Posted By Admin on December 12, 2018
An “ANC” is a legally binding contract entered into between the prospective parties before marriage.
It determines by which matrimonial property regime the parties wish their marriage to be governed and plays an extremely important role in how married parties plan their future estate and protect their individual assets.
Do I really need an Antenuptial Contract?
Should you decide not to get married by means of an ANC, you will automatically be married in community of property.
This means that you will share jointly in each other’s assets and also share jointly in each other’s liabilities. This means that both of your assets will be at risk should one of you make some bad individual business decisions.
With a valid ANC, you will each have the freedom to manage and be responsible for your own account and assets.
We are both too stressed with the wedding plans - can’t we do this after the wedding?
It’s very important that the contract is signed before your marriage should you choose to have an ANC. If this is not done and you still wish to have your marriage governed by an ANC, an application will need to be brought before the High Court which is both costly, and time consuming.
Okay we’re sold! What types of matrimonial regimes are there and which one would be best for us?
In community of property.
Should you wish to not sign an ANC your marriage will automatically be in community of property. In other words, what’s yours is mine and mine is yours. All assets brought into the marriage are shared equally between the parties, despite which one of you physically bought or worked for the asset.
Sharing all assets equally may sound reasonable, particularly to the non-breadwinner of the family, but there are many disadvantages for both spouses under such a matrimonial property regime.
Assets at risk: It makes sense that if you share equally in all the assets of a marriage, you will also share equally in the debts and liabilities of the marriage. Therefore, both spouses are jointly liable to creditors in the case of financial difficulty even if the cause of the financial difficulty arose before to marriage by one of the spouses.
Day to day disadvantages: Because there is only one joint estate, each spouse will not have the individual freedom to manage their own property or their individual assets. This can become very restrictive in your day to day dealings, as it is often impractical to obtain express written consent of your spouse, to do such mundane tasks as opening a bank accounts, store accounts, mobile phone accounts etc.
Out of community of property
Should you wish to be married out of community of property, an ANC will have to be signed prior to the marriage.
There are two types of marriages out of community of property, namely “with” and “without” the accrual system.
With Accrual: This means that there will be a sharing of all assets which have been accumulated during the course of the marriage only. Should you have assets or liabilities prior to marriage, these assets and or liabilities will remain your own personal responsibility.
This system works well in a modern day society because both parties contribute equally to the marriage and therefore share equally in the profits.
In our professional experience, this is the best overall system that benefits and protects both parties equally, regardless of who the breadwinner in the family may be.
Assets: Because there are now two separate estates, (one for each spouse) neither spouse need to worry about the individual impact of the others financial risk from creditors if the debt does not form part of their individual estate. This is often the case when one spouse wishes to start a new business. Should the business not succeed for whatever reason, the other spouse will not be liable for the debts incurred. You will often find that assets are bought or placed in the spouses name who is less likely to be declared insolvent.
Furthermore, each spouse is free to engage in transactions without the express consent of their partner, because they engage in these transactions within their own individual estate.
Without Accrual: This simply means that each spouse’s estate is the sole domain of the individual and that there is no sharing of each other’s estate either before or after the marriage.
In other words, your estate and assets remain yours, and your spouse’s estate and assets remain his or hers.
This type of matrimonial property regime is mostly suited when a married couple are both professionals and / or earn their own income or have their own respective businesses. In this way, each party builds and disposes of their assets as they see fit without interference of their spouse.
Naturally this type of system has its advantages and disadvantages. On the positive side, the parties need not worry about the financial dealings of their spouse having an impact on their own assets. A negative aspect of such a regime is that should one spouse contribute more financially to the common household in such things as consumables, this may cause an unequal distribution of assets.
Kindly note that this is an abbreviated explanation of the various matrimonial regime. Should you require more information please do not hesitate to contact Greeff Attorneys in this regard.
Article by Greeff Attorneys http://greeffattorneys.co.za/