01 Antenuptial Contract Article

Why is an Antenuptial contract important and what does it entail?

An antenuptial contract is an important contract to enter into prior to the date of marriage.  If an antenuptial contract is not signed prior to the date of marriage, then the automatic marital regime is recorded at Home Affairs and parties will be considered to be married in community of property to each other. 

However, if the parties enter into an antenuptial contract, they will enjoy the following benefits:

  • 1. Spouses do not share liabilities
  • 2. Protects spouse in the unfortunate event that his/her spouse is declared insolvent or a creditor obtains judgment against his/her spouse
  • 3. Spouses have the right to dispose and utilise their own assets at their own discretion, there is no consent required from each other
  • 4. No joining of spouses’ estates into one estate

There are two options of an antenuptial contract that parties can enter into, such as:

Married out of community of property (Accrual expressly excluded)

Spouses keep their estates separate and all assets and liabilities they acquired individually prior to the date of marriage, remain the property of that spouse after the date of marriage. 

Advantages

  • Property owned by spouse before marriage remains the property of spouse after marriage.
  • Each spouse has the right to dispose of his/her own assets without consent from his/her spouse.
  • No joining of spouses’ estates into one estate.
  • Protection against creditors in the case of insolvency or judgements etc.
  • Financially stronger spouse does not have to share his/her estate with the weaker spouse.

Disadvantages

  • There is no financial equality.
  • Weaker spouse cannot claim a share in stronger spouse’s estate.

Recommended if:

  • Both spouses already have substantial estates / incomes, or have been married before.

Married out of community of property (with Accrual)

Spouses agree that both spouses share equally in the growth during the subsistence of their marriage of each other’s individual estates. 

Accrual means the difference between the net value of the estate at conclusion and the value of estate at dissolution / death. At dissolution / death, the estate with the larger estate must transfer half of the difference to the smaller estate. 

Advantages

  • Assets acquired by spouses prior to marriage still belong to spouse, however all assets acquired after date of marriage belong to both spouses and form part of the accrual. Spouses can either exclude or include certain assets they acquired prior to marriage.  If no assets are excluded in the ANC, the value of each party’s estate at the commencement of the marriage is deemed to be nil. Spouses share the wealth accumulated during the marriage thus the financially weaker spouse also benefits.
  • Each spouse has the right to dispose of his/her own assets without consent from his/her spouse.
  • No joining of spouses’ estates into one estate.
  • Protection against creditors in case of insolvency or judgements etc.

Disadvantages

  • Financially stronger spouse has to share profits he/she made during the marriage.
  • Calculation of accrual at dissolution / death can be complex.

Recommended if:

  • If one spouse is already wealthy at time of marriage.
  • Ideal system, as its based on equality and managed as a partnership between spouses.

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