The Importance of the right marriage regime.

“KEEP YOUR EYES WIDE OPEN BEFORE MARRIAGE, HALF SHUT AFTERWARDS, BUT NEVER CLOSE YOUR EYES AT ALL FOR THE DURATION THEREOF”

The Legal Importance of Marriage Regimes

By Lezanne Taylor - Senior Attorney - JRA

INTRODUCTION

?It has been said that arguing with your wife or husband is a lot like trying to read the Terms and Conditions of Internet use, in the end, you just give up and go ‘I agree.’ Don’t therefore, proverbially, be caught with your “pants down” when the marriage you desired, turns out to not be fitting, and the division of your assets, through divorce, leaves you destitute.

A marriage contract, better known as an Antenuptial Agreement [hereinafter referred to as “ANC”], will be the most important contract a couple will ever have to sign. The ANC refers to an agreement entered into before the marriage, the purpose being to change the automatic financial consequences of a marriage. Couples excitingly are the crafters of their own fortune, or unfortunately misfortune in deciding on which marriage regime they want to go with. It can be said that an ANC is tailor-make, as parties may include any provisions they like in their ANC, provided the provisions are not against the law, good morals, or the nature of marriage.

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THE ALL BELLS AND WISTLES – ANC, deciding on the right “size”; “design” and “fabric” for your ANC.

?First and foremost, what is of crucial importance is for all intended couples, to understand that tying the knot, will involve consideration in respect of what their marriage regime should be. If parties don’t have an ANC, they will ?automatically be married in community of property. Consequently, the latter regime dictates only one estate between a husband and wife. On the other hand, and definitely more advisable to parties, are a decision to enter into an ANC, an ANC will ensure that the estates of each spouse remain separate. The purpose and structure of an ANC will set out the way in which each party takes ownership over their assets, utilization of the financial earnings, control, and further ownership of property. It will also include direction in respect of division of such assets at divorce or when one of the parties passes away.

?The Three Options, the Law has to offer in respect of Marriage Regimes –

?1.??????Married in community of property

?This marriage regimes affords the parties involved a communal estate, this means that there will only be one estate between a husband and wife throughout the subsistence of their marriage. The husband and wife, by virtue of this regime will thus share the risks and the benefits of their joint estate. Each party under this marriage regime has an undivided half share in all assets within the communal estate, meaning that no asset can be physically divided. The irrespective consequence, upon division, is that each of the parties will share equally in the profits and losses regardless of your financial contribution.

The biggest disadvantages under this marriage regime are that a party will become liable for all debt incurred by his/her partner, this including debt that was incurred before your marriage. Further, any party declared insolvent will have bearing on the other party as well.

2.??????Married?out?of community of property

This regime is sub-divided into further option, inclusive of an ANC out of community of property with the accrual, and an ANC out of community of property without the accrual.

A SLICE of either the “WITH” or “WITHOUT” accrual – PIE ?

The term ‘accrual’ is defined as “the accumulation or increase of something over time, especially payments or benefits”. Legally applied it however is seen as the NET increase in value of a spouse’s estate since the date of marriage. Practically seen, what you bring into the marriage remains yours, however what you earn through the subsistence of the marriage belong to both the parties. Sharing of the accrual, will only “kick -in” upon the parties deciding to dissolve the marriage. The latter right cannot be transferred or attached in law.

Calculating the accrual will incite a formula to determine which of the spouse’s estate grew more, during the marriage, whereas the party with larger estate will sacrifice half of the value in growth to the party with the lesser growth. ?Only property?acquired?during?the marriage?can be considered when calculating the accrual.

Marriage out of community of property WITH THE ACCURAL SYSTEM

Upon deciding on this regime, the parties in effect decide that they will share in the matrimonial estate as from the date of marriage. The latter legally implies that upon death or divorce, each party takes out the asset value they brought into the marriage and thereafter shares in the value of the estate built together.

The underlying philosophy of the accrual system is that each spouse is entitled to take out the asset value that he or she brought into the marriage, and?then they share, the “ACCRUAL”, being that they have built-up together, during the marriage.

Excluded assets

The following assets are not included in the NET value of estate assets –(i) any asset excluded from the accrual system under the ANC, or something previously owned by the other spouse.?(ii) an inheritance, legacy or donation accrued to a spouse during the subsistence of the marriage, except in so far as the spouses may agree otherwise in their ANC (iii) any donation between the spouses, and (iv) damages accrued to a spouse, other than damages for patrimonial loss.

Determining accrual

You can go about the following way - (i) ?make a list of all the assets (ii) deduct the assets that were excluded in the ANC, as well as assets previously owned by any of the parties (iii) deduct inheritances, legacies, or donations; (iv) deduct any debts and liabilities, (v) deduct the commencement value, as stated in the ANC, and adjusted by CPI.

Marriage out of community of property EXCLUDING THE ACCRUAL SYSTEM

Parties in regard to this regime, is seen as being independent from their spouse, and the spouses’ creditors, and or debts. Seeing however the accrual is specifically herein excluded the spouses of such regime will upon death or divorce, not share in the others estate at all.

Basically, all assets and liabilities acquired individually before the marriage form part of each spouses’ separate?estates and assets and liabilities acquired during the course of the rriage, will also remain separate.

CONCLUSION

Whatever the marriage regime you choose, the importance of a thorough considered and well – crafted agreement, tailor – made to your preference and governing your induvial need is paramount and should not be overlooked in the context of the legal applicability thereof. Being equipped with an unwavering agreement will indeed be your “Happily Ever After”.

Lezanne Taylor - Senior Attorney

JR Attorneys Inc

15 September 2021