What Exactly is an Antenuptial Contract?
Antenuptial contracts are a legal agreement entered into by a couple regarding the division of joint acquisitions or maintenance of their joint household or the children’s future. Parties may also include indications regarding issues such as education, religion and healthcare for any dependant children.
An essential reason why parties enter into an antenuptial contract is to enter predetermined marital property law regimes. The standard marital property law regimes are: When parties get married they don’t have to enter into an antenuptial contract every time they get married – they can enter into one contract for all future marriages and specify if the property regime is to be applicable in future marriages.
Section 2(3) of the Matrimonial Property Act 1984 sets out the requirements for a valid antenuptial contract: The parties must sign it after signature before a notary public and two competent witnesses; The notary public must authenticate their signatures; It must be executed before the marriage; and Before the notary public may authenticate the signatures of the parties on the antenuptial contract in the presence of two competent witnesses, the notary public must satisfy himself that the parties are married to each other .
A common example of antenuptial contracts is when one spouse earns significantly more than the other. The spouse earning less could insist on an antenuptial contract with the system of accrual being applicable to keep the estate more or less equal between them. The person with the high net worth would then avoid overcompensation at the dissolution of the marriage.
When parents get married they will also want to provide that their adult children, from previous relationships, will not claim a share in any pre purchased life policy. There are certain requirements regarding a pre purchased life policy that must be complied with, otherwise the children will be entitled to a benefit under the pre purchased life policy as beneficiaries. An antenuptial contract could be entered into to provide that all adult children from a previous relationship will not be considered a beneficiary.
It is important to note that an antenuptial contract must be signed before the marriage and cannot be entered into after the marriage. The parties would have to enter into a postnuptial contract.
The Essentials of an Antenuptial Contract
For an antenuptial contract to be a valid agreement, certain guidelines must be adhered to and specific content must be contained therein.
Disclosure of Assets:
In order for an antenuptial contract to be valid, each party must make a full and frank disclosure to the other as to all assets owned by that person. These assets, whether they be movable or immovable, tangible or intangible, must then be incorporated into the written agreement. If one party has failed to make such a disclosure, and reliance was placed on the representations made to induce the other party to enter into the agreement, the agreement will not be enforceable due to the presence of fraud. This does, however, mean that you will have to go through the same process as in a divorce to obtain a distribution of your assets if your antenuptial contract is set aside on these grounds.
Mutual Consent:
The essence of a valid antenuptial contract is the free agreement of both parties to the asset division contained therein. Each party must willingly consent to the commencement of the marriage and the stipulated distribution of assets. This does not mean that the parties must understand the complex aspects of asset division and financial planning that must be taken into account by the drafter of your contract, but at the very least the parties should have a basic understanding of the content of the contract, and the requisite formalities that must be adhered to in order to create a binding contract.
Legal Formalities:
In order for an antenuptial contract to be legally binding on the parties, certain legal formalities need to be complied with, namely:
It is thus vitally important that the particulars of your antenuptial contract accurately reflect the disclosure made by yourself and your partner, and that you, as the parties, understand the general effect of what you are signing. Once the antenuptial contract is registered, it will, following the relevant waiting period allow the parties the freedom to conduct their business and personal lives without having to be concerned that if one should die the world as they know it will change drastically.
It is however also important to note that when entering into an antenuptial contract, you may at any time enter into a trust agreement to include provisions for your children for the period until they reach the age of majority or exit your estate.
The Pros and Cons of Antenuptial Contracts
The use of an antenuptial contract can be an excellent solution to difficult family circumstances. It can help prevent and resolve issues between family members arising out of death or divorce, division of assets between spouses and children of previous family relationships.
These arrangements ultimately provide certainty about capital and income that would otherwise have to be dealt with during often acrimonious matrimonial proceedings. There are a number of pros and cons to antenuptial contracts.
Antenuptial contracts allow parties great flexibility in tailoring their future relationship to their specific individual circumstances. If parties have existing assets and liabilities, there could be great benefit in entering into an antenuptial contract. For example, if one or both parties have children, the execution of an antenuptial contract will place them in a much better position to deal in advance with the future distribution of inheritance and maintenance issues as children grow older. The use of an antenuptial contract will provide certainty should divorce or death occur.
There are costs associated with the drafting and executing of an antenuptial contract which might prove difficult to justify where parties have few assets and limited finances. There is no definitive guarantee that the agreement will be held to be valid should the agreement become contentious. Only time will tell whether parties will be held to antenuptial agreements. They are becoming more frequent than in the past. Yet they are still new and like anything else, the current case law is thin. So far, the courts have appeared to be fair and reasonable and the patriarchs are being given enforceability status.
The Legal Process behind Antenuptial Contracts
The process of drafting and finalizing an antenuptial contract, while not as complicated as contemplating the end of a new marriage, should be taken seriously. The following is a brief, step-by-step discussion of the legal process: Meet with an attorney to ensure that you understand fully the obligations you are accepting in the contract as well as the benefits you are giving up by signing the contract. It is never too early to meet with an attorney and obtain his or her advice on what provisions should or should not be included in the antenuptial agreement. It is critical that you fully disclose to your attorney all of your income, expenses, assets, and liabilities. This will allow your attorney to make a full and complete disclosure of how your income and assets will be affected by the terms of the antenuptial agreement. (Be sure to speak with your attorney about attorney-client privilege. There are some exceptions to this rule, specifically when there are issues regarding full and complete disclosure pertaining to the terms of the agreement.) One of the biggest pitfalls in negotiating an antenuptial agreement is that the client may attempt to hide information from his or her attorney. Not only does this prevent your attorney from properly advising you, it also puts you at risk of having the agreement thrown out because of the failure to disclose all of your property. Protect yourself by fully disclosing all of your assets and income to your attorney. Failure to do so could result in the antenuptial agreement being reformed or set aside in the event of a divorce or death. Furthermore , your failure to disclose could potentially cause fraud claims to be filed against you. Antenuptial agreements must be entered into voluntarily. If you had equal rights to have the agreement prepared and negotiated, you both have to sign it, and I suggest that you agree to enter into it at least 30 days before the wedding. We all know that people put on their best faces and their best attitudes prior to their wedding day. This is neither the time nor the place to negotiate an antenuptial agreement. You are buying insurance against the future against issues that you cannot foresee today, and doing that negotiation at the last minute or under duress is not advisable. If possible, both parties should consult with their own attorneys. At the very least, both parties need to consult with the same attorney and have their own separate conversations with the attorney. In the course of negotiating an antenuptial agreement, your attorney may request copies of bank and credit card statements, income tax documents, and other information about you to ensure that the agreement adequately considers your financial situation. It is important that you provide your attorney with any and all information that he or she requests. Failure to do so could end up being fatal to your case. Depending on your state’s laws, the court may have to approve your agreement before you marry or within a certain time after marrying.
Clarifying Myths and Misconceptions: Questions and Answers
Antenupital contracts do not leave the disadvantaged spouse completely cut out. There is a difference between a contribution to the joint estate and a maintenance obligation that a court has to consider (s 35 read with s 7(3) of the Divorce Act 70 of 1979). While the general principal is that each party is entitled to half of what was acquired during the marriage, there are provision for an unequal division where a court is satisfied that such a division is necessary to ensure fairness.
"Antenuptial contracts are unfair because they don’t require an equal division of assets between spouses." Not necessarily. In most cases where spouses married out of community of property, an equal division of assets is possible if provision was made for all possible needs of the spouse who may have had less of a contribution. Through comprehensive asset valuations, professional opinions and expert evidence, a fair division can be achieved. Parties must be advised that they can obtain independent legal advice at their own expense.
"You can’t make changes to an antenuptial contract once it has been registered." This is not entirely true. Where an error in the individual status of a party led to the incorrect election of an antenuptial system, a formal amendment may be possible without a redistribution of assets under s 14 of the Matrimonial Property Act 88 of 1984. Such amendments can be effected without delaying registration of the contract prior to marriage. Any other amendments, once effected outside the ambit of s 14 of the Matrimonial Property Act 88 of 1984, require parties to sign a new agreement and the re-registration of the agreement in the Deeds Office.
"There is no time limit for registering an antenuptial contract." An antenuptial agreement has to be registered in the Deeds office before the date of the marriage. The agreement can be signed and registered any time prior to the commencement of the marriage.
"The contract only protects me if I get divorced, but I want to help my partner in case of death." You can elect to do a joint will with your spouse whereby upon the death of the first spouse, his/her assets are dealt with as provided in the contract and on the dissolution of the marriage by death, the remaining spouse will inherit each other’s estates. However, the first spouse can choose to exclude his assets and all his beneficiaries from claiming against the estate.
An antenuptial contract is a contract and every valid contract requires the exchanging of consent. For each party to be properly advised, he/she must be advised independently to the other in writing prior to the contract being concluded. As there is no cooling off period once the contracts are signed, the process of contracting needs to be handled carefully and effectively.
Antenuptial Contracts in Other Countries
The concept of antenuptial contracts is not limited to the United States. Multinational marriages are becoming increasing common and with it comes conflicting legal systems, and varying attitudes towards pre-marital agreements.
France and Quebec are both children of Napoleonic France where the most common agreement is a conjugal property regime, known as the "régime de la communauté des biens", a relatively strict form of community property agreement. However, French and Quebec law allows for other agreements; namely separation of property, or division of property. In practice, "pre-nups" are commonly not used.
Without a written marriage agreement, German spouses are under a statutory matrimonial property regime called Zugewinngemeinschaft, which is a means of dividing acquired property without directly rendering an equal share of assets. The law does assume that marriages will be self-supporting, i.e., spouses work during the marriage . However, if a spouse is an economically disadvantaged, the presumption of mutual support during marriage operates in his or her favor. If the economically disadvantaged spouse is under age 36, then any financial gain or loss incurred by the economically disadvantaged spouse can be disregarded by the Court.
In Spain, Brazil, and Mexico, property acquired during marriage is generally considered to be owned equally by both spouses. Even in the Islamic countries, there is generally only partial community property. In practice, however, these countries hold the woman in a subordinate position in the marriage. In Egypt, Saudi Arabia, and Syria, women’s rights are governed principally by Islamic law, thus women cannot dispose of their property without a husband’s consent.
In Japan, written agreements dividing property upon divorce are not enforceable unless made before a judicial officer or notary public. However, the parties can set out their expectations in a non-enforceable "Memorandum on Marriage Co-Operation".
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