Marriage Contracts - Which one best suits you?

A marriage contract is called an Antenuptial Contract or ANC
(It is also known as a Marriage Contract, Marital Contract or Prenup Agreement)

There are 3 types of Marriage Contracts, which are explained below.
Choosing the right contract is VERY VERY important.

  1. Marriage in community of property
  2. Marriage out of community of property
  3. Marriage out of community of property subject to the accrual system

(1) In Community of Property

If you do not sign a contract before you get married, by law, you will automatically have an ‘In Community of Property’ contract. So read this carefully.

This means EVERYTHING you and your partner own gets lumped together in one estate. EVERYTHING is shared 50-50, no matter how little your initial share. This includes any money, assets (eg cars, property, businesses, jewellery etc), as well as any liabilities (debts, insurance policies etc).

Both partners have equal powers of administration (control), but both partners need to give consent for important decisions or transactions.

Positives (during the marriage):
Both partners share everything equally! This contract promotes legal AND economic equality.

Negatives (divorce or death):
If one partner becomes broke (insolvent) both of you lose everything. If one partner dies, the whole estate is ‘frozen’ until the executors (eg lawyers) work out everything. The living partner has no access to money until this is sorted out. This could take a very long time.

If one partner’s personality is a lot stronger than the other’s, or they are risk-takers, this contract may lead to lots of arguments

(2) Out of Community of Property

This contract must be signed in front of a Notary Public and registered, BEFORE getting married.

In this (ANC) Antenuptial Contract, each partner has a separate estate made up of their own assets and liabilities. Each partner is in control of their own estate and debt. These estates remain separate throughout the marriage.

Usually, this contract is chosen by wealthy individuals who are not considering having children.

Positives:
If one partner loses all their money or goes into debt, the other partner does not lose theirs. If one partner dies, only the dead partner’s estate is 'frozen'. This means the living partner can still access their own money and assets while the deceased person’s estate is handled by the lawyers.

Negatives:
If one partner does extremely well financially – they are not legally bound to share it with the other.

(3) Out of Community of Property with Accrual

This is exactly the same as an ‘Out of Community of Property’ contract but with one main difference.

In a divorce or death, both partners will share equally in only the growth (ie what "accrues" or grows) in value of each other's estates during the marriage.

Positives:
If both partners are earning, this seems the fairest version. Sometimes the person ‘running the home’ and looking after the children will earn less during the marriage and in a divorce, this option may assist them. This is probably the best contract choice for a happy and fair marriage.

Negatives:
The person earning the most may have to share the wealth they made during the marriage with their partner. What each partner had BEFORE the wedding, remains theirs.

If one partner does not work, they do not automatically get credit-worthiness via their partner’s wealth. They can only be credit-worthy if they have their own money.

NOTE: If you DO NOT want the accrual system to apply, it must specifically be excluded in the antenuptial contract.