Why are antenuptial contracts important

Why are antenuptial contracts important? Let's look at an example.

Once young and in love, Bob and Jane did what young and in love couples do. They got married. Thirty years later Bob and Jane are no longer in love and separate. They got married without an antenuptial contract. In other words, they are married in community of property. Bob is not willing to share 50% of the joint estate with Jane and refuses to divorce her. So he has a will drawn up leaving everything to his daughter. However, Bob forgets that should he die Jane will get 50% of the joint estate anyway simply by virtue of being married in community of property to him. Bob only owns 50% of the joint estate and therefore can only bequeath his 50% share.

Side note: Why I started blogging

I believe in empowering yourself with the necessary knowledge so you can make better choices for your life. And I don't think anyone should be a victim of poorly informed decisions. That’s why I decided to write these articles, so I can help you gain the basic knowledge you need to make decisions that will empower you instead of leaving you feeling like a victim.

Today I’d like to talk to you about antenuptial contracts. My parents are married in community of property so I am someone who has seen, first hand, what complications can arise from being married without an antenuptial contract. And that is why I'd like to give you some more information on this topic.

Firstly, what are the different marriage regimes?

There are two main matrimonial systems: married in community of property and married out of community of property.

All you have to do to get married in community of property is to show up for your wedding. With this matrimonial system everything forms part of the joint estate (everything being both assets and liabilities). This means that you only have a right to 50% of your total estate.

In order to get married out of community of property, you need to conclude an antenuptial contract. Marriage out of community of property can be further divided into two systems: with the accrual system or without. Without the accrual system is rather simple. What’s yours is yours and what’s mine is mine, and never the two shall meet.

When you conclude an antenuptial contract with the accrual system it gets a little more intricate. The accrual system works as follows: upon dissolution (whether that is by death or divorce) the total value of both parties’ estates is totaled. The lower value estate gets subtracted off of the higher value estate and the difference is then split in two. Each party gets half of the difference.

For example: John and Mary are married out of community of property with the accrual system. The total of John’s estate is R 30 000 and the total of Mary’s estate is R 20 000. The difference is R 10 000. Divide that by two. Mary gets R 5000 for her estate. The totals now are John – R 25 000 and Mary – R 25 000. For this you will need to know the value of your assets upon concluding the antenuptial contract. It is also possible to exclude assets from the accrual system. These assets must be listed specifically in the antenuptial contract.

Now, what is an antenuptial contract?

It is a contract between two parties entered into before their marriage that specifically excludes community of property from their marriage.

So again, why are antenuptial contracts important?

Amongst others, the top reasons are:

• If one spouse is declared insolvent, the other spouse is protected from the insolvent’s spouse’s creditors.

• Spouses are not liable for the other’s debts whether incurred prior to or during the marriage.

• You don’t have to obtain consent to deal with your own property.

• It removes the risk of creditors when one spouse undertakes a new business venture.

• It allows each spouse to retain their individual financial identities.