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Ante Nuptial Contracts (ANC)

anteWhat is an Antenuptial Contract?
A contract entered into prior to marriage with the purpose of regulating the terms and conditions of the marriage. The parties to an antenuptial contract are the prospective spouses. Only prospective spouses that are free to marry each other or enter into a same-sex civil union may enter into an antenuptial contract


Why is an Antenuptial Contract important?
If your spouse becomes indebted, to protect yourself against your spouses' creditors, it is important that you have an antenuptial contract that is registered at the Deeds Registry.


When must an Antenuptial Contract be entered into?
The antenuptial contract must be signed prior to the marriage and registered within three months after signature.
There are 3 different matrimonial property regimes in South-Africa:

MARRIAGE IN COMMUNITY OF PROPERTY
This applies automatically where parties do not conclude an Antenuptual Contract. All assets and liabilities of spouses married in community, whether acquired before or during the marriage, fall within one joint estate.

Disadvantages of being married in community of property

  • if one of you goes into debt, creditors have claim to all of your assets – that’s your assets as well
  • if one of you has your own business and becomes insolvent, your home and all assets, in both of your names, becomes fodder for debt collectors
  • there is no financial independence, certain transactions, such the sale of shares, need the consent of both parties
  • if one partner should die, the estate of both the deceased and surviving partner will be wound up because it is a joint estate – not great for the surviving partner who will find themselves in legal limbo for a while

Advantages of a marriage in community of property

  • on death or divorce, the estate is divided equally

MARRIAGE OUT OF COMMUNITY OF PROPERTY

This is achieved by concluding an Ante Nuptial Contract. This furthermore entails that each party has, and maintains, a completely separate estate.
Each spouse retains absolute independence of contractual capacity, and each party’s assets are protected against claims by the other party’s creditors. Each is liable for his or her own debt. There is no provision for sharing.

Advantages of being married out of community of property without  the accrual system:

  • if one of you becomes insolvent, creditors may not attach the assets of the other
  • each of you is legally obliged to offer financial support to one another should one of you be unable to support himself/herself

Disadvantages of being married out of community of property without the accrual system:

  • in the case of death or divorce, you are entitled only to those assets you have accrued in your name – should one of you choose to stay at home to raise children, that partner would not be entitled to the assets accumulated by the other partner


MARRIAGE OUT OF COMMUNITY OF PROPERTY WITH INCLUSION OF THE ACCRUAL SYSTEM
Each spouse is the owner of their own estate which means that they may own property independently of each other and are liable for their own debt.
Inheritances, legacies and donations, including assets acquired by virtue of them are excluded from accrual, unless the spouses agree otherwise in their antenuptial contract or if the testator or donor stipulate otherwise.


How is the accrual calculated?

At dissolution of the marriage, each party’s estate is calculated by determining all assets, determining all liabilities, subtracting liabilities from assets and arriving at a nett asset value.

In simplistic terms the value of the smaller estate is subtracted from the value of the larger estate, the difference is split, and the party having the larger estate pays half of the difference between the two estates to the party with the smaller estate.

It is possible to provide for exclusions from this sharing. In the Antenuptial Contract the parties may exclude certain assets from the sharing. For an asset to be excluded it must be properly described.

Advantages of being married out of community of property with the accrual system:

  • both parties share in the wealth accumulated during marriage
  • if each of you owned property before the marriage, it remains in your     respective names
  • you each conduct your own independent financial affairs
  • if one of you goes into debt, it cannot be claimed from the estate of the other
  • in the case of divorce, any assets made whilst married are shared – it doesn’t matter who acquired them; each partner’s current net asset value is calculated by subtracting all liabilities from assets
  • the ANC can be tailored to suit your needs
  • it protects the partner who remains at home to care for the family