When “I do” becomes “I don’t want to anymore”
It is the unfortunate truth that not all marriages have a ‘happily ever after’. Divorce is a reality for many couples and can lead to various challenging situations, especially where a business is concerned. Any small business owner will agree that their business is likely their most valuable asset. With an imminent divorce or in anticipation of this event, it is crucial not to unknowingly put this asset at risk.
The most common kind of marriage in South Africa is ‘In Community of Property’, which entails that both partners share half of all assets, debts and liabilities. This also includes all business interests. To avoid this, couples can marry ‘Out of Community of Property’, which protects assets in a divorce. This process involves having an Antenuptial Contract in place, which can either be with or without accrual.
Marriage out of community of property without accrual details that each party retains their separate property and the freedom to deal with said property as they wish. Getting married with accrual, however, entails the exclusion of asset value brought into the marriage. However, the spouse whose property grew least throughout the marriage’s dissolution will get half of the difference between the two estates’ values, in the event of divorce. Any claim made against a spouse’s estate, or joint estate, is calculated on the date the marriage was terminated.
In the scenario where an antenuptial contract was not agreed upon, couples can change their matrimonial regime from in community of property to out of community of property. This is done through registering a Postnuptial Contract with the High Court, though it requires a good reason for the proposed change. Individuals are also required to notify the proposed change to their creditors and the Registrar of Deeds.
Should you own immovable property at the time of application, title deeds or mortgage bonds will have to be endorsed. This makes the involvement of an attorney necessary to assist with legal technicalities to ensure a smooth conclusion.
In the event of a divorce, your partnership or shareholder agreements and company’s Memorandum of Incorporation (MOI) should include provisions to safeguard the owner’s best interests.
Consulting with a professional, such as those at MMS Cloud Accounting, can help you ensure that your business’s structure and agreements are for the possible implications of changes to personal circumstances, such as those caused by divorce.