Antenuptial contract with accrual vs without

Antenuptial with accrual

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. 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 accrual system does not apply automatically to all marriages out of community of property. For the accrual system to apply, the prenup must be drawn up in a specific way. The accrual system integrates a calculation that is applied when the marriage is ended by divorce. The spouses will share the assets during the course of their marriage based on a particular calculation if the marriage ends in divorce.

The term “accrual” describes the net increase in the value of a spouse’s estate since the date of the marriage. Put differently, what was yours prior to the marriage remains yours, and what you have earned in the duration of marriage is shared between yourself and your spouse.

The benefits 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.

Antenuptial without accrual

An antenuptial contract without accrual means that the couple’s finances are separate. Each partner’s estate remains entirely theirs prior to, during, and after the marriage (should there be a divorce). Each spouse’s bank account belongs solely to them, and debts incurred by either spouse are solely theirs. Thus, the financially and/or economically stronger spouse is not legally obligated to share his/her assets with the financially weaker spouse.

If one spouse has a notably larger amount of assets than the other, this holds no impact upon the other and remains exclusively theirs. The divorce process for an antenuptial contract without accrual is financially quicker and simpler. Any notable increases in wealth or debt by one spouse during the marriage does not affect the other should there be death or divorce.

The main disadvantage to an antenuptial agreement excluding accrual is that the financially and/or economically weaker spouse will suffer following divorce, having no share in their spouse’s assets.