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ANTENUPTIAL CONTRACTS (ANC'S)

Marriage out of Community of Property

The parties can draw up a contract in which they indicate that they want the marriage out of community of property. This is termed an Antenuptial Contract (ANC). The ANC can contain any stipulation that is not contra bonos mores (against goods morals). In other words parties agree that community of property will not apply to their marriage.

An ANC is an agreement between the parties in terms of which they reach consensus on the patrimonial and financial consequences regarding their marriage. The essential characteristic of a marriage out of community of property is that there is no joint estate. The parties retain their respective estates as their own property and each administers his/her own estate independently. They can however be joint owners of assets, for example a house, or a vehicle. The independence can be seen that they can act independently and not be liable for the debts of one another.

However, an exemption is that when household necessities are acquired, both spouses will be liable jointly and severally.

Marriage settlements can be determined in an ANC and are considered a donation, for example a house, cash, insurance policies or even the creation of a trust in favour of the other spouse. Due to the accrual system, which can now apply to these marriages, these settlements are not often made in ANC's.

As there is no community of debt, creditors cannot attach the assets of the other spouse. The parties are thus judicially equal but economically unequal. Each party may freely dispose of his/her assets and make a separate will.

Marriage out of Community of Property with the Accrual System

Once the parties decide to be married out of community of property, they can also have the accrual system made applicable to their marriage. The same principals which regulate the out of community of property marriage apply, but at the dissolution of the marriage either because of death or divorce, the spouse whose estate shows a smaller accrual has a claim against the other spouse for an amount equal to half of the difference between the accrual of the respective estates of the spouses.

The accrual system is sometimes referred to as a form of deferred community of property, however the parties are still independent and not liable for each other's debts. The net initial value of a spouse's estate is to be determined, either at commencement or at the end of the marriage.

In terms of this regime, both spouses have separate estates during the subsistence of the marriage and do not share each other’s profits or losses during the marriage. This system has all the advantages of the protection afforded to marriages concluded out of community of property i.e. that assets of one spouse are secure from the creditors of the other spouse, but it incorporates the ethic of sharing, which is the basis of an in community of property marriage. In other words, while neither spouse will be liable for the other spouse’s debts, the parties will, however, share what they have acquired during the subsistence of the marriage. This sharing only occurs upon dissolution of the marriage. This regime of marriage allows for very imaginative and flexible estate planning.

The 'accrual' is the extent to which the respective spouses have become richer by the end of the marriage, in other words, the amount by which the spouses' joint wealth has increased over the period of the marriage.

The spouse with the smaller accrual has a claim against the one with the greater accrual for half of the difference between the two amounts.

The accrual of a spouse's estate is calculated by subtracting the net asset value of his or her estate at the commencement of the marriage from the net asset value of his or her estate upon dissolution of the marriage.

This can be exemplified as follows:

If spouse A had a net asset value of R10 000-00 at the commencement of the marriage (his "initial value") and a net asset value of R100 000-00 at the dissolution of the marriage (his "end value") then the accrual to his estate is R90 000-00. If the initial value of the other spouse B was R20 000-00 and her end value R200 000-00, it follows that the accrual to her estate is R180 000-00.

 Net accrual is calculated by subtracting the "smaller" accrual from the "larger" accrual. In the above example: R180 000-00 - R90 000-00 = R90 000-00. In accordance with the Matrimonial Property Act, A (the spouse with the smaller accrual) acquires a claim against B (the spouse with the larger accrual) for one half of the net accrual (namely - R45 000-00).

The initial value of a spouse's estate must be declared either in an antenuptial contract or a separate statement made not later than six months after the marriage, failing which the initial value will be deemed to be nil.

Various assets are excluded from the determination of the accrual of a spouse's estate, and they are:

Any amount which accrued to the estate by way of damages other than damages for patrimonial loss;

Any asset which has been expressly excluded from the accrual system in terms of the antenuptial contract of the spouses as well as any other asset which a spouse has acquired by virtue of his or her possession or former possession of such asset;

An inheritance, a legacy or a donation which accrues to a spouse during the subsistence of his or her marriage as well as any other asset which he or she acquired by virtue of his or her possession or former possession of such inheritance, legacy or donation, except insofar as the spouses may agree otherwise in their antenuptial contract or insofar as the testator/testatrix or donor may stipulate otherwise;

Donations between spouses other than a donation mortis causa (after death).

In light of the above you should furnish us with a complete list of current assets and liabilities, proof of residence and copies of your identity documents in order to advise you properly during consultation.