Why You Should Sign an Antenuptial Contract

Many of us have watched enough movies or read enough Hollywood gossip to know that “prenup” is considered a dirty word. At worst, it’s viewed as a way to swindle your partner out of half (or more) of their assets, and at best, it just seems rather unromantic. But financial guru Suze Orman vehemently disagrees: “Drawing up a prenuptial agreement together is a sign of incredible trust and financial openness – you’re fooling yourself if you think you can achieve complete intimacy without it”.

Many couples discuss the “big questions” – children, morals, future aspirations – before they get married, but financial matters are just as likely to make or break a couple. Wedding theme colours and flower arrangements may be more fun, but if you haven’t had a serious money talk yet, discussing the parameters of your antenuptial contract is an excellent place to start.

Plus, while signing an antenuptial contract is not compulsory in South Africa, by not signing one, you will still be making a choice as couples who get married without one will automatically be married in community of property. Simply put, this means that everything each person brings into the marriage (assets and liabilities) and what they accrue during it will form part of one estate, which will be split equally (irrespective of who earned or contributed more financially during the marriage) between the partners should they choose to divorce. While this option may suit some couples, Garth Burne, a partner at Burne & Burne Attorneys, points out that should couples inadvertently find themselves in this situation and wish to change it after they are married, it can be a difficult and costly affair.

Therefore, it makes far more sense to give each other the gift of choice as well as your love before you say, “I Do.” There are two types of antenuptial contracts from which to choose, and they allow for a fair amount of flexibility to accommodate personal requests or provisos.

Marriage Out of Community of Property with Accrual

According to Burne, the accrual system is perhaps the fairest option for couples, with the vast majority of couples opting for this option as a result. “Before the introduction of the accrual system in 1984, if prospective spouses chose to be married out of community of property, there was no form of sharing between them of what was built up during the marriage. The accrual system was introduced to remedy this. It applies to all marriages out of community of property unless otherwise stipulated,” explains Burne.

In this option, each partner has separate estates during the marriage (and does not share in each other’s profits or losses). However, should they get divorced, they will share what they acquired during the duration of their marriage. This system has the advantage that neither spouse will be liable for the other spouse’s debts, but it incorporates the ethic of sharing, which is the basis of an in-community of property marriage.

The accrual portion of the agreement refers to how much each spouse has become richer by the end of the marriage. The spouse with the smaller accrual has a claim against the one with the greater accrual for half the difference between the two amounts.

“This regime of marriage allows for very imaginative and flexible estate planning,” says Burne.

Marriage Out of Community of Property Without Accrual

The other option is to still opt for marriage out of community of property but without the accrual option.

This achieves a complete separation of each partner’s assets, both those brought into the marriage and those acquired during the marriage, ensuring that each spouse retains ownership of completely separate estates. Should the couple get divorced, there will be no sharing of assets, and neither party has any claim against the other’s assets.

“This is recommended in circumstances where both parties have income and property; mostly couples marrying for the second time with children from previous marriages involved,” explains Burne.

If you are unsure which option to choose, your attorney can talk you through it, make recommendations and customise your contract to suit both of you. Entering into an antenuptial contract may sound like a daunting and complicated prospect, but the right attorney will instantly put you at ease.

The process also involves having in-depth, deeply personal conversations with your fiancé and being vulnerable together, which can make you feel even closer to your partner than before you signed on the dotted line. Perhaps it’s time Hollywood recasts the “prenup” from villain to romantic lead!