What’s mine is mine: The benefit of pre-nups

03 November 2017

A prenuptial agreement might still seem to carry the voice of doom in your mind if you’re about to get married in the name of true, romantic love, but it doesn’t have to spell imminent divorce. The term made familiar thanks to TV is somehow only considered synonymous with marriages teetering on closure. This little contract, it turns out, gets more than its fair share of bad rap. Here’s why it shouldn’t.

There is a lot more to an ante-nuptial contract as we know it in South Africa, than we initially thought. While many people will choose not to opt into the 'dreaded' agreement, they fail to realise that by doing so, they are choosing one by default. Of the three types of marriage contracts available under South African law, only one speaks of complete segregation of property in the event of a divorce.

Each type of marriage contract has its own set of benefits. We chatted to Graeme Krawitz, a Sandton-based divorce attorney at Michael Krawitz and Co, to find out a bit more about the different options available.

Marriage in community of property

'Community of property' applies if you and your spouse-to-be don’t sign an agreement, whether by choice, lack of understanding, or omission.

As default, every piece of property and every debt – everything that is yours, and theirs, is shared. While getting married in community of property is cheap and seemingly romantic, you share the good…and the bad!

There is no possibility of individual ownership or liability. That means your partner can claim half of any wealth you’ve earned – including your pension or retirement fund (up until the date of the divorce).

If you get into debt or are declared insolvent, your partner can be held responsible for paying it off, and vice versa. If your spouse is paying alimony and child support from a previous marriage, you are also held liable. If one of you has a child out of wedlock, the other partner is also liable for supporting the child.

Marriage out of community of property

In this agreement, each party’s property belongs to them alone, and there is no provision for sharing whatsoever at the point of death or divorce. These are common when a second marriage is being entered into, and there are children involved.

“This is your typical what’s yours is yours, what’s mine is mine ante-nuptial contract,” says Krawitz.

“The benefit of this contract,” he adds, “is that your estates remain separate. For example, if a husband should accrue R10-million worth of debt, the wife cannot be sued for her assets.”

Marriage out of community of property, including the accrual system

This agreement is similar to that of the one above, with one vital little difference: choice. This contract allows you to divvy up whatever assets you accrued while you are together. Krawitz explains, “The courts will calculate what you have between you, and split estates accordingly in the event of divorce or death.”

He adds this is by far the most popular option, in his experience. “With regards to clauses, the only one that comes to mind as relatively common is that of trust funds being excluded when estates are being split in divorce.”

The best thing to do before making the decision

Talk, talk and talk some more. While it’s not easy to broach such a tough topic with your fiancé, start the conversation as early as possible. Write the pre-nuptial agreement as a team, with the help of an attorney. Remember that this contract will help you decide as a couple what will happen with your cash, belongings and investments, rather than leaving the decision to a judge. Be honest about the terms you want and explain your reasoning behind it in order to help your partner understand your viewpoint. Make sure to listen to your partner’s requests with an open mind and find a way to compromise with each other on difficult aspects of the contract.

Don’t make these decisions a month before the wedding. This is the biggest financial contract you will sign in your lifetime, so make sure you’re happy with your contract.

If you need legal advice, take advantage of our Legal Assist service, a 24-hour telephonic advice line with qualified in-house attorneys who provide guidance on all legal matters.

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.