A brief introduction: what exactly is an “ANC”?
In South Africa we refer to a “marriage contract” entered into between you and your spouse as an “Ante-Nuptial Contract” which most people have heard on television as being referred to as either a “pre-nup” or as an “ante-nup”. What exactly is the importance of this “contract” and what does it entail?
A South African Antenuptial contract (“ANC”) is a cost-efficient and reliable pre-marital contract that can be entered into to protect a business or spouse from uncertain future events. An ANC regulates precisely what happens to one’s assets as well as to the respective parties’ rights and obligations in their “individual estates”, in the unfortunate event that the Marriage is terminated by either death or divorce. However, an ANC’s true value is often regarded as to effectively protect each spouse’s “individual estate” from nosy creditors, due to the fact that each spouse retains his/her own separate “individual estate” i.e. should your spouse enter the marriage with debt or create debt throughout the subsistence of the marriage, he or she does so without encumbering you and vice-versa. An ANC will further ensure that spouses have no claim against each other’s assets or businesses.
When entering into an ANC, the marital property regime will be one out of community of property, meaning each spouse’s “individual estate” stays completely separate and there is no creation of a “joint estate”, as the case would be when partners are married in community of property. You and your spouse can essentially decide the manner in which you would like to enter into your marriage: either in community of property (no ANC), out of community of property (with ANC) and if so, with or without the application of the “accrual” system. In the former case – “with the accrual” means that spouses will share in each other’s Net Estate Values by making use of an accrual calculation at the termination or dissolution of a marriage, where in the latter case – “without the accrual” – they will not share i.e. “what is mine is mine and what is yours is yours”.
Accrual? Should we consider it?
Accrual only comes into play at the dissolution or termination of a marriage and in layman’s terms refers to the amount whereby parties separate Net Estate Values have increased, or decreased. This is determined by making use of an accrual calculation. This means that even though the marriage is entered out of community of property, there will a sharing of growth in the spouses’ estates during the marriage, depending on how the ANC is drafted. The ANC could for example exclude the sale of a business or the sale of shares in a business in the future from the accrual system, however this would need to be explicitly stated. The accrual system does not mean that a spouse has a claim against the actual asset, being the business for example, but any value derived from the business will form part of the business owner’s estate for accrual purposes if not excluded, and the spouse will be entitled to a share in this.
To briefly summarise:
- In community of property: Parties have a combined estate.
- Out of community of property: Parties have separate estates.
- Out of community of property with the accrual dispensation: The parties have two separate estates, the same as prior to the marriage. In the event of divorce or death, the accrual of both estates are calculated separately and a claim can subsequently be lodged.
In South Africa, the application of the accrual system works as follows:
- At the beginning of the marriage the value of each party’s estate is determined and noted (known as the “Commencement Value”).
- On the day of divorce or death, the growth value of both spouse’s estates are noted (known as the “Dissolution Value”)
- The Net Estate Value (assets LESS liabilities LESS excluded assets and/or Commencement Values) of each estate is determined separately.
- The larger estate must then transfer half of the difference to the smaller estate. Putting it another way, the smaller estate must claim for an amount equal to half of the difference between the accrual of the respective estates.
What do we need to do if we want to enter into an ANC?
Any Antenuptial contract must be signed by both spouses intending to solemnise their marriage, BEFORE the marriage is officially entered into. It is vital that spouses be aware that failure to enter into an Antenuptial Contract before your big day will render your marriage as one entered into “in community of property” rather than as a marriage entered “out of community of property”. The only way to change your marital dispensation is by way of a High Court Application, typically exceeding R15 000.00 in legal costs.
Your first step would be to consult with a legal representatives or attorney well in advance of your wedding day to establish how you would like to enter your marriage and what you intend to include or exclude from the ANC – according to your wishes. After the ANC is drafted, both parties sign the contract, it is attested to by a Notary Public whereafter it is lodged and registered in the Deeds Office as well as collected on your behalf.
We can assist you with the entire process from start to finish! We also understand the hustle and bustle accompanied with preparations for the big wedding day and thus should you not have time to visit our offices in person, we will gladly arrange a virtual consultation with you and your partner to start the process.
Cost of the ANC?
Typically, an Antenuptial contract starts at R2500.00 (excl. VAT) for a “standard” contract however it can be more depending on the intricacy of the contract according to your wishes or the skilled labour and time utilised by the professional assisting you.
Kindly contact our offices to receive the most competitive and best possible rates and services for your every need and wish to safeguard your family’s future.
MC MENAMIN, VAN HUYSSTEEN & BOTES ATTORNEYS INC.
ANTON DU PREEZ
litigation@mvh.co.za
mvh@mweb.co.za
(012) 344 0525