Choosing a marriage contract: Know the financial implications

Your marriage contract can be one of the most important financial documents you will ever sign as it sets out the financial consequences of your future relationship and getting it wrong can create financial difficulties when your marriage comes to an end. When choosing a marriage contract, consider the following:


Firstly, keep in mind that if you get married without signing an ante-nuptial contract before your marriage, you will be deemed to be married in community of property – a marital regime which has a number of shortcomings. If you’re planning to get married with an ante-nuptial contract, don’t leave it until the last minute as you will need to have your contract drafted and notarised by an attorney and, once signed, it will need to be registered at the Deed’s Office which can take between 2 and 4 weeks depending on delays. The cost of drafting an ante-nuptial contract can range from around R2 500 for a basic contract and can increase in price as the contract becomes more complex, with the fee generally including the costs of registration. When contemplating your marriage contract, do not let the upfront costs of an ante-nuptial contract deter you from signing an ante-nuptial contract. The financial implications of choosing an inappropriate marital regime can be far greater and more onerous in the longer term, so rather spend money upfront getting sound legal and financial advice.


What happens to your respective assets from the date of marriage is another important consideration, especially if you are entering into the marriage with a sizeable estate. If you choose to get married in community of property, keep in mind that all the assets belonging to you and your spouse will be merged into a single, joint estate, including all assets that you owned prior to the date of marriage and those that you accumulate during the course of your marriage, subject to a few exceptions. On the other hand, if you and your spouse choose to get married out of community of property, you will each maintain and administer your own estates, including those assets that were acquired before and during the subsistence of the marriage. It is only on dissolution of an out of community marriage that the accrual system, if incorporated into your ante-nuptial contract, comes into play.

When it comes to fixed property, where a couple is married in community of property, their home will be owned jointly with each spouse effectively owning a 50% share. When it comes to buying and selling property in community of property, note that spousal consent is required in order to validate the transaction. On the other hand, couples married out of community are free to buy and sell immoveable property at will with no spousal consent or permission being required. In the case of the accrual system, the value of the property will be taken into account when determining the value of the accrual in the event of divorce or death. That said, couples married out of community of property are able to purchase a property in both spouses’ names, with this often being the safest, most practical option. If you choose to marry out of community excluding the accrual, a danger arises where the primary residence is registered in one spouse’s name because, if the marriage irretrievably breaks down and becomes acrimonious, the other spouse can find themself without accommodation. This is because each spouse retains their own separate estate and there is no sharing of accrual upon dissolution.


Debt is a significant contributing factor to marital breakdown, so it is important to fully understand the financial implications of debt in the context of your future marriage. While the concept of a community of property marriage may appear equitable on the face of it, this type of marital regime involves the joining of all debt, including debt that was incurred by each spouse before the marriage as well as all debt incurred by each spouse during the subsistence of the marriage. This means that, through the act of marriage, you can become jointly and severally liable for the debt of your spouse – even if you entered into the marriage debt-free. What’s more, while you remain married, your spouse can continue racking up debt in the name of the joint estate for which you can be held personally liable. For these reasons, it is advisable to explore and understand how debt would be treated in the context of an out of community marriage. Remember, as mentioned above, parties to an out of community marriage retain separate estates throughout the duration of the marriage, and one spouse cannot bind the other spouse without their knowledge and/or consent. Once again, it is only upon dissolution of the marriage through divorce or death that the existence of the accrual system will come into play. If you are married with the accrual, any debt held in your name will be used in determining the accrual value of your estate. On the other hand, if you have excluded the accrual system from your contract, you remain fully liable for all your debt, both pre-and post-marriage – and your spouse’s debt can in no way impact on your estate.


A devastating consequence of a community of property marriage is that where one spouse is declared insolvent, the other spouse will simultaneously be declared insolvent. This is because there is only one communal estate which, if found to be insolvent, will affect both owners of the estate. The advantage of an out of community of property marriage is that where one spouse becomes indebted or declared insolvent, the other spouse’s estate cannot be attached by creditors. Where the couple is married without the accrual system, one spouse’s indebtedness will have no impact on the other spouse. However, where a couple is married with the accrual system, one spouse’s reckless financial dealings can impact on the other spouse’s share of the accrual, although keep in mind that some protection is afforded by Section 8(1) of the Divorce Act.


When it comes to divorce, the process in a community of property marriage is relatively simple as it involves the joint estate being equally divided between the two spouses. The only exception to this is where one spouse brings an application for a forfeiture order on the grounds that the other spouse has unduly benefitted financially from the marriage. So, while the divorce process may appear simple, it is very often inequitable as it regularly results in one spouse benefiting more than he/she contributed financially to the marriage. On the other hand, an out of community of property marriage which excludes the accrual can also be inequitable, especially where one spouse assumes responsibility for full-time, stay-at-home parents while the other remains economically active. In the event of a divorce, the stay-at-home parent can find themself financially prejudiced as a result that he/she was unable to grow their net worth during the subsistence of the marriage. When it comes to divorce, the accrual system is widely believed to be the most equitable way of sharing assets between divorcing spouses. Remember, where a marriage contract includes the accrual, each spouse retains and controls their own estate during the course of the marriage. The commencement value, being the value of their respective estates at the date of marriage, is recorded in the ANC. Upon divorce, the commencement value of each estate and the extent to which each estate has grown during the marriage is calculated, and this is referred to as the accrual. As a result, everything that each spouse owned before the marriage remains theirs, and the value of everything that accrued during their marriage is shared equally between the two. For the equitable distribution of assets in the event of divorce, it is therefore important to ensure that the ante-nuptial contract accurately reflects the commencement value of each spouse’s estate.


Where a marriage is dissolved by the death of the first-dying spouse, the nature of the marriage contract will determine how the estate will be dealt with. Where a spouse to a community of property marriage dies, bear in mind that the joint estate is wound up. Once all estate costs and debts have been paid, the surviving spouse has a claim against the estate for their 50% share. The remaining 50% of the net estate will be distributed in accordance with the testator’s will or, if no will exists, in accordance with the laws of intestate succession. If you get married out of community without the accrual, your deceased estate will be wound up either in accordance with your will or in terms of intestate succession laws, whichever applies, and the estate administration will have no bearing on your surviving spouse’s estate. Although the accrual calculation in the event of a spouse’s death can be complex, this form of marital regime remains more equitable than the other two regimes because each spouse gets to share equally in whatever they have built together during the subsistence of the marriage. Upon the death of the first-dying spouse, the executor will take into account the commencement value of each estate as it appears in the ante-nuptial contract, and then calculate the growth in each estate during the course of the marriage, and this growth is then shared equally between the two spouses. Where the deceased spouse has the smaller accrual, their estate will have a claim against the surviving spouse for their share of the accrual. Conversely, where the deceased spouse has the larger accrual, the surviving spouse can claim against the deceased estate for their share of the accrual.

Have a wonderful day.


Leave a Reply

Let's talk

For a free consultation with no obligations, please fill in your details and we will contact you to set up a meeting.