The importance of reviewing and updating marriage contracts
As a married couple, it’s important to review and update your marriage contract as your circumstances change over time. This is especially true if you’re currently in the default marital regime of in community of property, which may no longer be suitable for your current financial situation. In this article, we’ll explore the complexities of changing your marital regime in South Africa and how a postnuptial agreement can help.
When getting married, many couples in South Africa choose to enter into a marriage contract, which lays out the terms of their relationship and how their assets will be divided in the event of a divorce or death. However, as time goes on, couples may find that their circumstances have changed and that their current marital regime is no longer suitable for their needs. In such cases, it may be necessary to change the terms of the marriage contract.
The option of transitioning to out of community of property through a postnuptial agreement
One of the most common reasons for changing a marital regime is for couples to transition from the default regime of in community of property to out of community of property. This can be done through a postnuptial agreement, which is a contract entered into by a couple after they are married. A postnuptial agreement allows couples to change the terms of their marriage contract and to opt out of the in community of property regime.
The two sub-regimes of out of community of property: with accrual and without accrual
When transitioning from in community of property to out of community of property, couples have the option of choosing between two different sub-regimes: out of community of property with accrual and out of community of property without accrual. The out of community of property with accrual regime allows for the couple to keep their assets separate but also shares any increase in wealth or decrease in debt during the marriage. This is the most popular sub-regime after the default in community of property. The out of community of property without accrual regime is similar to the out of community of property with accrual, but it doesn’t share any increase in wealth or decrease in debt during the marriage.
Examples of Why You May Want to Change Your Marital Regime
For example, let’s say you and your spouse got married while you were both starting your careers and didn’t have many assets to speak of. As time went on, you both built successful careers and accumulated significant wealth. Under the in community of property regime, all of that wealth would be shared equally in the event of a divorce or death. However, you may now want to protect your individual assets and consider changing to the out of community of property regime.
Another example could be a situation where one spouse has inherited a large sum of money or property, they might want to opt out of the in community of property regime to protect their inheritance.
The legal requirements for postnuptial agreements
It’s important to note that postnuptial agreements can only be entered into with the consent of both parties and must be signed by both parties and witnessed by a commissioner of oaths. Additionally, postnuptial agreements must be registered with the deeds office in order to be legally binding.
The importance of seeking the advice of legal and tax professionals
It’s also worth noting that changing a marital regime can have significant tax implications, so it’s important to seek the advice of a tax professional in addition to a legal professional.
In summary, changing your marital regime may be necessary as your circumstances change, and a postnuptial agreement can help you make that transition. Whether you’re looking to protect individual assets or inherited wealth, it’s important to seek the advice of legal and tax professionals to ensure that the process is done legally and correctly. Remember, you and your spouse are a team and it’s important to make these decisions together to ensure that your financial future is secure.
