How your marriage contract affects your finances

PERSONAL FINANCE


It is estimated that more than 138 000 individuals get married in South Africa every year. It will be interesting to see how this number is impacted by the Covid-19 coronavirus pandemic, which has brought about restrictions on gatherings.

When people want to get married, they often don’t talk about the type of marriage contract they want to enter into. This is for a number of reasons:

. Some people genuinely don’t know that there are different types of marriage contracts that should be considered before walking down the aisle;

. The subject is seen as taboo; and

. Some people consider not getting married in community of property as a sign that they do not love one another.

Read | A joint account: Is it for you? Is it better to go it alone?

The taboo around discussing which marriage contract to consider is that if you elect not to get married in community of property, it is perceived by some that the couple is not fully committed to the relationship or that one partner is already thinking about divorce.

A marriage can be dissolved in one of two ways – death or divorce.

The fact is that the type of marriage contract you chose makes a huge impact on both your finances.

It will affect the way in which you transact, acquire or dispose of assets and get into contracts – so it is not just a matter of whether you will get divorced or not.

THE DIFFERENT TYPES OF MARITAL CONTRACTS

.In community of property: This is the most common and well-known contract because it is the default marriage contract in South Africa. If you do not explicitly sign an antenuptial contract before you get married, you will automatically get married in community of property.

. Getting married in community of property is the easiest and cheapest way to get married because you do not need to visit a lawyer to draw up an antenuptial contract.

. However, if one partner is indebted, you both share that debt equally and are both liable for it. Other implications of being married in community of property is that if one spouse goes under debt review, both of you are under debt review.

. On the dissolution of the marriage through a divorce, you may need to sell your primary residence unless one of the spouses decides to let the other one stay.


Out of community of property with accrual: Getting married out of community of property with accrual means that a spouse will be entitled to share in the growth of the two estates at divorce. The accrual ensures that each spouse gets a fair share of the estate should the marriage come to an end.

During the marriage, each spouse can manage and control their estate independently of each other. It is only on the dissolution of the marriage – death or divorce – that a claim can be made for a share of the accrual.

The accrual is the net increase in the value of each spouse’s assets since the date of marriage.

Put another way, the spouses share equally in the increase in value of both their assets while the marriage is in existence. Only an attorney who is a notary public can execute an antenuptial contract.

It is important that both partners consult with the notary beforehand and request an explanation of the various marital regimes, and the implications of each on the dissolution of the marriage.

Read: Make your love last with a financial planning date

Having an attorney explain the implications can make the conversation less daunting.

Depending on how complex both your estates are, an antenuptial contract can cost anything from R1 500 upwards. This normally also includes the registration fee.

Out of community of property without accrual: Getting married out of community of property without accrual means that both spouses manage and control their estates separately.

On the dissolution of the marriage, each spouse walks away with only what they accumulated before and throughout the marriage – neither spouse can claim against the other spouse’s estate.

When drawing up an antenuptial contract, if you do not expressly exclude the accrual, the accrual system will automatically apply to the marriage.

Ultimately, it is important to know all the options that are available to you before marriage, and make an informed decision that best suits both of you.


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