Antenuptial Contracts

MARRIAGES AND ANTENUPTIAL CONTRACTS AND ITS PROPRIETARY CONSEQUENCES

Couples desirous of marriage have the option of electing a matrimonial property system that is best suited to their individual needs. The election of such matrimonial property system then becomes operable between both themselves and third parties.

MARRIAGES IN COMMUNITY OF PROPERTY

Marriages entered into without the conclusion of an antenuptial contract, which is also known as a prenuptial contract, is automatically in community of property. In other words, if a couple does not consult with an attorney or notary public before the date of marriage in respect of concluding an antenuptial contract, when that marriage is registered, such marriage will be in community of property.

This means that each spouse will be a joint owner of an undivided share in all the assets owned by each spouse prior to the conclusion of marriage and all assets acquired post marriage.

So, if Mr X married Ms Y and such marriage was in community of property and Mr X owned a house, motor vehicle and furniture and fittings prior to marriage, Ms Y shall become the joint owner of the aforesaid properties on date of marriage.All assets thereafter purchased by either Mr X or Ms Y post marriage will be jointly owned by both Mr X and Y, thereby forming part of a joint estate.

Similarly, pre-marital and post-marital debts also become shared between the parties. So, if Mr X was a debtor in respect of a mortgage bond registered over immoveable property prior to marriage, post marriage not only does Ms Y, become a joint owner of the immoveable property, is also then becomes a co- debtor in respect of liability towards that mortgage bond. All debt incurred by Ms Y, prior to marriage also then become the shared responsibility of Mr X.

When will a spouse married in community of property require the consent of the other spouse to conclude juristic acts.

Written consent obtained before hand

Consent as is described hereinabove must be obtained in respect of:-

  • transactions which require registration in the Deeds Office eg. Registration of Immoveable Property;
  • Registration of a Mortgage Bond;
  • Registration of a Servitude.

Such consent must be written and attested by two competent witness.

  • Transactions wherein a spouse binds himself/ herself as surety.  

Written Consent which must be obtained, not necessarily beforehand

Consent as is described hereinabove must be obtained in respect of:-

  • contracts in terms of which immoveable property is being alienated;
  • contracts including the burdening with a mortgage and which forms part of the joint estate - Receipt of credit in terms of a credit agreement; 
  • Purchase and Sale Agreement in respect of Immoveable Property

The written consent may be obtained after the juristic act has been performed and such consent must be attested before two competent witnesses. -

  • Alienation of shares, stock, insurance policies and other assets of similar nature by a spouse in a financial institution;
  • Alienation of assets which form part of the joint estate eg. Jewellery;
  • Withdrawing monies in the name of the other spouse in any account in a banking institution
  • The institution of legal proceedings against third parties.

Here the written consent may be obtained after the juristic act and need not be attested before two competent witnesses.

When is consent NOT required 

  • If the transaction is performed by a spouse in the course of his business or profession;
  • Transactions on the Stock Exchange;
  • Transactions concerning deposits at the banks. 

Exclusion of certain assets from the Joint Estate

Certain assets are excluded from the joint estate of spouses married in community of property and may include:-

  • assets acquired by means of a donation,
  • inheritances and awards in a damages claim in favour of one spouse.

MARRIAGES OUT OF COMMUNITY OF PROPERTY

The predominant difference between a marriage in community of property and one out of community of property is the absence of a joint estate. So like our example above, Mr X’s estate prior to marriage, which included his immoveable property, motor vehicle, furniture and fittings, remain his exclusive property post marriage.All debts incurred by Mr X prior to marriage remain the exclusive responsibility of Mr X post marriage.

All further debt incurred by Mr X post marriage shall remain his absolute responsibility.

The same applies to Y.

In respect of X’s mortgage bond discussed earlier, Mr X continues to be soley liable therefore and Ms Y does not automatically become a co-debtor in respect thereof.

Marriages out of community of property WITH and WITHOUT accrual

WITHOUT ACCRUAL

Firstly, a marriage with the application of the accrual system is OUT OF COMMUNITY OF PROPERTY. This means that an antenuptial contract has been concluded between the parties before the date of marriage.

Each party shall retain as their sole and exclusive property all property owned by their respective selves prior to and post marriage.

Such an option is best suited for those couples who have already had a chance to grow their estates. Eg. Couples wishing to re-marry with existing substantial estates.    

WITH ACCRUAL

With the above option, it must be stressed that the application of the accrual in a marriage OUT OF COMMUNITY does not make it a MARRIAGE IN COMMUNITY OF PROPERTY.

Clients often are under the misconception that just because the application of the accrual system involves an equitable sharing at dissolution and because the estate of one spouse somewhat becomes liable to the estate of the other, this automatically implies “community of property”. It is only on dissolution of the marriage that the “gains” in the larger estate between the spouses becomes shared between the parties.

It is important to note that if the accrual system is not specifically excluded in the antenuptial contract, such marriage automatically includes the application of the accrual system.

During the subsistence of the marriage, each party to the marriage is responsible for his/ her own estate. Hence, two completely independent estates continue to exist. Accrual only becomes applicable on dissolution which is either death or divorce.

On dissolution of marriage, the spouse with the disadvantaged estate has a claim against the spouse having the larger estate for a value equivalent to 50% of the difference between the respective accruals.

Eg. Mr X and Ms Y marry out of community of property with the application of the accrual system. The net commencement value of X’s estate, as disclosed in the Antenuptial Contract between Mr X and MsY is R500 000.00( FIVE HUNDRED THOUSAND RANDS)

Ms Y ‘s net commencement value is R100 000.00.

At dissolution of marriage the net value of Mr X’s estate is R1 000 000.00 ( ONE MILLION RANDS) and the net value of Ms Y’s estate is R500 000.00 ( FIVE HUNDRED THOUSAND RANDS).

Ms Y, having the smaller / disadvantaged estate will have claim against the accrual of Mr X’s estate which is calculated as follows:-

  Mr X Ms Y
Commencement Value 500 000.00 100 000.00
Final Value 1 000 000.00 500 000.00
Accrual 500 000.00 400 000.00
Difference in Accrual 100 000.00  

Ms Y, who has the smaller estate will therefore be entitled to ½ of the difference in accrual between the respective estates = ½ of R100 000.00=R 50 000.00

Ms Y will therefore be entitled to R550 000.00 which is inclusive of the R50 000.00 plus the final value of Ms Y’s estate being R500 000.00.

Mr X on the other hand will be entitled to a final value of R950 000.00 resulting from the subtraction of R50 000.00 from the final value of Mr X’s estate.

Exclusion of Assets in the calculation of Accrual

The parties to a marriage may also agree to include in their antenuptial contract that certain assets are to be excluded from the above illustrated calculation of accrual.

Firstly, the following are automatically excluded from the calculation of accrual:-

  • Damages;
  • inheritances, legacies and donations and;
  • donations between spouses.

Further to the general application of accrual as has been explained above, parties may include anything that they feel is suitable to dictate the consequences of their marriage, provided that such inclusion is not contrary to public policy.

Some examples include:-

  • the application of accrual can be made conditional on the marriage having lasted a certain period of time or on the birth of a child;
  • the non-application of the accrual system should either spouse become insolvent ;
  • certain assets may be excluded from the application of the accrual system eg. Proceeds from the Pension Fund, profits derived from a spouses business;
  • The parties may also agree to share in a different percentage as opposed to the usual 50% sharing eg. The wife shall be entitled to 60 % whilst the husband may be entitled to 40%;
  • As explained above, inheritances and donations are not included in the calculation. However, the parties may agree to include such values in their antenuptial contracts.

DONATIONS BETWEEN SPOUSES IN AN ANTENUPTIAL CONTRACT

Such donations, must expressly be accepted by the donee may include:

Immoveable property

Immoveable property may be donated between spouses and the donee will be required to pay the requisite transfer duty in respect of the acquisition.

Wedding gifts

It is usually accepted that if a wedding gift has been given to a particular spouse that wedding gift remains the exclusive property of such spouse. However, if it cannot be determined to whom the wedding gift was given to, then such wedding gift is the property of both spouses. Spouses often make a provision in their antenuptial contracts that all wedding gifts are donated to one of the spouses.

Moveable Property

Moveable property like furniture and motor vehicles may also be donated between spouses and included in the antenuptial contract.

CHANGES TO AN ANTENUPTIAL CONTRACT

Any amendment to an antenuptial contract after date of registration may only be effected by application to court. Our skilled Attorneys can assist you in Durban, Pinetown and Johannesburg courts.

POSTNUPTIAL CONTRACTS

A post-nuptial contract may be executed only if authorised by the Courts and if there exists an acceptable reason as to why an antenuptial contract was not concluded before marriage.

CHANGING YOUR MATRIMONIAL PROPERTY SYSTEM

Provided that the Court is satisfied that:-

  • good reasons exist;
  • sufficient notice has been given to all creditors and;
  • no person is prejudiced

Spouses to a marriage, may apply to court for leave to change their matrimonial property system.

MARRIAGES CONCLUDED OUTSIDE THE REPUBLIC OF SOUTH AFRICA

If a marriage is concluded outside the Republic of South Africa and the husband is domiciled in South Africa at the time of the marriage, then in the absence of the conclusion and execution of an antenuptial contract, such marriage shall be in community of property.

It is therefore of utmost importance that should a couple who wish to marry outside the Republic of South Africa and further wish that the proprietary consequences of such marriage not be dictated by that of community of property and community of profit and loss, then an antenuptial contract must be properly executed within the Republic of South Africa.

Our Attorneys can assist you in choosing the correct matrimonial property regime that is best suited to you and your partners individual needs.

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