Prenuptial contract – how do I decide?


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Deciding on the marital regime that will be applicable to your marriage is one of the most important decisions you and your partner will have to make before your wedding. As a result it is important to ensure that you are fully informed in order to make the best decision for you as a couple.

Why do you need a Prenuptial Agreement?

In South Africa the legal position is that all marriages are “in community of property” unless the couple registers a prenuptial agreement. (also commonly referred to as an ante-nuptial contract)
This means the couple will share equally in all assets gained by them during their married life together, but it also means that they will share equally in all debts made by their partner. The main negative effect of the above is that, should one partner experience financial difficulty or be sequestrated, all the assets of both partners may be taken to cover the debts of the indebted party. This situation may even result in the couple and their future families being turned out on the street with no money and no home.
In order to avoid the negative effects of a marriage in community of property, couples can register a prenuptial agreement. This will have the result that, if one partner should come to financial difficulty, the assets of the other will remain their own and safe from creditors, and that partner will be able to provide for the family financially until the indebted partner is back on his or her feet.
Thus contrary to public belief the most important reason to register an prenuptial agreement is not necessarily the possibility of a divorce later on, but to grant the couple the security of knowing they can rely on each other in times of financial need.

What are your options?

Should you choose to register a prenuptial agreement, and thus marry “Out of community of property” there are two options you can choose from:

Option 1: Out of Community of Property – With the Accrual System
This is the route we generally advise couples to follow if no special circumstances exits to dictate otherwise.

The accrual system is a good way for couples to ensure a sense of fairness and equality to a marriage by making sure that each partner will share equally in the growth in wealth gathered by them as a couple during their union, while still gaining the protection of a marriage out of community of property. In modern South Africa it is common that one partner will stay at home and carry on the household in order to enable the other partner to work and gain assets, or for one partner to assist in the business of the other without receiving a salary to enable the business owner to make more profit for the household. The accrual system is there to ensure that the couple shares equally in the wealth they gathered as a team.
In this case the effect of your prenuptial agreement will be that your assets and liabilities remain entirely separate from those of your partner during the course of your married lives together, and only upon termination of your union by means of death of a partner, or by divorce, the accrual system will come into play.

Practical Application of the Accrual system: The effect of the accrual system is that, upon termination of the union the difference between the increase in wealth gained by each party during the course of the union is calculated; and half of the said difference is then awarded to the party who has shown the least growth.
For Example:
Partner 1: Growth upon termination R200.00
Partner 2: Growth upon termination R100.00
To determine the difference in growth: R200.00 minus R100.00 = R100.00
Half of the difference =R50.00
Partner 1 will thus be awarded R50.00 upon termination of the Union and both parties will have R150.

This division of property ensures that the parties end up sharing equally in the financial growth obtained during their marriage.

Option 2: Out of Community of Property – Without Accrual System
In this case your ante-nuptial agreement will ensure that the assets and liabilities of each partner will remain entirely separate during the course of their married lives together, as well as upon termination of the Union. Each party will leave the union with only their own assets and liabilities.
This course of action is generally only advised to older couples who are not getting married for the first time and have maybe suffered a painful divorce or for couples where the one partner owns a vast amount of assets.

Remember you as a couple must make the decision of the correct marital regime together, in order to have a happy and financially secure married life!

To draft your prenuptial agreement and advice you on the correct marriage regime, for you and your partner, you can contact us on T: 051 433 1415 or infobfn@dtllaw.co.za. We can also assist and advise you on same sex marriages and life partnership agreements.

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