Getting married is not as easy as you might think

Written by Ansja Ferreira

“The marriage contract is usually the most uninteresting and most annoying part of the preparations for a wedding, especially if you compare this to dress-fittings, testing of hairstyles or finding the perfect wedding jewelry. Nevertheless, next to the photographs and memories, this is about all that is left from the happy day, says Erik Botes, a lawyer.

Erik explains that for the first time most couples are put in the situation of:

‘What if …? Where do they stand financially to creditors after the wedding? What is the rights of the young woman who sets her career aside to bring children into the world? What happens to the possessions or property that they may inherit of their mother or father? What are the implications when one of them starts a small business? What about their existing estates before marriage? Can one of the partners buy something for him/herself without the other’s consent? What about contracts that are only signed by one or the other? Will it be valid?

He also mentions further that most pastors, priests and other marriage officers will push a couple to provide him with the necessary certificate of a notary, who confirms that they have already consulted a lawyer.

“It does not have to be a bad experience, and from personal experience, we can say that most couples are usually relieved to walk away from the attorney’s office, says Erik. Sort this sensitive issue out as soon as possible with the help of your lawyer, recommends Erik.

What is the purpose of a marriage contract?

“The purpose of a marriage contract is simply to protect the man or woman financially at one hand, against his or her spouse and the other, against their creditors, explains Erik. “Normally, we recommend that young couples, who are at the beginning of their careers, get married out of community of property with accrual. “When this type of contract is drawn up, it is especially important to know what the parties’ respective estates are worth – usually including retirement annuities or pensions – on the date of the marriage.

There are three marriage formats.

A marriage in community of property

“What’s mine is yours and what’s yours is mine.”

Marriages without a prenuptial agreement in South Africa are automatically placed as a marriage in community of property as a result. The couple’s assets fall within a joint estate, hence the name “marriage in community of property”. When the marriage ends, whether through divorce or death, the joint estate is usually divided equally. A disadvantage is that one party is now responsible for another one’s debts.

“It is important to note that spouses married in community of property can have a joint will, emphasizes Connie Bruwer, an estate expert. “If one of the spouses dies, it is important that the survivor draws up a new will. If the survivor dies without a valid will, it will be deemed as if he/she died intestate, i.e. without a will, and this will cause that the deceased’s wishes cannot be met. It also means that the executor must provide security if he is not a family member of the deceased. At the death of the surviving partner, the joint estate gets a combined exemption of R7 million.

A marriage out of community of property, without accrual

“What’s mine is mine and what’s yours is yours.”

Both spouses retain their own estates, including liabilities and assets. Each person can do with his assets what he or she wants. Parties are not liable for each other’s debts, unless perhaps they sign as sponsor for each other. If one of them dies, only the deceased person’s estate is placed under the administration of an executor and resolved by the executor. Erik recommends that spouses who are at the point to engage in a second or third marriage, may find more benefit out of a marriage that is out of community of property without accrual. In these cases you usually find that the children on both sides are fully grown, and the parties are both far advanced in their respective careers. Couples where both spouses have interests in businesses, often choose to get married out of community of property and to manage their joint estate planning through wills or trusts. When a man, for example, has a full-time work, and his wife can’t work for a few years because of her responsibilities to her children, and the household and children were cared for during that period, the woman in the marriage will not benefit by a marriage out of community of property, since she will not have the income potential of her husband.  She will probably benefit more from a marriage out of community of property with accrual. In case of a marriage out of community of property at death there is a R3.5 million exemption for each of them. Couples that are married out of community of property without the accrual system, normally sets separate wills. Suppose both spouses die at the same time, the children will effectively inherited R7 million more, if the estate would be so great.

Out of community of property with accrual

“What we had before our marriage is our own, but what we have built together during the marriage, is ours”.

This is a popular choice for couples who are getting married for the first time and have not yet built great and valuable estates. Most of the advantages and disadvantages of the two other matrimonial options are combined with a marriage out of community of property with accrual. This is a good option for a couple who still wants to start a family. The woman will probably not receive payment to look after the children and the man continues to work and earn a salary. The woman probably has no growing assets.

What does the accrual mean? During the marriage each spouse retains his or her estate. When the estate, however, is dissolved by death or divorce, one of the spouses have a claim on accrual against the other spouse. The accrual of a spouse’s estate is the amount by which the net value of his or her estate at the dissolution of the marriage, exceeds the net initial value of the estate at the beginning of the marriage. Upon dissolution of the marriage, the growth of each of the spouses’ estates is calculated and the spouse whose estate has shown the least growth, can then claim from the other spouse. Simply put, an accrual is calculated by taking the initial value of each person’s estate, and then to take the final value and to calculate how much each person’s estate grew. The difference in growth is then divided in half and the spouse with the most growth will be reimbursed by the other spouse.

What is excluded from accrual? Inheritance, donations, compensation and winnings (say you win the lottery) is excluded from the accrual.

Tips:

Have your marriage contract drawn up before you get married. Afterwards it can only be changed by an order of the Supreme Court, and that costs much more.

Go see a lawyer. It is the lawyer’s job during the consultation to inform the couple on the advantages and disadvantages of the different forms of marriage. What will be the best option varies from couple to couple. According to Erik, the full consultation rarely lasts more than an hour and a half.

Have your will drawn up by an expert. If you die without a will, the court will determine what is to become of your belongings. You will die intestate, which simply means “without any legal will.” In this instance the court of succession rules will be in effect.

Your will is the most important document in your estate planning. It mentions how and to who your property will be distributed when you die. In the will it should be clearly and unambiguously state to whom your assets will be bequeathed. There should be no room for ambiguity or lack of clarity, since it is the document that is the most challenged in court. As a result, your will should be very clearly set out. It is of the utmost importance that your will is in writing and technically correctly set up, preferably by an expert in the field. The will must be signed on each page and the date must be entered in the will. Two competent witnesses, who are not in the will or heirs, must also sign the will on each page. Remember that verbal wishes and promises have no legal effect. Set your will up as quickly as possible if you do not have a valid will. This will save your family a lot of heartache and misery. Your will should be preserved in a safe place.

Sources: Wet op Huweliksgoedere, 1984 (Act 88 of 1984) (matrimonial Property Act no. 88 of 1984)

Bestorwe boedels. 5th Edition W Abrie, CR Graham, MC Schoeman Malan, P W van der Spuy