Antenuptial Contracts with Accrual

If a couple wished to be married out of community of property before the accrual system was introduced in 1984, then the assets they built up between them during the marriage were not shared. 

Marriage out of community of property with accrual

The accrual system served to remedy this and has now become applicable to all marriages out of community of property. Prospective spouses need to specifically mention that they wish for exclusion of the accrual system in their antenuptial contract in order for it to be excluded. 

Marriage out of community of property with accrual means that both spouses have separate estates when they get married and don’t share profits or losses for the duration of the marriage.

Advantages of the Accrual System

The advantages of such a marital regime include the protection of each spouse's assets from the creditors of the other spouse. Thus neither spouse will be affected by the debts or liabilities of the other. 

However, they will share the assets they acquire from the start of the marriage. The sharing of these assets only takes place once the marriage ends.

Accrual relates to the extent of increase of the joint wealth between spouses throughout the marriage. Should one spouse have a smaller accrual than the other, then he or she will have a claim against the difference between the two amounts. 

How is accrual calculated?

Let’s consider an imaginary situation in which a couple is married out of community of property, thus neither the assets or debts are jointly owned. 

The estates of each party are separate, and only on dissolution of the marriage will the accrual of each party’s estate be calculated and the difference be divided. 

In order to do this, the net value at the commencement of the marriage as specified in the Antenuptial Contract is subtracted from the net value at dissolution. 

Declaration of Assets in Antenuptial Contract

The net value of the possessions of each party is declared at the beginning of the marriage in their Antenuptial Contract.

The net worth of these assets may also be declared in a written statement before the marriage or within six months of it taking place. 

The statement needs to be signed by the other partner and then authenticated by a notary. This is filed with a copy of the Antenuptial Contract in the official record which is known as the protocol. 

Should the debts of either spouse at the time of the marriage be greater than the value of the property of his or her property then the net value of the partner at the start of the marriage is nil.

In the event of either partner failing to state the value of his or her property in the Antenuptial Contract or separate statement, then the net value of the his or her will also be valued at nil and proof will be required to show otherwise. 

Everything that a spouse owns at the end of the marriage is usually treated as having been acquired during the marriage if their estate is regarded as nil. They will have to prove that said property belonged to them before the marriage took place in order for it to be deemed as such.

Property excluded from Accrual 

However, when working out the accruals of each spouse, some property is not taken into account. 

This includes:

• Any damages that are awarded to either spouse as a result of defamation or for pain and suffering;
• Inheritances, legacies or gifts that have been received by either spouse during the marriage, unless the parties have agreed in their Antenuptial Contract to include these or the donor stipulated that the other spouse should be included as a beneficiary of such;
• Donations made by one spouse to the other. This is not counted as part of either giver or receivers estate, and the giver is not allowed to try and recover the donated part nor does the receiver have the right to return any part of it. 
• Any compensation received as a result of injury received during the marriage.

 
The consumer price index is taken into account and an allowance is made for factors which could affect the difference in the value at the start and end of the marriage such as the inflation rate.

An example of how accrual is calculated

Husband's Estate

The total asset value of the husband’s estate at dissolution of the marriage is R 350,000. Subtract his total liabilities or debt at the dissolution of the marriage which equates to R 200,000. This means that the current value of the husband’s estate is R 150,000. 

Subtract the commencement value of his estate, stated in the Antenuptial Contract of R 20,000 which gives you a Subtotal of R 130,000. Then subtract the adjustment for inflation on commencement value of R 10,000. The husband’s actual accrual is R 120,000.

Wife's Estate

The total asset value of the wife’s estate at dissolution of the marriage is R125,000. Subtract her total liabilities or debt at dissolution of the marriage which comes to R 35,000. 

Now, the current value of the wife’s estate is R 90,000. Then subtract the commencement value of her estate, stated in the Antenuptial Contract of R 10,000. 

This give a Subtotal of R 80,000. Next, subtract the adjustment for inflation on commencement value of R 5,000 and you will get the wife’s accrual of R 75,000

Subtracting the wife’s accrual or growth of R 75,000 from the husband’s accrual of R 120,000 gives you R 45,000 which is the amount with which the husband’s accrual exceeded the wife’s accrual. 

The wife will therefore be entitled to 50% of R 45,000 which will amount to a claim of R 22,500 against the husband's estate.

This amount of R 22,500 added to the wife’s accrual and will result in a total growth of R 97,500, which is exactly the same as the accrual of the husband’s after deduction of the claim.

The estates of both spouse will have thus increased by the same value since the start of the marriage. However, only at the dissolution of the marriage can an accrual claim be made. 

Antenuptial Contracts with Accrual and Deceased Estates

If dissolved as a result of death, then the accrual claim has to be paid before a will or intestate succession can come into effect. 

In the event of the first dying spouse’s accrual being greater, the surviving spouse will have a claim against the deceased estate. The same can be said if the surviving spouse has a greater accrual, in which case the estate of the deceased spouse would have a claim against the surviving spouse.

If the estate of the first dying spouse has a greater accrual, the surviving spouse would have a claim against the deceased estate.

The accruals will not need to be worked out in the event of the surviving spouse being elected as the sole heir or heiress by way of a will or intestate succession as he or she will receive everything anyway. 

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