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Marital Contracts and Finances: Beyond the Glitz and Glam

Marriage is all too often related to the wedding day. We all look forward to the glitz, glam, and celebration. It’s the dream.

But, before the adventure and idyllic happily-ever-after begins, the couple needs to take a look at the financial consequences of their partnership. We can help you achieve a firm grasp on the reality of marital contracts and healthy finances. Keep reading.

What types of marriages are there in South Africa?

Rings on marriage agreement

Two individuals can tie the knot through a civil union, customary marriage, or civil marriage in South Africa.

Customary Marriage

A customary marriage is performed under African customary law. The partners must be 18 years or older. Under customary law, polygamous marriages are legal.

Civil Union

Civil unions or partnerships recognise same-sex marriages as legal. The rights granted to couples according to the Civil Unions Act and the Marriages Act are the same.

Civil Marriage

A civil marriage is a union entered into by a woman and man. If no contracts are made, this marriage is automatically in community of property.

If your choice is not to get married in community of property, then an antenuptial agreement has to be signed. This means you will be married out of community of property.

What are the requirements for a valid marriage in South Africa?

House in hand while pointing at signature

The individuals who choose to be in a union must give their consent and should be 18 years of age or older. With a civil marriage, if one or both of the partners are younger than 18, consent from the parents or legal guardians is required. However, no individual younger than 18 can enter into a civil union.

A marriage has to be lawful. For example, closely related people are not allowed to get married and an individual who is already married cannot enter into a second marriage. The exception is under a customary marriage.

Certain formalities under the South African law should be adhered to. The marriage has to be conducted by a marriage officer and two witnesses must be present. For a marriage to be considered a legal contractual agreement, it has to be registered at the Department of Home Affairs.

Understanding marriage contracts in South Africa

Man and woman discussing financial matters

You need to understand the different types of marriage contracts in South Africa. This helps to forestall legal battles and protect your assets if the marriage does not work out in the future.

In South Africa, there are two types of marriage contracts:

  • Marriage in community of property, or
  • Marriage out of community of property
Couple walking through confetti

If you choose to be married in community of property, all your assets will be shared. If you choose not to share your assets, you need to sign an antenuptial agreement. If no antenuptial agreement is signed, you will be married in community of property automatically.

Marriage in community of property

Financial planner advising clients

Marriage in community of property joins together everything you and your partner owned before and during the union. This includes inheritances.

While this may encourage partnership in the relationship, it can also be problematic. You will need written consent from your partner to buy or sell property, including jewellery. Additionally, you will need consent from your partner to enter into credit agreements. 

The debt you and your partner had before marriage forms part of the joint estate. You will hold joint responsibility for your partner’s debt.

These are hard truths. On the opposite side of the coin, there are benefits.

There are times where marriages do not work out. This can lead to divorce.

Divorce can be a messy process at times. But, when you are married in community of property, you and your partner receive half of the assets accumulated before and during the marriage.

This means both partners get an equal share and potentially a better quality of life leaving the marriage than they may have if they had married according to an antenuptial contract. Of course, this point could be argued in a number of ways depending on the individuals and the circumstances.

Marriage out of community of property (antenuptial)

Rings on divorce document

This contract has two options: marriage with or without the accrual system.

A marriage contract with an accrual system protects the individual who is considered financially vulnerable in the union. Marriage without the accrual system automatically allows each partner to manage their assets.

Marriage out of community with accrual

Here is an example of the accrual system in action.

This system may protect you if you are the partner who takes the role of a stay-at-home parent. Or, for instance, if you are actively studying without a source of income.

The accrual system also means you’re not liable for your partner’s debt. You’ll be able to grow and manage your assets without the consent of your partner.

And, the assets you owned before the marriage will remain solely yours. Upon death, your will and testament can leave further instructions about what happens to your assets. You can choose whether to leave these assets to your spouse or not.

Marriage out of community of property without accrual

Couple enjoying a cup of coffee in doorway

Marriage out of community of property with accrual protects each partners’ assets from before and during the marriage. This supports the idea of regulating assets independently.

You do not need the consent of your partner for any agreements. This can work well for business-minded individuals. In the case of a divorce, your partner cannot claim any of the assets you have grown before or during the marriage.

However, this specific system does not protect you if you are the partner with less financial standing in the marriage. Simply because your partner is not required to share any benefits with you under this type of marriage contract.

Final thoughts on marital contracts and finances

Rings in box on marriage contract

Knowledge is power. And that power comes from marrying your heart with a proper understanding of how to protect your finances within a marriage.

For assistance with marital contracts, please feel free to contact our Maysure Financial Services team. We can help you determine the best marital contract for your needs.

Contact us here:

+27 11 839 2302

info@maysure.za.com

Maysure Financial Services is a registered financial services provider. FSP 15173

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Financial New Year’s Resolutions: Shape Your 2021

We’re sure you’re all aware of the classic New Year’s Resolution tradition: you start out full steam ahead with planning your goals for the year and two months later, you’ve lost all motivation. What happens? Naturally, you slip back into your old spending habits and procrastination becomes enemy number one.

It’s easy to fall back into comfortable patterns, especially when it comes to your finances. But, it’s detrimental to achieving your financial goals. Avoiding financial planning often results in far more stress than it would take to set aside some time to plan your finances for the New Year.

Remember, you don’t have to do it alone. We are here to help you by shedding some light on a few key financial resolution tips and how you can stay the course.

1. Evaluate Your Finances

Knowing your financial status is a good place to start when it comes to planning your resolutions. After all, you can’t create resolutions until you know where you’ve been going wrong. Aim to form a realistic baseline idea of your current financial health status, even if it’s not exactly where you want it to be.

This means evaluating your spending habits, calculating your net worth, and reviewing your goals. These actions will tell you more about what your money is doing.

Once you have an idea of what your financial health looks like, it becomes easier to create realistic resolutions and to achieve them.

2. Plan Your Money

Following your evaluation, you can move on to setting financial resolutions that work for your money. This will put you on the road to becoming financially savvy.

But, what exactly does this mean and how do you do it?

Successful resolutions incorporate clear goal-setting and focused timelines. Outline exactly what goals you want to achieve and set an executable timeline. You are less likely to procrastinate and fail at your financial resolutions when they are clear, simple, and doable.

This does not have to be done in a vacuum. It’s advisable to reach out to all your available resources.

A financial adviser can assist you in drawing up a financial plan that establishes clear goals with executable timelines. This goes a long way to creating resolutions that give you more confidence and less stress.

Contact Maysure Financial Services for help to achieve your financial resolutions.

3. Pay Your Debts

You are now well on the path to financial savviness. Armed with knowledge and determination, you can focus on the nitty-gritty of your goals. It’s time to prioritise debt relief and not get sidetracked by debt creation.

In your financial resolutions, outline an effective budgeting strategy that aims  “to ensure that you’re spending with a purpose”. This means paying off your credit card and other outstanding debts before you plan that next big holiday.

Procrastination is the thief of time. The beginning of a new year presents you with the perfect opportunity to get into financial shape and make more down payments to secure future debt relief.

4. Plan Your Investment

Paying off debt is not the only significant aspect to consider, another easily-overlooked area is long-term investment. You may be tempted to set goals exclusively for the now, but “big picture” goals should always be in the foreground of your financial New Year’s resolutions.

Each year that goes by gets you a step closer to retirement. So, make sure you know where you want to be in the future. Resolutions don’t need to be limited to the 12 months ahead. You can make them with the next 12 years in mind.

Investment and finances are a very personal affair. There are so many options to choose from, whether it’s putting money into an investment portfolio or paying off your bond. Make the right decision for you. Discuss your options with your financial adviser to make an informed choice.

5. Review and Relearn

Finally, the best way to stay on top of your goals is to regularly review your budget and always leave space for learning. The more knowledgeable you are about your finances and the financial world in general, the easier it becomes to tackle any unexpected issues that may arise throughout the year.

Another goal you can include in your resolutions is to expand your knowledge by reading more blog posts, newsletters and finance books. If you are armed with the facts, you are prepared for battle.

Another great idea is to have a checklist that you can revisit throughout the year to ensure that you’re staying on track with your goals.

Financial New Year’s resolutions don’t have to become an exercise in procrastination, instead, they can be realistic, simple, and informed.

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Please do not hesitate to get in touch to find out how to make your money work for you:

+27 11 839 2302

info@maysure.za.com