Correct marriage contract

When getting married in South Africa, one would automatically be married in community of property if no antenuptial (ante – before; nuptial – marriage) contract has been drafted and executed prior to the marriage date. This has many drawbacks, as community of property marriages can leave one’s spouse (or self) financially vulnerable, says Rene Barry, partner at Henkes Nolte-Joubert.

The two main types of marriages are in community of property or out of community of property with an antenuptial – with or without accrual – which will be fully explained below.

Community of property (COP)

The estates of the spouses become one – therefore, the debts as well as assets become the shared responsibility (50/50) of both parties in the marriage and not just the person whose name is listed as the debtor or owner.  In the unfortunate event of one of the spouses being declared insolvent, the joint estate could be lost if there is a court order granted against it. 

When married in community of property, both spouses would have to sign documents where there are large asset purchases, such as a home or motor vehicle, or where there are transactions which could affect the spouse, such as signing surety for someone else. 

Changing later from COP to having an antenuptial contract is possible, but this has to be done via an application to the High Court. The court will factor in whether any other person is negatively affected by the change in marriage contract, such as creditors who might have a claim against the estate of one or both spouses.

Antenuptial contract (ANC) without accrual

This type of marriage contract is where assets gained before or during the marriage are kept separate. Whatever each party brought with them into the marriage remains theirs and profits or gains are not shared, neither are debts. The parties are independent of each other financially, therefore “safer” in terms of protecting their own financial future.

Antenuptial contract (ANC) with accrual

Each spouse will keep full control of his and her own property and wealth (as well as debt) but any assets or profit accumulated during the marriage is shared on death or divorce.  The accrual is determined by calculating the difference in the net starting value and the net final value of the estate of each spouse at the date of dissolution of marriage by death or divorce. The value of the difference in the accrual of the two estates is then divided equally.

Whether an ANC with or without accrual is chosen as the marriage contract, a Notary, not linked or related to either partner should be called on to execute the contract prior to the date of marriage.  This contract should be registered at the Deeds Office within three months of the contract being executed before the Notary. It should be noted, however, that if it is not registered, it will have no effect on third parties but is still fully valid inter partes (i.e. the spouses). 

Drawing up a contract should be done with a practical approach, and should not be an emotional issue.  It is similar to business planning in that one wouldn’t enter into a partnership with another without stating clearly what the terms of the contract are.

Couples can choose what they will put into their contract, and it is always best to allow for enough time before the wedding is to take place to meet with a Notary Public, draw up the necessary documentation and sign it. A contract as important as this should not be rushed – and is as important to the future of each spouse as is the taking of wedding vows, says Barry.