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Most people seem to know that one should sign a contract before they get married, but not everybody understands the importance and implications of doing so. Herewith a a basic guide to antenuptial contracts.
If people get married without first executing an antenuptial contract (also known as a “pre-nup”), they will automatically be married in community of property.
If you execute an antenuptial contract, you will be married out of community of property and you will each retain your respective estates.
Let’s discuss the options…
Your separate estates which existed before the marriage become one indivisible joint estate and almost all assets and liabilities will become shared.
There are a few exceptions to this rule in that certain damages claims and specifically excluded inheritances may not fall inside the joint estate.
Although the concept of sharing just about everything may sound romantic, this matrimonial regime has certain shortcomings. If either of the party’s creditors were to obtain judgement against either party, the judgment would be executable against the joint estate. In other words, none of the shared assets would be shielded from the creditors of either party.
One party to the intended marriage may have already accumulated some wealth and if the parties choose a marriage in community of property, there would be no distinction between the property acquired before or after the marriage – it would all go to one big “melting pot”.
If you want to keep your financial affairs separate during a marriage but still want to share the fruits of your joint labour, then a marriage out of community of property with the inclusion of the accrual system may be the best choice.
Each party’s assets remain separate as do their respective liabilities – before and during the marriage – but at the end of the marriage (by death or divorce) one party will have a claim to half of the difference between the accruals of the two estates.
A party’s accrual is the nett value of their estate (assets less liabilities) calculated on the date of the death or divorce, ignoring certain excluded assets and liabilities in terms of the antenuptial contract and/or in terms of the Matrimonial Property Act.
In simple terms, the party who has made the most “profit” during the marriage will be liable to pay half of that “profit” to the other at the end.
There are several benefits of this system. By keeping your financial affairs separate, you avoid one party’s creditors attaching the other’s assets in execution of a judgment debt.
You can exclude assets acquired before the marriage from the operation of the accrual system so that only the assets acquired during the marriage are accounted for when determining the accrual claim.
One party can safely choose to suspend or not to focus on his/her career in order to provide the necessary support to raise children without losing out on the financial gains made by the other party.
Just as you each have separate estates before a marriage, a marriage out of community of property excluding the accrual system would allow the parties to enjoy the benefits of marriage without having to share any assets or share in the other’s liabilities.
This system often suits couples who would not need the benefits of the sharing in the accrual system and who prefer to keep their financial affairs separate.
No matter what your circumstances, we trust a basic guide to antenuptial contracts will assist you in carefully considering your options when choosing the matrimonial property regime for your intended marriage. Take the time to consult with your attorney and to discuss the financial aspects of your partnership with each other – before you say “I do”.
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