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Planning a wedding can seem all-consuming, but before you start your life together, you’ll need to consider the legal side too – and that means deciding on a marital regime.
Vera Nagtegaal, executive head of Hippo.co.za, says it’s critical for engaged couples to consider the various legal protections available. That will help to ensure that they enjoy a happy marriage without placing unnecessary financial risk on each other.
It’s not just in case you split up
Nagtegaal explains that the misconception among many couples is that any type of cohabitation agreement or marriage contract is only there to protect them in the event of a divorce.
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“The reality is that having some sort of legal protection helps to guard each partner against a number of financial risks that can also be linked to business debt and even death,” says Nagtegaal.
While antenuptial agreements (ANCs) are the most common type of marriage contract, there are a number of cohabitation and marriage agreements that could be considered.
In Nagtegaal’s view, it is always good to speak to someone qualified, such as a lawyer, who will be able to explain the various types of options available.
READ: Couples living together: know your rights
Nagtegaal says it is important for couples to do their homework in order to understand what type of legal protection will best suit their needs and circumstances.
“Should couples decide they do not want an ANC or other form of agreement in place, they will be married in community of property by default,” she cautions.
Some types of marriage agreements available in SA include the following.
Married in community of property
This means that everything you own will be shared equally between you and your partner, including anything you own when you get married, and anything you earn or create while you are married. If you get divorced, all assets and debts are split equally.
One of the biggest risks associated with being married in community of property is if one party accumulates large amounts of debt or is implicated or cheated in a business deal for example, the other party would also be held liable for their debt.
“Should one partner default on debt, the other partner’s income or assets can be taken from them to service that debt,” explains Nagtegaal.
If you get married without consulting a lawyer and you draw up another type of cohabitation agreement or marriage contract, this will be the type of marital regime you have by default.
READ: 5 steps to save effectively as a couple
Married out of community of property
This means that you continue to exist as two separate financial entities. Your possessions and debts are yours and your partner’s possessions and debts are theirs.
Should you be separated by death or divorce, you keep what you had before you were married, and you get to keep everything you earned during the marriage.
Married out of community of property, with accrual
While both parties maintain their separate financial identities, everything that they earn or the growth of their assets after marriage is evenly divided between them.
It is possible to make certain stipulations about items or earnings that can or can’t be included under accrual – for example inheritances are often excluded.
Choosing an option
Nagtegaal points out that, if the couple establish themselves as individual financial entities by getting married out of community of property, they cannot be held responsible for the debts of the other party.
One of the most important considerations to take into account before selecting the type of marital regime you want to enter into is that your will cannot override your marriage contract. So, only your agreed portion of your assets can be dictated in your will.
For instance, if you wanted to leave your money to charity, but you were married in community of property, your spouse would retain her or his portion of your money, regardless of what your will states.
If you were married out of community with accrual, the accrual calculation would have to be finalised first, before your remaining income could be allocated in line with the wishes expressed in your will.
“The discussions you have with your lawyer as you draw up your ANC are extremely valuable for planning your future together,” says Nagtegaal.
“The process may force you to face some hard decisions, but an open and honest process like this is a fantastic first step for building a future together.”