There are several reasons that people may choose to enter into an Antenuptial Contract. Some of the more common reasons that one may decide to marry out of community of property include the following:
1. To avoid being held jointly and severally liable for the debts or obligations incurred by your spouse prior to the marriage or during the marriage;
2. To protect your own assets from your spouse’s creditors;
3. You may own assets at the time of the marriage which you intend to exclude from a joint estate; and
4. To exercise independence and freedom in financial transactions, without being required to obtain consent from your spouse.
The fundamental basis of an Antenuptial Contract is that it excludes community of property and community of profit or loss.
The Matrimonial Property Act of 1984 (the “Act”) provides two options for your Antenuptial Contract, namely:
1. with application of the accrual system; and
2. without application of the accrual system.
Please note that if you and your spouse conclude an Antenuptial Contract, the accrual system will automatically apply unless it is expressly excluded.
Exclusion of the accrual system means that there will be no sharing of profit or loss by the spouses at any time.
Unless purchased jointly, all assets are owned completely separately, including those brought into the marriage and those acquired during the marriage.
Neither party shall be liable for any debt or obligation incurred by the other before or during the subsistence of their intended marriage.
As there is no sharing, neither spouse has any claim against the assets of the other upon death or divorce by virtue of the antenuptial contract.
Application of the accrual system may be considered as the “fair” option as it offers the same protection as marriages concluded out of community of property, while it acknowledges the marital partnership by allowing for sharing of assets that are accrued during marriage.
With application of the accrual system, both spouses also have separate estates during the subsistence of the marriage and they do not share in each other’s profits or losses during the marriage.
Although neither spouse is liable for the other spouse’s debts or obligations, the parties will be entitled to an equal share of the assets that were acquired during the subsistence of the marriage, upon dissolution of the marriage. Where the marriage is dissolved by death, the accrual claim must be paid prior to any testamentary dispositions.
The 'accrual' is the extent to which each spouse has increased his/her respective estate by the time of dissolution of the marriage. Thus, the accrual of the estate of each spouse is the amount by which the value of his or her estate, at the dissolution of the marriage, exceeds the value thereof at the date of marriage.
The result of calculating the accrual is that each spouse shares equally in the total accrual of both parties. However, the formula appears to be slightly more complex. Essentially, the formula provides that the estate that shows smaller growth during the marriage has a claim against the estate that shows larger growth, for half the difference.
In the above example, the husband is entitled to half of R600,000 which will amount to a claim of R300,000 against the wife’s estate. R300,000 is therefore added to the husband’s accrual, a total growth of R700 000, equal to the amount of the wife’s growth (after deduction of the husband’s claim). Both estates therefore increased by equal values since commencement of the marriage.
In the Antenuptial Contract, the spouses are required to declare the nett value of their respective assets at commencement of the marriage. If either party has no value in their estate, or their debts at the time of the marriage exceed the value of their property, the nett value of that estate at commencement of the marriage is regarded as nil. Generally, in the event that an estate has as a nil value upon commencement, everything owned upon dissolution of the marriage will be deemed to have accrued during subsistence of the marriage.
The nett value of the estate of each spouse at the commencement of the marriage is calculated with due allowance for any difference in the value of money which may exist at the commencement and at the dissolution of the marriage. For this purpose the weighted average of the consumer price index (published from time to time in the Government Gazette) or any index published in substitution thereof will be accepted as prima facie proof of any change in the value of money.
Certain property belonging to either spouse may not be taken into account when the accruals are calculated, including:
1. Any amount which shall have accrued to such spouse’s estate by way of damages other than damages for patrimonial loss;
2. All inheritances, legacies and donations which may accrue to either spouse during the subsistence of the marriage and all assets which either spouse may acquire by virtue of his / her possession or former possession of such inheritance, legacy or donation and income derived therefrom; and
3. Donations made by either spouse to the other, other than donations mortis causa.
