New divorce ruling could affect prenups in South Africa

The Supreme Court of Appeal (SCA) says separate agreements from an antenuptial contract – or prenup – are valid and enforceable.

A prenup governs the matrimonial property system between two spouses and is entered into before a marriage concludes.

However, there was recent confusion regarding the validity of separate agreements signed by the parties in a marriage that already agreed to a prenup.

Wright Rose-Innes (WRI) has examined an SCA case to show that the two agreements can align.

The case in question involved a married couple – Mr and Mrs B – who had signed a prenup before marriage which stated that the marriage was to be out of the community of property with the exclusion of the accrual system.

The couple also signed a separate agreement which stated that Mr B would provide additional support if a divorce occurred – including monthly lifelong maintenance, paying additional costs and donating certain assets.

According to Wright Rose-Innes, the couple ultimately separated, and a dispute between the parties went to court when Mrs B wished to enforce the separate agreement.

The SCA ruled that the prenup and the separate agreement were both enforceable, and patrimonial consequences arising from death and divorce would still flow from the separate agreement.

The SCA said that the main aim of a prenup is not to create obligations but to provide a matrimonial property system for spouses that is different from the normal patrimonial consequences of marriage.

It added that the separate agreement never impeded the objectives of the prenup, and the parties’ estates remained separate. The parties also clearly did not want the separate agreement to replace or rectify the prenup.

The ruling means that there are no restrictions on all agreements between spouses out of the community of property – except for separate agreements that change the matrimonial regime and have not received a court order to do so.

Although the SCA ruling means that separate agreements for marriage are valid, WRI noted a fine line might exist, and separate agreements that go too far may be unenforceable.

Trust assets investigated in divorce proceedings 

Financial disagreements are often at the centre of divorce disputes, with the SCA ruling on certain matters.

Last year, the SCA ruled on an accrual calculation dispute and stated that trust assets could be included in a couple’s estate for accrual purposes.

However, the inclusion of trust assets depends on the time the trust was established and the circumstances surrounding its creation,n said WRI.

Trusts are an arrangement where the trust founder gives ownership of certain assets to a trust controlled by trustees and benefits trust beneficiaries.

The case referred to a husband that created an off-shore trust shortly before divorce proceedings, which he claimed would provide maintenance for his child.

However, his estranged wife said that the trust was created to hide assets before the accrual system finalised their divorce.

The SCA ruled that the husband setting up the trust was intended to frustrate his wife. They added that the former couple would often discuss financial matters beforehand, which meant that the creation of the trust was questionable. There was also no need for the trust to be established as the husband was already paying for the child.

WRI noted that including trust assets in future accrual calculations during divorce proceedings would depend on the context in which the trust was created.

Read: Proposed changes to marriage and divorce laws in South Africa