Talking about future couple’s finances essential in marriages
Make sure money matters add up before the wedding day
Many couples avoid having real, honest and practical talks about finances before their wedding. Many work on assumptions, but have rude awakenings later.
It matters to know your partner’s attitude and behaviour towards money and assets before you get married. And do not take their word for it. Open the books, and see for yourself.
We live in a moderately traditional society, that generally still views an antenuptial contract (ANC) negatively, and an in community of property (COP) contract positively.
Basically, the proponents of COP hold the view that if, “what’s mine is yours, and what’s yours is mine”, then it means we truly love and trust each other.
By implication should “yours be yours and mine be mine”, means we enter marriage with divorce already in mind.
But divorce is not the only thing that ends a marriage. Marriage is supposed to be “until death do you part”.
But in the excitement of the wedding planning, many couples avoid looking at which regime would be suitable.
And in SA law, when you get married without a formal ANC in place, the state automatically classifies your marriage as COP.
You can change it later, but would have to follow a lengthy and tedious legal process at the high court, and part ways with a substantial amount of money.
Marriage in community of property: The two estates of each partner are joined into one estate of equal, undivided shares. The joint estate is only divisible equally upon termination of the marriage.
All assets and liabilities belonging to each of you before the marriage, as well as all assets and liabilities you accumulate during the marriage, form part of the joint estate.
It literally means “what’s yours is ours and what’s mine is also ours”. And that also goes for debts.
You are responsible for all debt incurred by your spouse – even those from before marriage. This includes maintenance payable to children from a previous relationship.
And if your partner is blacklisted at a credit bureau, you also inherit the limitations of that too.
If you are the financially stronger spouse, your financial position could be significantly weakened.
Another consideration is that, if your spouse becomes unable to pay their debts, or is in business that’s in debt, the estate can be declared insolvent and you too can be held liable for the debts.
Should you divorce, and in an acrimonious manner, the chances of being able to agree on the division of the joint estate are slim. Signing an ANC gives you the option to choose between an accrual or non-accrual system.
In the accrual system, each spouse retains control over their separate estate but can share equally in the growth of each other’s estate during the marriage . Simply put, it aims to ensure both spouses gain a fair share during the marriage.
The non-accrual system means assets and liabilities you had before the marriage continue to form part of your separate estates. And any asset or liability incurred during the marriage remains exclusively yours.
If a husband is declared insolvent, his creditors will not be able to touch the estate of the solvent wife.
Spouses are not liable for each other’s debts. All they share is their net assets.
This property regime can have devastating financial consequences for a stay-athome spouse. Should the marriage end, a stay-at-home parent who was unable to grow their own estate in terms of asset value would have no legal claim to their spouse’s estate.
However, the court can take into account that they contributed to the marriage by raising the children, running the home and supporting their spouse’s career, and determine accordingly.
Calculating the accrual can be complicated. However, it remains the most equitable method of sharing the assets accumulated during marriage.
Property and assets as well as love and commitment are independent of each other.
The vow, “For richer or poorer”, means that your love and commitment should be unaffected by material things.
It is imprudent to enter a marriage without an honest conversation about the regime you’ll choose.
Actually, by not talking about it, you make the choice anyway.