Postnuptial Contract with Accrual. The Most Popular Choice for Modern Couples
In South Africa, couples who marry without an antenuptial contract (ANC) are automatically married in community of property, merging their assets and liabilities into a single joint estate. However, many couples later realise that this default regime exposes them to significant financial risks, such as shared debt liability. Under Section 21(1) of the Matrimonial Property Act 88 of 1984, spouses can apply to the High Court to change their regime to a postnuptial contract with the application of the accrual system, which is currently the most popular choice for those seeking a balance between independence and equity.
The Mechanics of the Accrual System
The term "accrual" refers to the growth or increase in the value of a spouse's estate during the subsistence of the marriage. In this regime, spouses maintain two separate estates throughout the marriage, providing a "liability firewall" that ensures one spouse is generally not responsible for the debts of the other.
Upon the dissolution of the marriage through death or divorce, the growth of each estate is calculated. The spouse whose estate shows the smaller accrual has a legal claim against the other for half of the difference between their respective growths. This calculation follows a specific formula:
• Commencement Value: Spouses declare the net value of their estates at the time the contract is signed.
• Inflation Adjustment: To maintain real economic value, this initial value is adjusted using the Consumer Price Index (CPI).
• Asset Exclusions: Certain assets are excluded from the sharing calculation by law, including inheritances, legacies, and donations from third parties, as well as any assets specifically named as excluded in the contract.
Why "With Accrual" is the Preferred Choice
The accrual system is widely favoured because it offers financial independence while acknowledging the non-financial contributions of a spouse, such as raising children or supporting a partner’s career. It allows entrepreneurs to trade and enter commercial transactions without requiring their spouse's written consent, yet ensures that both partners benefit from the wealth built together.
The High Court Application Process
Unlike a pre-marital ANC, a postnuptial change requires judicial oversight because it alters the legal status of a couple in a way that could affect third-party creditors. The High Court will only grant the order if several stringent requirements are met:
• Sound Reasons: The couple must provide convincing reasons for the change, such as protecting the family home from business risks or correcting a lack of legal knowledge at the time of the wedding.
• Public Notification: Notices must be published in the Government Gazette and two local newspapers (English and Afrikaans) at least two weeks before the hearing.
• Creditor Protection: All known creditors must be notified via certified or registered post to allow them the opportunity to object if they feel prejudiced by the change.
• Solvency: Both spouses must generally be solvent, with no pending sequestration.