An antenuptial contract (ANC) is one of the most important documents you will ever sign. Because this document governs what happens to all your assets and liabilities on death or divorce it is imperative that you give this some serious thought.
An Ante Nuptial Contract must be signed before the marriage ceremony is conducted and must be signed in the presence of a notary and two competent witnesses. The contract is then registered in the deeds office. Parties who wish to change their marital regime after having gotten married need to launch an application to the High Court.
In community of property
In South Africa if you get married without an ANC then your marriage is “in community of property” This means that everything you as a couple own from before your marriage, including your debts, and everything you earn or buy after your marriage falls into a joint estate of which each of you have an equal, undivided share.
Upon death or divorce, you are each entitled to a half-share of the joint estate and you are jointly liable for any liabilities. If one partner becomes insolvent everything in the joint estate can be attached and sold to pay off creditors except for property that does not form part of the joint estate.
Out of community of property
Marriages concluded “out of community of property” mean that each of you retain your own assets and liabilities regardless of whether you acquired them before or during the marriage. There is no sharing of profits and losses whether upon death or divorce.
Should you wish to be married out of community of property it is necessary to conclude an antenuptial contract to that effect.
Out of community of property with accrual
The “accrual” system permits a form of sharing, whilst at the same time allowing you to retain your own unique separate estates. Assets that are built up during the marriage are shared but you each retain your own estate. Your separate assets cannot be sold to pay your spouse’s creditors if your spouse becomes insolvent.
Upon dissolution, the estates are calculated separately by subtracting your liabilities from your assets. The monetary value of the smaller estate is subtracted from the monetary value of the larger estate. The difference is then split and the party with the larger estate pays half of the difference to the party with the smaller estate.
It is possible to exclude certain assets when drafting the antenuptial contract. These assets will then not be included in the asset statement and will be excluded from the calculation. It is also possible to exclude a certain sum of money which is the agreed equivalent of assets that you do not want to share. This is termed the “commencement value”.
Certain property is automatically excluded from the accrual:
- Damages awarded for defamation or for pain and suffering;
- inheritances, legacies or gifts that either of you has received during the marriage; and
- any donations made by one spouse to the other.