Marry for love but plan for divorce
To avoid disputes, know what your marriage contract means
RUSSIA has one of the highest divorce rates in the world, with the US also ranking high. But even if you live in South Africa, where the divorce rate is low by comparison, couples tying the knot need to be aware of how their marriage contract will influence how their home, cars and savings are divided when a relationship ends.
In a marriage in community of property, the division of assets can be smooth if the couple agree on how the joint estate will be divided. But what happens when spouses are at each other’s throats?
“Where spouses do not reach an agreement on how to divide their joint estate — as often happens — the court has the power to appoint a receiver or liquidator to realise and divide the assets of the joint estate,” said Bertus Preller, a family law attorney.
Marriage out of community of property, where a contract must be drawn up before the couple marry, can also be difficult to navigate. In a marriage out of community of property without accrual, spouses do not share in each other’s assets or any increase in the value of those assets during the marriage. The same applies to their debt.
Marriage out of community with accrual is more complex. For starters, both parties must ensure that the value of their assets at the time of the marriage has been verified and accepted by both, warned Preller. “It often happens in divorce matters that one party will allege that the other’s commencement value was inflated or completely inaccurate.”
If one partner stays at home and takes care of the household, making sure that their spouse has declared all their assets at the time of marriage is essential because the value of the assets declared will affect the stay-athome partner’s share of assets accrued during the marriage.
The partner may push for spousal maintenance, but their share in the patrimonial assets may be minimal. Preller said: “It is therefore important that some kind of safeguard be built into the antenuptial contract, for example that the spouse receives a donation in the form of a property or lump sum should the marriage end in divorce.”
The couple can also negotiate so that some of the assets that were initially excluded be included. This would give the economically disadvantaged partner a better chance to share in the rising value of assets.
When the couple divorce, the net value — total assets minus liabilities, excluded assets and commencement values — of each person’s estate is determined separately. Then the larger estate must transfer half of the difference between the estates to the smaller estate.
To illustrate: if the larger estate is worth R5-million and the smaller estate R1-million, the difference between the two estates is R4-million. Half of this, R2-million, must be transferred to the smaller estate.
A couple can apply, once married, to change their marriage contract but need to do so with the approval of the high court, and Preller warned that this is an expensive exercise.
To change a marriage contract a couple must consult a lawyer and go over the legal costs and the effects such changes will have on their respective financial positions before making amendments. The court also needs to be satisfied that neither spouse will be prejudiced, and that the rights of creditors are protected.
“When the court is satisfied that the requirements have been met, it will order that the existing matrimonial property regime no longer applies to the marriage and authorise the couple to enter into an antenuptial contract, by which their future matrimonial property regime will be regulated,” said Preller.
So if you are hoping your marriage will last, it may be a good thing you don’t live in Russia, where, according to The Telegraph, the annual divorce rate is 4.5 per 1 000 residents, or in the US, where there are 3.6 divorces per 1 000 residents. Only 0.6 out of every 1 000 South Africans gets divorced each year, according to 2009 data.