Article provided by SchoemanLaw Inc
At the early ages of any business, the assets of the business are the assets of its Founder. Should the Entrepreneur get married, the marital regime will determine the proprietary consequences in the event of a divorce. Many couples enter into antenuptial contracts (ANC) to protect their assets and financial position prior to and during the marriage.
Marriage in community of property applies automatically where Parties do not include an ANC, meaning that all the of the Parties’ assets and liabilities fall within in the joint estate. When you marry out of community of property, there are two options to consider regarding your ANC. Marriages out of community of property without accrual means that the assets and liabilities owned by a person prior to the marriage, as well as accumulated during, belongs only to that person.
Marrying out of community of property with accrual means that both Spouses gain a fair share of the estate if the marriage is terminated. The accrual system incorporates a calculation that is applied when the marriage is dissolved by divorce. The spouses will share the assets during the course of their marriage based on a particular calculation when the marriage is terminated.
RD v TD1 illustrates the legal position for couples who have entered into an ANC and who subsequently decided to engage in a business venture together, post marriage in the event of divorce.
In this case the parties married out of community of property without the application of accrual and with the exclusion of profit and loss and subsequently entered into a Partnership Agreement that applied to a Commercial Fish Farm Enterprise. The Plaintiff argued that the Defendant’s allegation that the business venture subsequently entered into constitutes that of a Universal Relationship Agreement, the essence of which is profit sharing was an attempt to amend the parties ANCs, which is legally untenable.