She said yes! Now what?
Deciding to get married is the choice you and your partner will make with potentially the most significant impact on your financial affairs. It is an intensely emotional time but before long reality knocks on your door.
When you are engaged you can easily become overwhelmed with the amount of legalities involved in getting married. What regime to use? Is it OK to ask for a pre-nup? What will happen to my assets if something happens to one of us? Some of these questions might have popped into your mind and we will do our best to give you some answers.
Firstly, you and your partner will have to choose the Matrimonial Property Regime that will govern your marriage. A Matrimonial Property Regime is merely the system that regulates the ownership of property between spouses/partners. Depending on what you choose, it can create a joint marital estate dictating what property is included and by whom it is managed. In South Africa we have only three matrimonial property regimes.
In community of property -
Unfortunately by far the most common, this regime creates a joint marital estate wherein all assets and liabilities of the parties is equally shared between them. If you get sequestrated, your partner does as well, and vice versa. Approach with caution, especially if you or your partner is self employed.
Out of community of property -
No joint estate is created and each party retains their own estate, keeping their own assets and remaining liable only for thein own liabilities - “what’s mine is mine and what’s yours is yours”. Only if you are totally financially self supporting, with your own independent wealth, should you consider this option.
Out of community of property with the accrual system -
You and your partner/spouse have different estates and do not share profits or loss for the duration of the marriage. However, the difference in the accrual between the larger and smaller estate is shared once the marriage comes to an end. This regime can be quite difficult to understand sometimes, but it is simpler than it seems at first. Here is how it works:
1. You and your partner enter into an antenuptial contract (‘ANC’). You can do this through an Attorney.
2. In the ANC you can include or exclude any of your or your spouse/partner’s assets you or your spouse/partner have gathered before your marriage. If no assets are recorded in your ANC the value of both estates will be nil at the time of the marriage.
3. The net value of the assets declared in the ANC by each party will be used in the calculation of the accrual amount at the time of dissolution of the marriage.
4. If your estate grew by R100 and your partner’s estate grew by only R50, your partner will receive payment of R25 when your marriage comes to an end.
The most important factor about the accrual is that you will not be held liable for any debts or liabilities that your spouse may have entered into.
Assets automatically excluded in the accrual calculation include:
Any damages awarded to either spouse as a result of defamation or for pain and suffering;
Any asset excluded from the accrual system under the ANC;
Any other asset that the spouse acquired by virtue of his/her possession or former possession of same asset;
Inheritances, legacies or gifts that have been received by either spouse during the marriage, unless the parties have agreed in their ANC to include these or the donor stipulated that the other spouse should be included as a beneficiary of such;
Donations made by one spouse to the other. This is not counted as part of either spouse/partner’s estate, and the spouse who donates is not allowed to try and recover the donated assets and the spouse receiving the donation may not return it;
· Any compensation received as a result of injury received during the marriage.
In short, the accrual system provides fair and equal sharing in the growth you and your partner achieve without distributing financial risk.
Making a decision like this is very important. If you are not sure about which regime you would be most comfortable with, consult with an Attorney and discuss the matter in detail with him/her. This will not only give you piece of mind but it will also ensure that you can get married with peace of mind about what might happen to your belongings.