An antenuptial contract is essential to a married couple’s financial well-being, writes Georgina Crouth. Supplied
In the run-up to your wedding, an antenuptial marriage contract is the most important document you will sign. It is essential to a married couple’s joint and individual financial planning - without one in place, couples are financially exposed and their assets are at risk.

Signing an antenuptial contract does not, as is popularly believed, reflect a lack of commitment to the relationship, says Cape Town attorney Michelle Dommisse.

“The biggest myth is that having an antenuptial contract shows that the parties are planning to get divorced,” Dommisse says. “I think there is a misconception that such contracts are only relevant in the event of divorce. This is not so, as they are enforced if one spouse dies or becomes incapacitated. In fact, if someone dies, the executor cannot carry out the deceased’s wishes in a will until the antenuptial contract has been checked to confirm that there is no conflict with the accrual claim. If there is a conflict, the accrual claim trumps the will, and the provisions of the will can only be carried out once the accrual claim is met.”

Dommisse says an antenuptial contract should rather be viewed as an aspect of good financial planning, because it enables couples to protect each other from the risk of joint liability, and enables each person to protect assets they have accumulated before they get married.

She says couples may find it awkward to deal with antenuptial contracts, because it feels that such discussions indicate a lack of trust and commitment. But the reality is that all marriages end in a legal sense: in death or divorce.

“An antenuptial contract is well advised for responsible financial management during a marriage. In short, the possibilities that you do not manage in your planning can end up managing you should they become reality. The legal structure of a marriage is extremely expensive and intricate to alter after the event.”

Contracting in - or out

Without an antenuptial contract, the default, “old-fashioned” legal structure is that you are married in community of property. All debts and assets of both parties are joined in a “common estate”, which is owned equally by both partners. Everything that is earned, bought, inherited or acquired during the marriage then goes into this joint estate. The couple share in each other’s debt too, which can be catastrophic if one party becomes insolvent, because both will then be deemed insolvent - and their assets won’t be protected.

And if one person enters the marriage with significantly more debt - or assets - than the other, that’s immediately shared between spouses.

Antenuptial agreements with or without accrual

* An antenuptial contract without accrual means that you separate your finances at the start and keep them separated. In fact, it means staying single as far as your finances are concerned: each partner’s estate remains his or hers during the marriage. All debts remain separate, and if one partner becomes insolvent, the other’s assets or financial status is not affected. Everything that each partner acquires, earns or inherits during the marriage remains his or hers too. If the couple divorce, the financial aspect of the process is quicker because there are no entanglements.

* An antenuptial contract with accrual is similar to one without accrual, except that any increases or decreases in either partner’s estate during the marriage is shared. At the time of marriage, each estate is valued. This may be the fairest solution for couples who are both independently wealthy before marriage.

Dommisse says this system combines the best of both worlds: “It is based on the idea that both of you will contribute equally to the union and should therefore share equally in the benefits gained during the union. The accrual system recognises emotional and physical support as contributions in addition to financial ones. On the other hand, each of you is protected from the debts and possible insolvency of the other. All inheritances, legacies and donations made to either of you before and during the union are automatically excluded from the accrual.”

What if there is no antenuptial contract in place?

It’s not too late to draft a contract, but this will cost significantly more, Dommisse says. “Postnuptial agreements can be drawn up. This costs more (about R30 000), as it involves newspaper adverts and an application to the High Court. Once the court order is issued, the postnuptial agreement can be registered at the Deeds Office.”

PERSONAL FINANCE