Question:
I am emailing on behalf of my aunt who is living in South Africa. She is married with an ante-nuptial contract. Her husband is in debt due to gambling and she is worried that the bank will repossess the house which is in her name.

What is her legal standpoint?

Answer:
There are two different versions of the ante-nuptial contract and it depends on what type of agreement a couple decide on when they get married, as to the level of protection they have from each others' finances.

Firstly, there is the ante-nuptial contract without accrual. This basically means that they never share their finances, so any property or debt belonging to one party remains theirs alone. Their partner has no claim to any assets on divorce or death in terms of the agreement (obviously if assets are left to them in terms of a will then they'll benefit that way instead) and no creditor can claim the one spouse's debt from the other.

Hopefully this is the type of contract your aunt entered into with her husband. In this case, as long as the house is legally owned by the one party the debts of the other cannot be claimed against it provided that the owner never put it up as security on any of the other party's loans.

Then there is the ante-nuptial contract with accrual. Accrual means that every asset or debt a couple incurs after marriage is shared equally. Most marriages are entered into with this agreement. This means that whatever they accumulate before marriage remains theirs individually, but whatever a couple accumulate together they will share.

Under normal circumstances this contract seems extremely fair. Legally it means that if one party incurs large debts and the other party accumulates assets (in other words if one party is responsible and the other is not) then only the net situation is shared in an accrual event: death or divorce.

Yes, the responsible partner loses half of their wealth that was built after they were married and the spendthrift is acquitted of half of their debts incurred during that period.

So, even though two people are married with an ante-nuptial contract and can legally do their own thing financially, within a marriage partnership they should always discuss their spending habits with one another because they will have an impact on both of them.

In your aunt's case, even if she bought the house before marriage she would still be responsible for 50 percent of her husband's debt incurred after marriage and if the only way she could pay for her share was to sell the house (or take out a bond on it) then, yes, her home could be under threat if they get divorced or he dies.

If at the start of the marriage both parties feel that they haven't accumulated many assets, their respective values could be set at nil.

Sometimes, if their respective net values are similar then in the spirit of romance they could also set their values at nil, intending to share everything while still having financial autonomy.

This means that everything they have will be shared equally on divorce, death or dissolution of assets due to debt (if one party is sequestrated the other will be equally liable) in an accrual situation.

In the case of a nil asset value at the beginning of the contract it is almost like being married in community of property. The only material difference being that they don't need each other's signature on any financial dealings, which is the so called 'protection' mechanism within a marriage in community of property.

The bottom line is that the contract needs to be scrutinised carefully. Do not assume that just because you have an ante-nuptial agreement that you are automatically protected. As you can see, it's a lot more complicated than that!

acsis Limited is an authorised financial services provider. The response to the question covers some of the issues in a general and factual manner and does not constitute advice. It is important to consult with a financial planner who, after an analysis of the individuals? personal needs, goals and circumstances, will be able to provide comprehensive and appropriate advice.