When is an antenuptial contract necessary?

When is an antenuptial contract necessary?
31 Aug 2020

If the spouses do not conclude an antenuptial contract (“ANC”) prior to the date of their marriage, the marriage is automatically in community of property.

Marriage in community of property

In a marriage in community of property, the spouses have a joint estate. This means that all assets are equally owned by spouses, so are the liabilities. This includes all assets and debts acquired and incurred prior to the marriage and during the subsistence of the marriage.

Examples:

  • If for example, X has a property that she acquired before the marriage, on termination of the marriage both spouses will have an equal right to their 50% share in and to the property as it would have formed part of the joint estate.
  • If Y has a student loan that was not fully paid prior to marriage, both spouses would be liable for the payment of the student loan as it will form part of the debts of the joint estate.

If the parties wish to be married out of community of property, an ANC must be concluded. This is a legally binding contract concluded by two parties prior to the date of marriage. It sets out how the spouses intend dealing with their respective estates at the commencement, during the subsistence, and upon termination of their marriage. The ANC must be signed before a Notary Public and two witnesses. The ANC is then registered within 3 months of signature, in the relevant Deeds Registry.

If an ANC is concluded, the parties must decide on whether their marriage will be with or without accrual:

Marriage out of community of property, profit and loss with accrual

In a marriage out of community of property with the inclusion of the accrual system, both spouses have separate estates, meaning that each spouse has their own assets and liabilities. During the marriage the estates of each spouse grows separately.

For this marital regime, the spouses would have to conclude an ANC and expressly stipulate that the marriage is out of community of property with the inclusion of the accrual system. The commencement value of each spouse’s estate would be recorded in the ANC by calculating their assets separately. It is important to note that spouses can choose to exclude certain assets. At the dissolution of the marriage, the value of each estate is calculated, and the net value of each estate is determined. The spouse whose estate shows no accrual or a smaller accrual than that of the other spouse has a claim against the other spouse for half of the difference between the accruals of the respective estates.

By operation of law inheritance, legacies, donations received from third parties and any amount recovered by way of damages (except damages for patrimonial loss) are excluded from each spouse’s estate and shall not be considered when determining the accrual value.

Marriage out of community of property, profit and loss (accrual expressly excluded)

In a marriage out of community of property with the exclusion of the accrual system, both spouses have separate estates. This means that each spouse has their own assets and liabilities. Upon termination of the marriage, each spouse retains his/her own assets and is liable for his/her own liabilities.

This article merely sets out a brief overview of the legal position and it is advisable for parties to seek the assistance of a Notary to fully understand each matrimonial property regime so that they make an informed decision before entering into a marriage.

Co-authored by Mandisa Mngadi (Candidate Attorney).

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Donovan Avenant
Donovan Avenant

Donovan Avenant is a partner at Eversheds Sutherland (KZN) and heads up the litigation department. His focus is on commercial litigation for corporates. He also deals with alternative dispute resolution....

Lara Jansen van Rensburg
Lara Jansen van Rensburg

Lara Jansen van Rensburg is an associate at Eversheds Sutherland (KZN) in the commercial department, advising primarily on commercial transactions. She holds an LLB degree and an LLM (Business Law)...

Lerosha Naidoo
Lerosha Naidoo

Lerosha is an associate at Eversheds Sutherland in Durban and part of our property department. She has many years of experience in the conveyancing and property field. She commenced her...

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