Love and Money: Tie up the loose ends before you tie the knot
The major problem with an antenuptial contract is that it is drawn up at a time when divorce is probably the last thing on one’s mind.
Yet the contract governs what will happen to a married couple’s assets in the event of divorce or dissolution of the marriage. And it has implications for married life too. Moreover, it’s a bargain compared to what a wedding costs.
There are three types of marriage regimes in South Africa:
- In community of property – everything is pooled into a joint estate; husband and wife become owners of all assets at the time of the marriage, and all assets and liabilities thereafter. The advantage is economic equality; the disadvantage is there is no protection if one of the spouses becomes insolvent or is sued. The joint estate is then liable for the debts of both parties;
- Out of community of property before 1984 – it is common in such a marriage for one party to have significantly more assets than the other. For instance, the wife brought up the children, while the husband was the breadwinner. In the event of divorce in this instance, the courts have discretion to award a redistribution of assets;
- Out of community of property after 1984 - unless specifically stated in the antenuptial contract, such a marriage is subject to the accrual system; what is amassed over the life of the marriage is accrued. If a marriage out of community of property after 1984 with accrual is dissolved, the parties get an equal share of what they have amassed over the marriage, minus what they owe.
If accrual is expressly excluded, the parties have no claims against each other, other than for maintenance.
The advantage is that there is protection for spouses should the other become insolvent. Each spouse has his/her own estate and does not share in the other’s profit or loss. But not sharing in profits could be a major disadvantage for the spouse with a much smaller estate.
When drafting the antenuptial contract, the spouses can expressly exclude certain assets, such as a property or a share portfolio.
The advantage is protection should one of the spouses become insolvent. There is a fair division of profit accumulated during the marriage, but not prior to it.
Wealth, ignorance and poverty play a role in determining which format is chosen, said Bertus Preller, a divorce and family law attorney at Abrahams & Gross. Most married couples from a poor or uneducated background marry in community of property because they don’t have the means to pay the fees for an antenuptial contract, or simply lack the knowledge.
Preller said marriage out of community of property with the accrual system is perhaps, the fairest marriage system for most couples.
One of the advantages of an antenuptial contract is that there is nothing preventing one spouse from making a donation to the other – there is no donations tax between husband and wife – provided that the donor is solvent and that the donation doesn’t render him/her insolvent.
This is the only regime that allows for tax-free donations between spouses.
The reason for the accrual system is, essentially, to protect the wife.
One’s circumstances will usually dictate what marriage option to choose. In a second marriage, for example, the couple may be in their 40s or 50s and exclude accrual altogether. There may be children from earlier marriages. Accrual would affect what children inherit.
To be valid, the antenuptial contract must be signed by both parties prior to the marriage before a notary public. It must be registered at the Deeds Office within three months of marriage.
Attorneys’ and/or notaries’ fees to draft and register a simple antenuptial contract vary between R1000 and R3000.
To change it, the parties must make a court application and place adverts seeking creditors’ approval. The cost is between R10000 and R20000.
Source: Times Live
About Bertus Preller:
Bertus Preller is a Divorce and Family Law Attorney in Cape Town and has more than 20 years experience in law and 13 years as a practising attorney. He specializes in Family law and Divorce Law at Abrahams and Gross Attorneys Inc. in Cape Town. Bertus is also the Family Law expert on Health24.com and on the expert panel of Law24.com. His areas of expertise are Divorce Law, Family Law, Divorce Mediation, Custody (care and contact) of children, same sex marriages, unmarried fathers rights, domestic violence matters and international divorce law.