Ante-Nuptial Contracts
So you are getting married ….. Congratulations! As Notary Publics, we at SJ HEFFERMAN INCORPORATED pride ourselves with and understand the importance of choosing the right matrimonial property system for you and your prospective spouse, and have assisted hundreds of clients in choosing correctly. Now you have popped the question, decided on the honeymoon venue, the flowers and the bridal gear. A lot of ignorance exists amongst prospective husbands and wives about the implications and pros and cons of a particular property system. Here is a brief outline of the various choices as well as the consequences thereof.
Marriage in Community of Property
Each partner in a marriage is an individual who has the right to work and to be economically active. Before marriage, he or she accumulates a separate estate. He or she can make independent choices. When a couple gets married in community of property, the two separate estates are consolidated into one. Although each party can still have a separate estate from sources such as inheritances and awards for personal damages inflicted, the husband and wife now have one estate. They are liable to the outside world for debts incurred after the commencement of the marriage, and they each have equal power to bind the joint estate (the marital power does not exist anymore). There are certain exceptions where the spouse must obtain the permission of the other, such as the purchase and sale of immovable property, or entering into a credit agreement.
If the said consent is not present, the act of the spouse who lacked consent can still be binding towards third parties if the third party did not know that the consent was not present. The spouse who can prove that the estate suffered damages due to such an act has a claim against the other party at the dissolution of the marriage.
The marriage in community of property is the simplest system. However, frequently a partner in the modern marriage engages himself in business activities. A danger is that such a venture can turn sour, and the partner might go insolvent and be sequestrated. In such an event, both parties will be sequestrated because of the fact that they have one estate. Thus, if the husband gets sequestrated, the wife will suffer the same embarrassing fate.
Marriage Out of Community of Property
For a marriage to be out of community of property, the prospective husband and wife must conclude an ante nuptial contract (ANC) in front of an attorney who is a qualified Notary Public. There are two separate systems for the couple who want to marry out of community of property:
Marriage out of community of property EXCLUDING the accrual system.
The marriage out of community of property without the accrual gives recognition to the fact that the spouses each have their separate estate, and for purposes of the marriage, there will be no community of property, profit or loss between the two of them. This means that one party has no claim against the estate of the other at the dissolution of the marriage through death or divorce. That can be severely detrimental to the spouse that has to raise the children (99% of cases the wife) and has virtually no chance to build up an estate.
The positive side of this system is that each spouse can engage in economic activity separately and does not need the consent of the other party.
Marriage out of community of property INCLUDING the accrual system
If nothing is said in an ANC with regards the accrual system, it is presumed that the marriage is with the accrual system. In the accrual system, the marriage is still out of community, profit and loss. However, the element of a marriage in community of property is that a commencement net value of each spouse’s estate is calculated as at date of the marriage. The account of the estate of a spouse is the amount by which the net value of his estate at the dissolution of the marriage exceeds the net value of his or her estate at the commencement of the marriage.
At the dissolution of the marriage due to death or divorce, the closing net value of each spouse’s estate is again calculated. It is then established which spouse’s estate showed the largest accrual. The difference between the accrual of the two estates is calculated. In so doing, and because of the fact that inflation has to be accounted for to establish the new value of the commencement value already stated in the ANC as at the dissolution, the consumer price index is used. Eventually, the party whose estate shows no or a smaller accrual is entitled to half of the difference of the accrual.
Trusts
- A Trust is defined as a legal institution where a trustee, in accordance with the express intentions of the donor or founder, has the right to the property, subject to the fact that he may only utilise the goods exclusively for the benefit of beneficiaries.
- Trusts may be created in a Deed of Trust, a will, or a Nuptial contract (ANC).
- Trust assets should be defined, and may include movables, immovables (like land or houses) or intellectual property.
- Trust creation is a formal process and requires the lodgment of the trust deed with the Master, and trustees may only act once they receive letters of authorization from the Master.
- So what are the advantages of forming a trust?
- Trusts assist in reducing income tax as the Trust cannot be taxed on income earned from the trust assets. Estate Duty can be drastically reduced since the trust assets do not form part of the calculation for estate duty.
- Donations tax – donations to a Trust are donations tax exempt if the trust property is kept in the trust as long as the donor lives.
Should you have any questions related to this topic, or wish us to create and register a trust for R4500.00, feel free to Contact us.
Estate Planning - Wills
When you get married, have your first child, retire, or reach any other significant milestone in your life, it is considered wise to draft a will or update your current will.
If you already have a will drafted for free by your generous banker, look to see if they are now nominated as executors, and consider the financial consequences this may have for your estate and those you want to provide a future for. We will gladly draft your will and include an executor of your choice. This means that you can select someone that you trust, even though they may not have the necessary skills to execute your will. If your bank or some less scrupulous others drafted your current will and had themselves nominated as executors, they are likely going to charge your estate the full executors fees. If you select a family friend or family member that you trust, and give them powers of assumption, they can negotiate with a few lawyers to arrive at a fee structure that reflects their effort, not their greed.
Contact us should you wish to discuss how we can help you with a new will or make amendments to your existing will. We charge R3500.00 per will anywhere within South Africa.
I have lost my Ante Nuptial Contract - Now what?
So you cannot locate your original Ante Nuptial Contract that you signed all those years ago, and cannot recall the Notary Public that prepared and registered the contract. Ante Nuptial Contracts are not often referred to, and so it is not unusual for parties to the contract to misplace the original.
If you can recall who did your ante nuptial contract for you, it would be possible for you to get hold of that Notary Public, and ask for a copy of the original that they have in their file. When you entered into the agreement, two original documents were signed. The one was returned to you (or should have been) after it was registered at the Deeds Office, the other original was kept by the Notary.
If you get a copy of the original held by the Notary Public, it will not have the Deeds office registration stamps on it though.
We offer a service to anyone (even if we did not do the original agreement for you) that has lost their contract. We will trawl through the Deeds Office records to locate their copy of your registered contract. If you wish for us to provide this service for you, kindly Contact us.
Authentication of Documents
When documents that are (executed) within South Africa are going to be used outside of South Africa, they typically need to be Authenticated. Notaries are given the privilege of performing this function. As notaries, we can authenticate the documents, and provide a certificate and seal to evidence that we have performed this service.
Different procedures are followed after the Notary has issued the certificate, depending on the type of document that is being authenticated.
If the country in which this document will be used are signatories to the “convention de la Haye on 5 October 1961”, the process is simpler, and faster, as they have agreed that all signatory countries may adopt a truncated process.
We charge R1200.00 to authenticate documents, and an additional R2500.00 if you want us to attend on the High Court and Home Affairs Department to finalise the authentication. Should you need us to provide this service, please Contact us.
Conversion from Community of Property to Ante Nuptial Contract R12500.00
By virtue of Section 21 of the Matrimonial Property Act, parties to a marriage may amend their marital regime from Community of Property to Ante Nuptial Contract.
This is done by application to the High Court and, if granted, typically allows the parties a month to register the new Ante Nuptial Contract with the Deeds Office.
It is usual to have such a change approved subject to the new Ante Nuptial Contract being made without prejudice to the rights of existing creditors. Simply put, new creditors will not be able to rely on the Community of Property but existing creditors would still have an action against both parties under the previous Community of Property system.
The courts will want to be convinced of three elements before granting the opportunity to amend the marital regime: (a) there are sound reasons for the proposed change; (b) sufficient notice of the proposed change has been given to all the creditors of the spouses and (c) no other person will be prejudiced by the proposed change.
If you wish to have us make application to convert your marital regime for R12 500.00, please Contact us.
Final
The above does not deal with the property consequences in general at divorce or death. It is only a general discussion of the various property systems available to a spouse at marriage. For detailed advice or more information, kindly Contact us.
An ANC won’t ensure that your marriage is a success. Only communication, dedication, and hard work will achieve that. A custom-made property system will, however, provide peace of mind. Once you have decided upon an ANC, and it has been concluded, file it away in a safe place and forget about it. Then enjoy your marriage!