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There is nothing more exciting than planning a wedding. The ring, the venue, the flowers, the food. For a young couple about to embark on their new lives together, the excitement and anticipation of the wedding, the honeymoon, and everything that follows, is a very special time.
However, among all of the bits and pieces that form part of the big day, one of the most important things – in fact probably the most important – is often overlooked, or in some cases ignored. The matrimonial property system that a couple chooses for themselves will have a huge impact on their lives, both during their marriage, as well as if they divorce or, if not when they divorce, then when one of them dies.
What’s the fuss?
A lot of couples feel that it is contrary to the essence of marriage to even discuss signing an Antenuptial Contract (an "ANC"), and are often too shy or embarrassed to even mention it to their spouse. What they don't however consider or realise is that signing an ANC is necessary in order not only to protect yourself, but also to protect your spouse and any children that you may have in the future. It is important to appreciate that an ANC does not only come into effect if and when you get divorced. It becomes applicable the minute you get married. In order to explain how it all works one has to however start at the beginning.
How it works
According to South African Law, if a couple gets married without signing an ANC they will automatically be married in community of property. What this means is that after you are married, you and your spouse have one joint estate, and all of your assets and liabilities are shared and form part of the joint estate. If you or your spouse get into any financial difficulties during your marriage, your creditors will be entitled to attach any asset in the joint estate, regardless in whose name the asset might be registered, or who bought it. Accordingly, it is virtually impossible to protect your assets, or keep them separate from the joint estate. Should you or your spouse wish to enter into certain types of contracts or commercial transactions, or purchase immovable property, you will have to obtain the written consent of your spouse in order to do so. On either divorce or death, the joint estate will be equally divided between the parties.I In other words, all assets and debts of the estate are shared equally, regardless of what each spouse has contributed towards the estate. It is evident that this type of matrimonial property system is rather limiting. For this reason it is recommended that a couple enter into an ANC before they marry.
Once the couple have decided that they want to be married by an ANC they will need to consult with an attorney who can advise them, and draft the document for them. It is preferable in some circumstances, usually where one or both parties have sizeable estates, that the couple each see their own attorney, and get independent advice, but this is not essential. What is however important, if you are consulting one attorney together, is that you use an attorney who is reputable, who specialises in family law or at least has a good knowledge of family law, and that the attorney is objective and impartial. You will need to consult with the attorney a month or two before you get married, as the ANC has to be signed by both of you before you get married and registered at the Deeds Office. Bear in mind that it is possible to sign an ANC after you are married, but that this is a costly exercise and involves an application being made to the High Court.
Two types of ANC’s
There are two types of ANC that a couple can choose:
ANC without the application of the accrual system
• With the non-accrual ANC, once you are married you will each still retain your own separate estates, and creditors can only attach assets held in the name of the debtor.
• Accordingly the non-debtor spouse's assets are fully protected from the creditor. You will each have full legal independence, so you do not need consent from the other spouse in order to enter into any contracts or transactions.
• On death or divorce, whichever happens first, you will each keep the assets held in your separate names, and neither spouse has a claim to the assets of the other spouse.
• If you want your spouse to share in any of your assets when you die, you will have to provide for this in your will.
• If you want to purchase an asset together with the understanding that it will be shared, it is essential that the asset is registered in both of your names.
ANC with the application of the accrual system
ANC with accrual is similar to the ANC without accrual, but with one very big difference.
• Again, once married, you each retain your own separate legal estates, and creditors can only attach assets held in the name of the debtor, and not the assets of the other spouse.
• You similarly have full legal independence, so you do not need consent from the other spouse in order to enter into certain contracts and transactions.
• The difference lies in the concept that whatever assets each of you has at the beginning of the marriage will remain your separate property on either death or divorce, but any assets which are accumulated by either of you during the course of your marriage will be shared equally between you both at the end of the marriage.
• So, in the accrual ANC, you will list the assets which you each have at the commencement of the marriage. These assets can be listed in one of two ways. You can either place a cash value on them, or you can exclude the actual asset as a whole, irrespective of what the current value of the asset is. If you place a cash value on the asset then, on death or divorce you are entitled to retain that value, adjusted by inflation. If you exclude the asset as a whole then, on death or divorce, you are entitled to retain that asset, or any asset derived from the proceeds of that initial asset.
• All other assets which are accumulated by either party during the course of the marriage are called the “accrual” in that party’s estate.
• If there is a difference in accrual values between the parties, the difference in those values must be shared, so that each party receives the same value of accrued assets at the end of the marriage.
So dear couple, please ensure that, after the dust has settled and the two of you are sipping champagne in your honeymoon suite, you will be doing so secure in the knowledge that you have taken care of the future that you are about to begin together!
However, among all of the bits and pieces that form part of the big day, one of the most important things – in fact probably the most important – is often overlooked, or in some cases ignored. The matrimonial property system that a couple chooses for themselves will have a huge impact on their lives, both during their marriage, as well as if they divorce or, if not when they divorce, then when one of them dies.
What’s the fuss?
A lot of couples feel that it is contrary to the essence of marriage to even discuss signing an Antenuptial Contract (an "ANC"), and are often too shy or embarrassed to even mention it to their spouse. What they don't however consider or realise is that signing an ANC is necessary in order not only to protect yourself, but also to protect your spouse and any children that you may have in the future. It is important to appreciate that an ANC does not only come into effect if and when you get divorced. It becomes applicable the minute you get married. In order to explain how it all works one has to however start at the beginning.
How it works
According to South African Law, if a couple gets married without signing an ANC they will automatically be married in community of property. What this means is that after you are married, you and your spouse have one joint estate, and all of your assets and liabilities are shared and form part of the joint estate. If you or your spouse get into any financial difficulties during your marriage, your creditors will be entitled to attach any asset in the joint estate, regardless in whose name the asset might be registered, or who bought it. Accordingly, it is virtually impossible to protect your assets, or keep them separate from the joint estate. Should you or your spouse wish to enter into certain types of contracts or commercial transactions, or purchase immovable property, you will have to obtain the written consent of your spouse in order to do so. On either divorce or death, the joint estate will be equally divided between the parties.I In other words, all assets and debts of the estate are shared equally, regardless of what each spouse has contributed towards the estate. It is evident that this type of matrimonial property system is rather limiting. For this reason it is recommended that a couple enter into an ANC before they marry.
Once the couple have decided that they want to be married by an ANC they will need to consult with an attorney who can advise them, and draft the document for them. It is preferable in some circumstances, usually where one or both parties have sizeable estates, that the couple each see their own attorney, and get independent advice, but this is not essential. What is however important, if you are consulting one attorney together, is that you use an attorney who is reputable, who specialises in family law or at least has a good knowledge of family law, and that the attorney is objective and impartial. You will need to consult with the attorney a month or two before you get married, as the ANC has to be signed by both of you before you get married and registered at the Deeds Office. Bear in mind that it is possible to sign an ANC after you are married, but that this is a costly exercise and involves an application being made to the High Court.
Two types of ANC’s
There are two types of ANC that a couple can choose:
ANC without the application of the accrual system
• With the non-accrual ANC, once you are married you will each still retain your own separate estates, and creditors can only attach assets held in the name of the debtor.
• Accordingly the non-debtor spouse's assets are fully protected from the creditor. You will each have full legal independence, so you do not need consent from the other spouse in order to enter into any contracts or transactions.
• On death or divorce, whichever happens first, you will each keep the assets held in your separate names, and neither spouse has a claim to the assets of the other spouse.
• If you want your spouse to share in any of your assets when you die, you will have to provide for this in your will.
• If you want to purchase an asset together with the understanding that it will be shared, it is essential that the asset is registered in both of your names.
ANC with the application of the accrual system
ANC with accrual is similar to the ANC without accrual, but with one very big difference.
• Again, once married, you each retain your own separate legal estates, and creditors can only attach assets held in the name of the debtor, and not the assets of the other spouse.
• You similarly have full legal independence, so you do not need consent from the other spouse in order to enter into certain contracts and transactions.
• The difference lies in the concept that whatever assets each of you has at the beginning of the marriage will remain your separate property on either death or divorce, but any assets which are accumulated by either of you during the course of your marriage will be shared equally between you both at the end of the marriage.
• So, in the accrual ANC, you will list the assets which you each have at the commencement of the marriage. These assets can be listed in one of two ways. You can either place a cash value on them, or you can exclude the actual asset as a whole, irrespective of what the current value of the asset is. If you place a cash value on the asset then, on death or divorce you are entitled to retain that value, adjusted by inflation. If you exclude the asset as a whole then, on death or divorce, you are entitled to retain that asset, or any asset derived from the proceeds of that initial asset.
• All other assets which are accumulated by either party during the course of the marriage are called the “accrual” in that party’s estate.
• If there is a difference in accrual values between the parties, the difference in those values must be shared, so that each party receives the same value of accrued assets at the end of the marriage.
So dear couple, please ensure that, after the dust has settled and the two of you are sipping champagne in your honeymoon suite, you will be doing so secure in the knowledge that you have taken care of the future that you are about to begin together!
Sheri Breslaw is a Family Law practitioner at Fairbridges Attorneys in Cape Town. Contact her: sbreslaw@fairbridges.co.za
