An Antenuptial Contract (“ANC”) is a legal agreement entered into between a couple before marriage to regulate the matrimonial property system that will govern the marriage. Choosing a matrimonial property system is a personal decision as it serves as an important financial planning tool that can be tailored to a couple’s circumstances and goals.
There are three systems in South Africa, which determine how spouses’ finances are handled during and after marriage. If no ANC is concluded, spouses are automatically married in community of property in terms of the Matrimonial Property Act 88 of 1984 (“the Act”). This means that all assets and liabilities, both present and future, fall into a joint estate for which both spouses share equal ownership and responsibility. When the marriage is dissolved, either by death or divorce, the joint estate will be divided equally between the spouses. If the marriage is dissolved by death, 50% of the joint estate accrues to the surviving spouse and the other 50% is dealt with in accordance with the deceased spouse’s will, or, if there is no will, then the provisions of the Intestate Succession Act.
If a couple intends for a different system to apply, i.e. out of community of property including accrual, or, out of community of property excluding accrual, then this must be recorded in an ANC. Marriage out of community of property means that spouses maintain separate estates for the duration of the marriage. The inclusion of the accrual system allows spouses to share in the growth of their estates on dissolution of the marriage. If the accrual system is excluded, then spouses are only entitled to the assets in their own estates and do not share in the growth of the other spouse’s estate. In these circumstances, a spouse’s will, or the Intestate Succession Act, determines how their estates are distributed on death.
For an ANC to be valid, it must comply with the following requirements:
- It must be executed before the marriage, i.e. your ANC must be signed before your appointment with the Marriage Officer;
- It must be attested by a Notary Public and two witnesses; and
- It must be registered in the Deeds Office within three months of signing (six months if signed outside of South Africa).
If these steps are not taken on time, spouses will be deemed to be married in community of property.
In terms of section 21(1) of the Act, spouses may apply to court for leave to change the matrimonial property system which applies to their marriage, if the court is satisfied that there are sound reasons for the proposed change, sufficient notice is given to creditors, and no person will be prejudiced. If successful, the couple can enter into a Postnuptial Contract, but this process can be complex, costly and time-consuming.
ANCs give couples the freedom to choose a system that best suits them, rather than being bound to the default position. But timing is everything. By consulting a Notary Public early to draft, execute and register an ANC, couples can avoid unintended financial consequences and enter into marriage with certainty and peace of mind.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).