An antenuptial contract, known colloquially as a prenuptial contract (or “prenup”), is a private agreement entered into between a couple who plan to get married. The purpose of the contract is to change some or all of the automatic financial values of marriage.
The prenup allows the couple to put together their own matrimonial property regime. They can include any provisions they wish in their prenup, on condition that the provisions are not against the law, ethics, or the nature of the marriage. It is tricky to change a prenup because they dictate the financial and proprietary outcomes of the couple’s future and can affect the rights of the couple’s creditors.
A prenup dictates the division of the couple’s assets in the event of divorce or death. Under South African law, this contract determines whether your marriage will exist in one of the three marriage regimes below:
- In community of property; all assets and liabilities are shared and jointly owned by spouses.
- Out of community of property – with accrual; each spouse declares his/her estate’s nominal value at the start of the marriage and keeps their assets and liabilities, unless expressly included.
- Out of community of property; all assets and liabilities of the spouses are separate, unless otherwise stated in the antenuptial contract.
Having a prenup offers several benefits, such as:
- Preventing your future marriage from automatically being in community of property
- Offering transparency in your relationship by recording the rights, duties and consequences (legal and proprietary) of your marriage
- Preventing unnecessary disputes with your spouse in future
There is a popular opinion that antenuptial contracts are necessary only for the wealthy, so that a rich fiancé may protect his/her assets. However, couples of more modest means are increasingly using them as well, for other purposes, such as the following:
- Clarifying financial rights during marriage, whether the couple is wealthy or not.
- Avoiding potential financial conflicts and arguments if there is a divorce.
- Getting protection from one’s spouse’s debts
A couple must allow sufficient time for planning their antenuptial contract. Also, it is vital that each spouse is truthful about his/her financial situation when drawing up the contract. If one person hides something, this omission can invalidate the agreement. Each spouse must be open and honest when discussing not only their finances but also what they want out of the prenup. Both spouses must agree on the goals of the prenup, so that it is valid and fair.