Everything You Need to Know about Antenuptial Contracts (ANC) In South Africa
An ANC is an agreement that two people enter into before getting married. It sets out how their finances will work during and after the marriage. The purpose of the agreement is to protect each spouse and their individual assets. It helps safeguard those assets from outside risks, such as creditors, and it explains how assets will be divided if the marriage comes to an end. This is particularly important in the event of death, as it helps ensure clarity and peace of mind for both parties and their families.
Who should think about getting an ANC?
An ANC should be a strong consideration for any couple entering into a marriage whether in the sense of Western traditions, civil unions, or African traditional marriage. Remember that by default all marriages are entered into by community of property in the eyes of the law, so if this does not suit the couple, then an ANC is strongly advised.
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 help 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 does the accrual system work?
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, whether it’s a Western marriage, civil union, or traditional marriage, 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.
What can be put into an ANC:
We have a strong rule of contractual freedom in South Africa and so the parties can include anything that is legal. Assets can be excluded from the accrual calculations, such as a family heirloom or a house acquired by either spouse. There are certain benefits for estate planning that are allowed but these are not that big.
make sure to put all things that you want in the ANC as it cannot be changed once the parties are married without a High Court Application which is extremely costly.
What is the procedure for getting an ANC:
You will need to consult with an attorney or a notary to draw up the contract for you and advise on what to include. The agreement is signed in front of a notary BEFORE you get married and requires two witnesses.
The notary will then register that ANC in the Deeds Office, within three months of it being signed. It is binding on the parties and is binding on the creditors as long as it is registered in the Deeds Office. If it is not registered in the Deeds Office, then it is not valid against creditors and will not protect you from your spouse’s debts. If it is not registered in the three-month period, an extension can be obtained from the High Court and it must then be registered within the time determined by the court.
What happens if you did not get an ANC signed before getting married:
If the terms of the ANC were agreed on before getting married, South African law does allow for the husband and wife to jointly apply to court for a post nuptial agreement to be registered, which has the same effect as an antenuptial agreement.
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