'Til divorce do you party. Picture: 123RF/GREKOV
'Til divorce do you party. Picture: 123RF/GREKOV

Society has evolved, and people form various types of partnerships and unions, including marriage. As unromantic as it may appear at the time, marriage contracts are incredibly important, not just because of the possibility of divorce, but because of the way contracts bind people, even after death. 

Everyone needs to take time to seriously weigh up the pros and cons of the various types of marriage contracts. When you decide on a contract, pay careful attention — with the help of a qualified professional — to the details, so that in the event of death or break-up, you are protected.

The “pre-nup” is a vital part of any wedding plan, says Jeremy Woods, head of Fiduciary Services at financial advisory firm GTC.

He urges couples to carefully consider their needs and to review their contracts before signing, as the details of a marriage contract have many consequences for a couple’s life together. “It is entirely natural for couples to focus on making their wedding day as special as possible. But the reality is that most couples focus far too little attention on the less romantic aspects of determining an appropriate marriage contract to legally regulate the union.”

Woods says that while most couples commit in their wedding vows to stay true to each other until one of them dies, it is important to note that a marriage contract may bind two people even after one of them has died. “The legal structure of a marriage forms the basis of several material, financial aspects of your life together, including life insurance, investment decisions and the estate you leave to your family.”   

Which type of contract is right for you?

Marriages “in community of property” mean that all the assets and liabilities of both spouses — including those accrued prior to the marriage — are aggregated into a single estate, with an equal share for each partner.

While this may sound romantic, and a signal of utmost trust and love, it does come with some very important implications. Regardless of whether separate wills have been drawn up, the estate will be treated as stipulated in the contract.

According to Woods, there are also many cases of a deceased partner leaving their spouse with unanticipated debt. “If the marriage was concluded without an ante-nuptial contract, the deceased’s creditors will lay claim to the surviving spouse’s assets, regardless of the fact that it was the deceased who was responsible for initiating the debt.” 

However, despite the best intentions of preparing for possible future scenarios, discussing marriage out of community of property is almost always emotionally charged

For these reasons, the more “modern” route is to be married “out of community of property”.

“This allows for each partner to have greater independence over their assets and wealth accumulation. This is more relevant now than ever as more and more dual income couples are self-employed earners,” says Woods.

According to Woods, there is a misconception that ante-nuptial contracts are only worth considering if the couple has substantial assets prior to the marriage. “In fact, a decision to get married out of community of property is as much about governing the future of a union as protecting past ownership.  It’s impossible to predict what may happen to either party in future, and it’s best to be prepared for any scenario.”

However, despite the best intentions of preparing for possible future scenarios, discussing marriage out of community of property is almost always emotionally charged. It is for this reason that a third type of contract has been gaining more popularity. That is marrying out of community of property with the accrual system.

In terms of this contract each partner retains their assets gained before the marriage and they each have a share in the joint asset-growth amassed during the marriage. “This option is especially popular for older couples who marry, or in the event of second marriages, when each partner has independently accumulated their own assets.”

Divorce: the reality

According to a report released by Statistics SA earlier this year, four in 10 divorces were for marriages of less than 10 years. 

It is important for divorced couples to amend their wills as soon as their marriage has been dissolved. 

Woods explains: “If the existing will — whether it be joint or separate — before the divorce stated that the spouse was to inherit something, the law places a moratorium on that specific bequest for a period of three months.

“Should the testator [the one who makes the will] die within that three-month window, the bequest to the former-spouse will be null and void. Should the testator die after the three-month window, not having changed the will, the former-spouse will inherit whatever the will directed.”