You’ve made your first major decision in life – getting married!
Then you made another – we’re not getting married in community of property!
Now you’re faced with a third – should we go for a straight antenuptial contract or an antenuptial contract with the accrual system?
Let’s go all the way back to 1984…
All marriages out of community of property entered into after 1 November 1984 automatically included the ‘accrual’ system unless… you specifically requested that the ‘accrual’ be excluded.
So for all those ‘old fogies’ who can’t remember which way they’re married; now you know!
And if it just so happens that you got married before 1984, you can alter the antenuptial contract to include an accrual, but both parties must agree to this.
Here’s how the accrual system works
Each of you gets to run your own affairs separately. At the end of the marriage – either through death or divorce – the spouse with the smaller accrual since the marriage started is allowed to claim against the estate of the other spouse.
This claim is for an amount equal to half the difference between each of their accruals.
The easiest accrual to calculate is the one where each of you started with zero assets.
During the marriage let’s assume the two of you build up assets worth R1 million. Upon death or divorce each of you is then entitled to R500, 000.
The problem comes in when either of you brings assets into the marriage. This means that an accrual claim needs to be calculated, which is something I’ll discuss in the next article.
Why was the accrual system introduced?
In days gone by you had the situation where one spouse was the main breadwinner while the other stayed at home. The main breadwinner bought all the assets in their name while the ‘stay at home’ spouse had very little to show for all their effort. The accrual system sorted this mess out.
Will an accrual claim override the wishes of my will?
Yes. An accrual claim takes precedence over heirs. All ‘people who are owed money’ are first paid followed by the accrual claim. Only once the accrual claim is taken care of can the heirs inherit (Which makes financial planning and life insurance vital for those married under this system!).
The accrual claim is a deduction in the estate and doesn’t attract estate duty.
But what if I inherit a holiday home?
A couple of things are excluded from the accrual:
- Inheritances and donations to either of the spouses from third parties are excluded
- Assets which are excluded in terms of the antenuptial contract. This includes the proceeds from the sale of such
- an asset as well as the purchase of any new asset which replaces the previous one.
- Any damages awarded to either of the spouses by a court settlement
- Donations between the spouses
- Life insurance with the surviving spouse listed as beneficiary
In our next financial planning article we’ll demonstrate an actual accrual claim, so you won’t want to miss that one!
Till next time
PS: One more thing before I forget! Before you sign those nuptials, make sure that the agreement makes provision for the donation of a life insurance policy to your children. You don’t need to have the policy in place at the time of signing the nuptials, but the great thing is that the proceeds will pay to your children absolutely free of any estate duty!
If you don’t do this, and later take out life insurance with your children as beneficiaries, it could potentially create an estate duty problem.
And don’t forget to ask us for that life insurance quotation when you – or your children – do decide to exercise this option!
PPS: “Old Fogies” refers to those of advanced years! 
Related posts:
- Financial Planning | How To Calculate Your Own Accrual Claim
- Financial Planning | The One Major Reason Why We Set Up Trusts
- Financial Planning | We Are Married COP And My Spouse Is Insolvent
- Financial Planning | What Happens If You Pass Away Without A Will?
- We’re Getting Married Soon…Tell Us About Antenuptial Contracts!
Article by Lawrence
Someone, who as he gets older, finds he has more questions than answers
Lawrence has written 150 awesome articles for us at Insurance Fundi
