The Accrual System Explained in Detail

 The accrual system is the heart of most antenuptial contracts. Understanding it properly requires knowledge of three key concepts: the net commencement value, assets excluded from the accrual, and how the accrual calculation works. 

What Is the “Accrual”?

 The accrual of a spouse’s estate is the amount by which the net value of that estate at the dissolution of the marriage exceeds the net commencement value of that estate at the start of the marriage. Put simply: Accrual = What you end with − What you started with. The accrual measures how much each spouse’s estate grew during the marriage. 

Net Commencement Value

 The net commencement value is the value of each spouse’s estate at the start of the marriage, after deducting liabilities (debts). It is declared in the antenuptial contract itself. 

How It Works 

• Before the wedding, each spouse must honestly assess the value of their assets and subtract their debts. The resulting figure is their net commencement value.
• This value is recorded in a schedule or declaration forming part of the antenuptial contract.
• If no value is declared, the law deems the commencement value to be zero. This means that on dissolution, the entire value of that spouse’s estate will count as accrual — in other words, all of it will be subject to sharing.

 Example: Determining Net Commencement Values 

 These figures are locked in on the date of marriage and serve as the baseline against which growth is later measured. 

Important Notes on Commencement Values 

• The declared values must be honest and accurate. Inflating your commencement value to reduce your eventual accrual obligation is a form of fraud against your future spouse.
• The commencement value is adjusted for inflation over time using the Consumer Price Index (CPI), so it reflects real growth rather than merely inflation. This means that R400,000 in 2024 will be adjusted upward when the calculation is completed, protecting its real value from erosion.
• Couples with no significant assets at the start of their marriage often declare commencement values of zero or a nominal amount, which is perfectly acceptable.

Assets Excluded from the Accrual

 Not all assets form part of the accrual calculation. Certain assets can be excluded, meaning they are not considered when determining how much a spouse’s estate has grown. There are two categories of exclusions. 

A. Exclusions by Law (Automatic) 
The Matrimonial Property Act automatically excludes certain assets from the accrual: 

• Inheritances. Any asset inherited by a spouse during the marriage is excluded from the accrual, unless the deceased person (the testator) specifically stated in their will that the inheritance should form part of the accrual.
• Donations (gifts). Any asset received by a spouse as a donation during the marriage is excluded, unless the donor specifically stated that the donation should form part of the accrual.
• Assets acquired with excluded assets. If you use an inheritance or excluded donation to buy something else, the replacement asset is also excluded (this is the principle of substitution).
• Damages for personal injury. Non-patrimonial damages awarded to a spouse for personal injury (pain and suffering) are excluded.

 The rationale is that inheritances and donations are windfalls; they were not generated by the marriage's joint efforts and should therefore not be shared. 

B. Exclusions by Agreement (in the Contract)
In addition to the statutory exclusions, the couple may agree in the antenuptial contract to exclude specific additional assets from the accrual. Common examples include: 

• A family business or shares in a family company owned before the marriage
• A specific immovable property (e.g., a holiday home inherited from family, or an investment property)
• A retirement fund or pension interest
• An existing investment portfolio
• Any other specifically identified asset that the parties agree on should not be subject to sharing

 Practical advice: Think carefully about what you exclude. Excluding too many assets can undermine the purpose of the accrual system and leave one spouse without fair protection. At the same time, there may be good reasons to protect certain assets — for instance, a business that must remain within a family or a property with sentimental value. Any exclusion must be clearly described in the antenuptial contract to be enforceable. 

How the Accrual Calculation Works

 When the marriage dissolves (whether by divorce or death), the accrual of each spouse’s estate is calculated and compared. Here is the step-by-step process: 

Step 1: Determine each spouse’s current net estate value. Add up the total value of all assets and deduct all debts at the date of dissolution. Exclude any assets that are excluded by law or by agreement. 

Step 2: Deduct the net commencement value (adjusted for inflation). The commencement value declared at the start of the marriage is adjusted for inflation using the CPI. This adjusted figure is then deducted from the current net value. 

Step 3: The result is the accrual. If the net estate value exceeds the adjusted commencement value, the difference is the accrual. If the net estate value is less than the adjusted commencement value, the accrual is zero (it cannot be negative). Step 4: Compare the two accruals. The spouse with the smaller accrual has a claim against the spouse with the larger accrual for half the difference between them. 

Example: Assume a marriage of 10 years, and that inflation has doubled prices over that period (CPI adjustment factor of 2). 

Difference between the two accruals: R2,200,000 − R200,000 = R2,000,000. Spouse B’s claim against Spouse A: R2,000,000 ÷ 2 = R1,000,000. Spouse B is entitled to claim R1,000,000 from Spouse A, so that the growth generated during the marriage is shared equally.