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Why you need a marriage contract

The bride was beautiful and the groom ever so handsome. After a dream wedding they drove off into happily ever after to raise a family and grow old together. Or maybe not. In the Justice Department's annual report for 2012-2013, 50 517 divorce cases were recorded a massive increase on the 39 573 cases in the previous year. Simply put, divorce is a hard and fast reality. As unromantic as it may sound, every bride-to-be has to discuss divorce and ante-nuptial contracts with her husband to be.

What is a marriage contract?
The best way to protect both partners in a marriage is by signing an ante-nuptial contract or ANC. We spoke to a lawyer to get the low-down on ANCs and why you should not say I do' before you have signed on the dotted line.

A contact governs what happens in the matrimonial relationship and what must happen should the partners divorce, he says. It comes into play if the marriage relationship does break down and gives certainty as to how the separate estates must be dealt with.

In a marriage without an ANC, the two partners and their respective estates become joint. Should the marriage break down, the assets (including cash and property) and liabilities (for example debt) are split equally between the two parties. This is referred to as being married in community of property. However, when an ANC is in place, it governs exactly how those assets and liabilities should be split.

The contract will usually give numbers a value to every asset that each partner has when they enter into the marriage, so that in the unfortunate event of a split, the division of assets is much simpler and quicker.

An ANC is also extremely useful for dividing the financial responsibilities of both parties during the marriage. Without a contract in place, the one party can be held liable for the debts of the other in other words your husband's creditors could attach your car if he defaults on his loans. If a contract is in place, each person's debts and liabilities are their own.

The different types of contracts
There are two types of contracts:

  • An ANC: This is a contract that states that the two parties are completely separate financial entities, and that what they bring to the union, they can take with them when they leave. What they earn or come to owe during the course of their marriage is also their responsibility should it dissolve.
  • An ANC with accrual: This states the assets and liabilities with which each partner comes to the marriage are their own, but allows for the growth of assets during the course of the marriage to be split between the parties in the event of a divorce. This is a good way of acknowledging that two people have contributed to the life that the couple builds together, and should be able to share equally in the benefits if it breaks down. Creditors cannot in this case attach the assets of the other party.

If a couple were married in a traditional or religious ceremony that is not a recognised civil union, the courts will still generally allow for an equal split of the growth of assets during the marriage in essence, treating the union as if a contract that allowed for accrual was in place. The courts will even try to do this in the case of two individuals who have been living together as if they were married, although it is more difficult in this case to mark a starting point of the union.

Of course, the maintenance paid for any children born either inside or outside of a marriage is calculated independently of what the two parties may or may not owe each other.

Why you should have the conversation 
Discussing the possibility of divorce at what should be a happy and optimistic time may not sit well with both partners in an engagement, but it is an important, practical step to take. It can even be considered to be an act of love to make sure that if there is a future time at which the marriage falls apart, the best possible outcome has been planned for from the beginning.

Sitting down together and talking openly about finances and the future is also a very good way to start a marriage that will last a lifetime.

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