I do – but, with or without the Accrual System

Marriage is the start of a wondrous journey into a realm defined by sharing and love. Unfortunately, life does not always share our sentiments and it is therefore up to us to remain astute and lay a foundation that is able to handle both the joys and tribulations that might come our way.

An important building block of the foundation is to ensure that your spouse and children are provided for should your world be shaken by a tragedy. One of the most effective ways of ensuring this is to draw up a suitable antenutpial contract and a will for each partner. When planning a life together, many couples focus on their relationship and future acquisitions and plans and neglect the financial impacts of their bonding. As unpleasant as it may be at times, securing a stable financial future is vital to the success of any marriage. Therefore, taking the time to visit an attorney to set up your antenuptial agreement does not necessarily indicate that both or either of you question the validity of your union, but instead shows a responsibility and deep caring for the wellbeing of one another.

When drawing up your antenuptial contract, various factors should be considered, such as, whether you want the accrual system to apply to your marriage, how you are going to share your income and wealth and if you want to include certain assets like your pension fund. As the accrual claim is paid out before any other inheritance, the impact of Capital Gains Tax and Estate Duty should also be considered.

The accrual system was initially implemented to protect women who chose to stay at home, take care of the children, and preserve the family union. Nowadays its application has changed somewhat, as more and more women enter the workplace and build successful careers. Many couples are now opting for it because of the difference in their earning capacity, dependency due to illness, career changes or just a willingness to share the wealth.

The accrual system means that should you get divorced or tragedy strikes (termination of marriage), the difference between the growth in your assets are split 50-50. So for example, if at the time of the dissolution of the marriage, your estate (assets) are worth R5 000 000 and your spouse is worth R8 000 000, then the difference of R3 000 000 needs to be split between the two of you, with both receiving R1 500 000.

Should either party die, half of the difference in their estate automatically goes to the spouse whereafter the remainder is dealt with according to his/her will. So if the husband is worth R10 million more than his wife, R5 million automatically goes to her in terms of the accrual payout. This means, that if a trust fund has been set up for children in the husband’s will, they in turn will only receive the remaining portion of their father’s assets.

In the worst-case scenario, if for some reason, one spouse leaves their assets to a charity, for example, the charity will receive not only the assets of the deceased spouse, but also half of the difference between the assets of the couple (accrual payout). Needless to say this could come as quite a shock to the surviving spouse so understanding the system and professional counsel is very important when setting out on your life together.

Another reason to seek legal counsel before getting married is to take into account the impact that estate duty and CGT may have at the time that the marriage terminates.

Approaching a legal firm such as Schoeman Attorneys’ before getting married will ensure that only the benefits of the financial aspects of your marriage will prevail.

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