One of the last things you want to think about while counting down to the big day is what happens if you get divorced or your spouse dies? Unpleasant as this is, you need to deal with these issues.
There are three matrimonial property regimes: marriage in community of property; marriage out of community of property and marriage out of community of property, subject to the accrual system.
If you get married without a marriage contract, your marriage will automatically be in community of property. Should you decide to get married out of community of property, you need to enter into an antenuptial contract (anc), which is drawn up by an attorney and then registered in the Deeds Office. If you enter into an anc, the marriage will automatically be subject to the accrual system, unless you specifically exclude this from your contract.
How do I choose?
1. Marriage in community of property
Marriage in community of property creates an economic partnership between the spouses. All the assets and liabilities are merged in a joint estate in which both of you own equal shares.
You both have equal powers of management of the estate and may perform any legal transaction without consent from your spouse. Certain transactions, though, such as selling or mortgaging property, purchasing property or pledging assets to be held as investments, have serious financial consequences and require the written consent of your spouse.
On dissolution of the marriage, the estate is divided equally. If your spouse dies, usually his share of the estate will be left to you in terms of a will. Should you get divorced, the estate will be divided equally.
There are obvious advantages if you contribute less to the marriage financially, because you have an equal share of the estate. However, you run the risk of losing everything if your husband suffers a financial setback, since all your assets and liabilities are pooled.
If one of you embarks on a business venture that fails, you'll both be plunged into financial hardship or ruin, even if only one of you was responsible for incurring the debts.
2. Marriage out of community of property
If you're married out of community of property without the accrual system, your respective assets and liabilities are kept separate. So, its largely a case of 'what's mine is mine, and what's your is yours'.
You are not liable for any debts of your spouse, unless the debt was incurred buying necessities for the joint household, such as food, clothing, medical bills, electricity bills and so on, in which case both of you are liable.
Each of you retains your own property if you get divorced. If your spouse dies, you keep your own property. His property will either be distributed according to his will, or the laws of intestate succession if there was no will.
While this has the advantage that your estate is not at risk if your spouse suffers a financial setback, it can operate unfairly against a wife who forfeits earning an income for years while she stays at home to raise small children.
3. Marriage out of community of property, subject to the accrual system
The accrual system works in the following way: While you are still married, your assets and liabilities are kept separate and are administered separately. When the marriage is dissolved, whether by divorce or death, a sharing of profits, similar to a marriage in community of property.
On dissolution of the marriage, the accrual of the respective estates is calculated. If your estate shows the smaller accrual, you can claim for half of the difference between the two accruals. Effectively, this means that the total net increase in both estates is added up and divided equally.
You are both free to exclude certain assets from the calculation of the accrual, such as separate property that you may have acquired before the marriage.
To do this you have to value the property when you get married and state what your estate is worth at the start of the marriage.
Example:
Husband Wife
Estate on marriage (excluded) R 100 000 R 50 000
Estate on divorce/death R 500 000 R 250 000
Accruel R 400 000 R 200 000
Total accrual of R 600 000, of which each spouse gets R 300 000; therefore husband (or his estate is he is dead) has to pay wife R 100 000.
The advantage of this system is that both of you are protected against the financial losses of the other during the marriage. On termination of the marriage, both of your contributions to the marriage are recognised in that you have an equal share in proprietary gains made during the marriage.
What process should you use when choosing your option?
You and your fiancé need to have an open conversation about it and try and reach a mutual agreement which satisifies both of you. Although you could both consult your own attorneys for advice, be aware that your attorney will see your interests as being opposed to the interests of your fiancé.
You could also consider consulting an attorney together and ask him or her to act as a mediator, who can then advise you of the legal implications of the various options and act as a facilitator. Once you have reached an agreement, it can be recorded in writing and the contract then registered.