| |
Services - Antenuptial Contracts |
|
| |
| Antenuptial Contracts |
Marriage Contract Why do you need one?
Introduction
Firstly, congratulations – you`re getting married! Secondly, apart from the million things that you need to arrange, like the wedding venue, wedding dress and honeymoon, we know the last thing on your mind is the marriage contract. Kindly read the following summary to make it a little easier for you, we answer the most frequently asked questions and we trust it will help you.
What do I need to do, to enter into a Marriage Contract?
- You should contact an attorney BEFORE you get married.
- Otherwise, if a contract is signed after you have already married; the law requires an application with the High Court and this also requires the approval of your creditors which can be extremely expensive.
|
Why do you need a Marriage Contract?
- The most important reason would be that the contract protects you against the debt of your spouse.
- Ownership of matrimonial property can be structured in a way which prevents the matrimonial assets being attached by creditors.
|
What happens if I choose not to have a Marriage Contract?
In South Africa a person can choose between an “in community of property” or “out of community of property” system of marriage. If no marriage contract is entered into, the marriage is automatically in community of property. This means, that all pre-marriage assets will be shared and at the risk of matrimonial assets being attached by creditors for a spouse’s debt.
Do I want the Accrual System to apply?
- The accrual system allows you to protect what wealth you bring into the joint estate but provides for the sharing of any capital growth.
- It protects the spouse who cannot contribute financially to the estate.
- It protects the spouse who puts assets in the name of the other spouse for the purposes of protecting such assets against creditors.
|
How is the Accrual System Calculated?
An example of how accrual is calculated
The starting point is that the parties are married out of community of property, so the assets are not jointly owned nor are the debts joint debts. Each party still has a separate estate.
On dissolution of the marriage, either by death or divorce, the accrual or growth to each party's estate is worked out. This is done by calculating the net value at dissolution less the net value at commencement of the marriage, as declared in the Antenuptial Contract. If one of the estates has grown more than the other during the marriage, the party with the smaller growth has a claim against the party with the greater growth, for half the difference.
The parties may, in their Antenuptial Contract, declare the net value of their possessions at the beginning of the marriage. Alternatively, a marriage partner may, before the marriage or within six months of it, declare his or her net worth in a written statement, signed by the other partner and attested by a notary (who will usually be the one attending to their Antenuptial Contract). The notary files the statement with the copy of the Antenuptial Contract in the official record, known as the protocol.
If either partner's debts at the time of the marriage exceed the value of his or her property, the net value of his or her estate at the start of the marriage is regarded as nil. Also, if either partner fails to state the value of his or her property in the Antenuptial Contract or in a separate statement, his or her estate at the time of the marriage will be valued at nil, unless there is other proof of its value.
If a partner's estate on marriage is regarded as nil, everything he or she owns at the end of the marriage will be treated as having accrued during the marriage, unless it can be proved that the property belonged to him or her before the marriage took place.
Certain property belonging to either spouse may not be taken into account when the accruals are worked out:
- Any damages awarded to either spouse for defamation or for pain and suffering;
- Any inheritances, legacies or gifts that either spouse has received during the marriage, unless the parties have agreed in their Antenuptial Contract to include these or the donor has stipulated their inclusion;
- A donation made by one spouse to the other. This is not taken into account as part of either the giver's or the receiver's estate, with the result that the giver cannot recover part of what he or she gave and the receiver need not return any of it.
- Compensation for injury received during the marriage.
When calculating the values of the dissolution of the marriage, allowance is made for any difference in the value of money at the commencement and the dissolution of the marriage, usually with reference to the consumer price index (i.e. the inflation rate).
The total asset value of the husband’s estate at dissolution of the marriage |
R350,000 |
LESS his total liabilities/debt at dissolution of the marriage |
-R200,000 |
The current value of the husband’s estate |
R150,000 |
LESS the commencement value of his estate, stated in the Antenuptial Contact |
-R20,000 |
Subtotal |
R130,000 |
LESS adjustment for inflation on commencement value |
-R10,000 |
Husband’s accrual or growth |
R120,000 |
The total asset value of the wife’s estate at dissolution of the marriage |
R125,000 |
LESS her total liabilities/debt at dissolution of the marriage |
-R35,000 |
The current value of the wife’s estate |
R90,000 |
LESS the commencement value of her estate, stated in the Antenuptial Contact |
-R10,000 |
Subtotal |
R80,000 |
LESS adjustment for inflation on commencement value |
-R5,000 |
Wife’s accrual or growth |
R75,000 |
Husband’s accrual or growth |
R120,000 |
LESS Wife’s accrual or growth |
-R75,000 |
Amount with which the husband’s accrual exceeded the wife’s accrual |
R45,000 |
The wife will therefore be entitled to 50% of R45,000 which will amount to a claim of R22,500 against the husbands estate. This amount of R22,500 added to the wife’s accrual will result in a total growth of R97,500, exactly the same amount as the husband’s growth will be after deduction of the wife’s claim. Both their estates would therefore have increased by the same value since the marriage.
An accrual claim can only be made on dissolution of the marriage, not during the marriage. If the marriage is dissolved by death, a claim in terms of the accrual system must be paid before the will or intestate succession is given effect to.
If the estate of the first dying spouse has a greater accrual, the surviving spouse would have a claim against the deceased estate. If the estate of the surviving spouse has a greater accrual, the estate of the deceased spouse would have a claim against the surviving spouse. If the surviving spouse is the sole heir/heiress by virtue of the will or of intestate succession (i.e how an estate devolves when a person dies without leaving a will) then it is academic. It is not necessary to work out the accruals as the surviving spouse receives everything anyway.
Wedding Bliss
Wedding Bliss is South Africa's biggest Wedding Site. This site will help you to organize the perfect wedding, right through from the engagement to the honeymoon!
Click here for more |
|
|
|
| |
|
|
|
|
