certain juristic acts without spousal consent. According to section 15(2) of the Matrimonial Property Act (‘the Act’), spouses married in community of property are prohibited from, inter alia, alienating or otherwise burdening immovable property forming part of the joint estate, and pledging or disposing of jewellery, paintings, and other assets which form part of the joint estate without the written consent of the other spouse.
While these statutory exclusions are in place to protect the joint estate, a marriage in community of property ultimately limits individuals’ financial flexibility and autonomy.
Maintain financial and contractual independence
In a marriage of community of property, any debts incurred by one spouse generally accrue to them both. Consequently, if one party is declared insolvent, the joint estate is placed under sequestration, irrespective of whether the spouses’ finances were managed separately in practice. Unsurprisingly, this can be devastating for the other party, particularly if they operate a business or were unaware of their spouse’s penchant for gambling and extravagant spending. The undesirability of the potential financial consequences of this marital regime is a key reason why prospective spouses increasingly opt to conclude a marriage out of community of property.
Couples married out of community of property retain their separate estates, including the assets they brought into the marriage, and do not share profits or losses. Absent a signed suretyship agreement, individuals married under this regime are thus not responsible for each other’s debts. Further, they are free to purchase and dispose of immovable property in their own name – and perform other key juristic acts – without written or tacit spousal consent.
This legal arrangement is achieved through the careful drafting, attestation, and registration of a custom-made ANC by a competent Notary Public with a sound knowledge of the contours of matrimonial law. In this sense, an ANC is critical to securing spouses’ contractual and financial freedom – and protects both parties from being held jointly liable for the other’s debts.
Tailor the agreement in accordance with your unique circumstances
The Act recognises two variations of marriages out of community of property: marriages out of community incorporating the accrual system and those excluding accrual. Upon the dissolution of a marriage, the accrual system mandates that both spouses must share equally in the growth of their respective estates. For instance, if A and B’s estates both had a commencement value of NIL at the date of marriage and A’s estate grew by R1 million while B’s estate increased by R100 000, B will be entitled to half the growth of A’s estate, namely R450 000, upon death or divorce.
Given the redistributive objective of accrual, the exclusion of the accrual system is favoured by couples who are financially established and independent, mature persons who remarry, and individuals whose economic station differs markedly from their significant other’s position.
The total separation of estates, however, may prejudice a financially weaker spouse who adopts the role of homemaker and raises the couple’s children. Accordingly, the inclusion of the accrual system safeguards the homemaker’s financial interests in the event of divorce. Notably, spouses can tailor their ANC to include certain assets in the accrual calculation, such as inheritances, donations, property acquired during the marriage, and damages for loss of income.
Align your estate planning needs
In a marriage of community of property, spouses have the autonomy to specify the distribution of their assets, including immovable property, savings and investments, motor vehicles, and sacred family heirlooms, in accordance with their preferences. As such, an ANC complements a will by clearly defining the distribution of assets between spouses, if any, and protects assets intended for heirs from the other spouse’s creditors. If couples elect to incorporate the accrual system, the surviving spouse will have an accrual claim against the estate of the first-dying spouse, which is typically paid before bequests are distributed.
Avoid protracted legal battles
Though divorce is the furthest thing from the minds of most spouses-to-be, approximately 50% of marriages ultimately end in divorce. For this reason, it is imperative that couples conclude an ANC to comprehensively regulate the proprietary consequences of their marriage and safeguard their interests in the event of a divorce. Without an ANC, a protracted legal battle is likely as couples struggle to reach a settlement, particularly in instances where one party’s financial contribution to the marriage significantly outweighs the other’s.
For a real-life example of the perils of acrimonious divorce, read our article.
STBB’s family law attorneys have extensive experience in the drafting and tailoring of antenuptial contracts. To secure your financial interests and future needs, contact our experts at familylaw@stbb.co.za/dev2 to arrange an in-person or Zoom consultation today.