If you don’t have an ANC, you are automatically married in community of property. This means that there is one estate between a husband and a wife. Everything is shared equally between spouses, which includes debts. However, with an antenuptial contract, the estates of each spouse remain separate. The difference comes with the addition of the accrual system. In this blog, we take a look at the ABC of the ANC (antenuptial contract).
What is an Antenuptial Contract?
An ANC determines whether a marriage will be out of community of property with/without the accrual system. It must be signed by the persons entering into a marriage, two witnesses and a notary public, and it must be registered in the Deeds Registries office within the prescribed time period.
What is the Accrual System?
The accrual system is a formula that is used to calculate how much the spouse with the larger estate must pay the smaller estate if the marriage comes to an end through death or divorce. Only property acquired during the marriage can be considered when calculating the accrual.
- If there is no accrual system, then the spouses have their own estates that contain property and debts acquired prior to and during the marriage – nothing is shared.
- The underlying philosophy of the accrual system is that each spouse is entitled to take out the asset value that he or she brought into the marriage, and then they share what they have built up together.
- The accrual system only applies if the marriage ends – either by divorce or death. You cannot claim your share of the joint estate while you’re still married.
Whether or not you decide to include the accrual system in your antenuptial contract depends on the couple. Some may see the relevance while others do not.
It is imperative for both of you to consult the lawyer who is drawing up the ANC together. Both parties need to have a clear and concise understanding of the agreement, as well as the consequences, should said marriage end in divorce. It is of utmost importance, that you consult with a neutral party. This party needs to be able to mediate what goes into your ANC, as emotions can cloud your judgment, and it can be a stressful negotiation especially if one spouse has a lot of assets and the other doesn’t for example.
For assistance with an ANC, contact our director and specialist in the field, Ana Joao, on firstname.lastname@example.org for a consultation.