Antenuptial agreement with accrual means that the couple shares each other’s increases or decreases in their estates. Most soon-to-be-wed couples find that this is the fairest marriage system.
The couple shares the assets that are built during their marriage. This means that, if the marriage ends in divorce, the couple will need to calculate their estates separately to figure out the value of the estate and shared estate.
Each spouse’s estate is valued at the time of marriage, and then again if the couple decides to divorce. The spouses then retain the assets their owned before the marriage but share in any increases made during the marriage.
The advantages of an antenuptial contract with accrual include:
- The couple shares the increase in their assets accumulated during the marriage and the economically weaker spouse benefits.
- The spouses do not share their assets acquired before their marriage. In this way, the accrual system appeals to people who are already wealthy at the time of marriage.
- During the course of the marriage, each spouse handles his/her estate at will. There is no complex joint or equal administration.
- The spouses are not liable for each other’s debts. All that they share is their net assets. Therefore, if one spouse becomes insolvent (bankrupt), the other spouse is protected against creditors.
The disadvantages of an antenuptial contract with accrual include:
- The financially stronger spouse is required to share the assets that he/she acquired during the marriage.
- If one spouse is the breadwinner, the other spouse will be financially dependent on them.
Couples who have signed a prenup with accrual must carefully consider the impact the accrual will have before the terms of their wills take effect. The person drawing up the couple’s will must know how the couple is married so he/she can factor this into the will, and the couple is aware of the potential outcomes of the ending of their marriage.
As long as they have sound reasoning and are in agreement, couples can also decide to amend the consequences of their marriage with accrual. This is perfectly binding, provided it doesn’t prejudice the claims of creditors.
It must also be noted that the Matrimonial Property Act allows certain things to be excluded from the accrual system, such as:
- Any inheritance received
- Any assets explicitly excluded according to the terms of the prenup
- Donations or gifts the spouses may give each other