An ANC is an agreement entered into by two people who are get married and want to use this contract to regulate their financial arrangements to protect each other and their individual assets during the marriage from outside threats and to regulate the division of assets at the end of the marriage. This is most important when one of the spouses passes away.

Who may get an ANC:

Anyone who decides to get married may have an ANC drawn up, whether it is a marriage in the sense of Western traditions, civil union, same sex, or an African traditional marriage.

What are the benefits of having an ANC:

• In the event of your spouse becoming insolvent, your assets and income are not affected. This may cushion the blow of the situation and helping your spouse to get back on their feet.
• If your spouse passes and there are debts remaining, the burden is not transferred over to you.
• You are free to enter into any legal agreement without putting your spouse at risk.
• As debts are not shared, it makes the ups and downs of life as a marriage couple significantly less financially risky.

The downside of this type of marriage regime is that the assets are completely separate and should one spouse be a stay at home mom/dad and in so doing, sacrifice their own career for the benefit of the family, they will not have a claim against the other spouse’s assets at the end of the marriage. The only way to lay a claim against your partner’s assets at the end of a marriage out of community of property, is to include an accrual system in the ANC.

How the accrual system works:

The accrual system is designed to balance the different earnings of the spouses during their marriage. The idea is that they both share in the profits and benefits of the marriage. So, for example, one spouse stays home, focuses on the children and running the house, which allows the other spouse to focus on and achieve higher results in their career, then they both enjoy the benefits. The accrual is only determined at the end of the marriage (whether by death or divorce) and during the marriage the parties are married out of community of property and have no claim to the assets of their spouse.

The way the system is calculated is that the net asset values are recorded at the date of marriage. The net asset values of each spouse are then determined at the end of the marriage, the starting values are deducted from those values (after being adjusted for inflation) and the profits are shared. The spouse who had a greater accrual, has to give half of that accrual to the other spouse. This then equalises their finances and they will share the profits of the marriage. This is a big benefit. At the same time, the parties are still married out of community of property so they are protected from each other’s debts and can enter into any contract without the other spouse agreeing to it or co-signing.

What happens if we do not sign an ANC:

In South African law, you are married in community of property unless there is an ANC stating otherwise.

What are the drawbacks to not being married with an ANC in place:

• You are jointly liable for each other’s debt’s which can become quite difficult in cases of insolvency and includes any debt left behind by your spouse after their passing.
• You require your partner to co-sign most legal contracts and in the event of friction in the marriage, this can prove a major source of contention.
• If you are financially stronger than your spouse, you essentially gift them half of everything you own.
• The reality is that not everyone is good with money and the mistakes of one’s spouse can ruin you both financially leaving you with no safety net.