ANTENUPTIAL CONTRACTS

“Prenup” is a term often used in movies and the American media. It is an abbreviation of the phrase” pre-nuptial agreement”. It is a reference to an agreement we know as an antenuptial contract, commonly referred to as an ANC, being an agreement entered into between two people who are about to get married,? regulating ownership of their respective estates during their marriage.

A typical ANC provides for each party to that marriage to retain exclusive ownership of all assets brought into the marriage by him/her and any assets acquired by him/her during the marriage. This retention of ownership includes the right to deal with those assets in any way whatsoever without the consent of that party’s husband or wife, as the case may be.

This system worked well for many years, especially in situations where both the husband and the wife had estates of approximate equal value. This meant that, in the case of divorce, the parties would be negotiating on equal terms.

However in many marriages in the old days, one would have situations where the husband was the sole breadwinner and the wife was unemployed and stayed at home rearing the children. When marriages like this ended in divorce, the wife found herself in a very precarious position having no assets to fall back on and having only meagre maintenance payments from her ex-husband to keep her going. Assuming, of course, the ex-husband actually honoured his obligations towards her!

The Matrimonial Property Act which became law on 1 November 1984 came to the rescue.

The Act provides for a marriage out of community of property to automatically be subject to the accrual system unless the parties specifically agree otherwise in their ANC.

If the accrual system is applicable, on the dissolution of a marriage, whether by death or divorce, the value of each estate would be determined. The estate that accrued the greatest net value since the date of marriage would have that accrued value divided by two and the amount so arrived at would be due to the other spouse.

Donations between spouses during the subsistence of their marriage are not taken into account in determining the accrual. This also applies to inheritances, but this restriction may be excluded by agreement.

At the time the ANC is signed, the parties would typically agree on the commencement values of their respective estate. These values would be recorded in the ANC.

The accrual system provides for a much fairer situation where the wife did not earn an income at all. She would be entitled to 50% of the accrued value of her husband’s estate, which in practical terms is very similar to a marriage in a community of property.