I’ve been asked to write something about the financial implications of marriage. Specifically: what it means to marry out of community of property with accrual.

The general sentiment:

1. Yay, we’re getting married!
2. Even though this is forever, we’re not being silly about this. We know things can end sometimes.
3. So we’ve kept the pre-nup simple.
4. Just the standard contract with accrual.
5. If anything happens, we’ll just split the earnings made during the marriage down the middle.
6. It’ll all be fine.

No.

No – it will not “all be fine”.

Because where there are technicalities, there are loopholes. And “marriage with accrual” has a giant gaping one that is more of a noose, really, for whoever is not the breadwinner. For the person who can become, very definitively, the bread-loser.

In South Africa, it hinges on section 3 (1) of the Matrimonial Property Act of 1988:

At the dissolution of a marriage subject to the accrual system, by divorce or by the death of one or both of the spouses, the spouse whose estate shows no accrual or a smaller accrual than the estate of the other spouse, or his estate if he is deceased, acquires a claim against the other spouse or his estate for an amount equal to half of the difference between the accrual of the respective estates of the spouses.

Mostly, it hinges on this clause: At the dissolution of a marriage.

The value of the accrual arises on the date of divorce. It’s calculated as follows:

Value of Estates at Divorce – Value of Estates at Wedding Day = Accrual

It’s based on this assumption:

It takes no account for this:

You see:

When my friend comes to me to tell me that his wife cheated on him…

I’d say this:

1. So is it over?
2. Actually, that’s not a very important question to answer immediately. Point is: she did what she did.
3. Why don’t we talk about doing some estate-planning for when you die?
4. No no – you’re not listening to me.
5. We need to do some estate-planning for when you die. 
6. What assets are in the marriage do you have?
7. Okay great. Let’s put some things into the family trust.
8. Before we do that, let me see that Trust Deed.
9. Right, just sign this beneficiary amendment request right here. I’ll speak to the trustees .
10. Now, for the next few months, we need to do some donations to move things around.
11. I’ll take care of the rest.
12. Oh, but also – what a wench. Never liked her. Here – have a whiskey.

And so you know, the above example is tame, and limited by timing (after all, the cat is already out the bag – and, apparently, playing around). Imagine a similar conversation happening when an unscrupulous husband wants out and his wife (or husband) isn’t quite aware of that desire yet?

The trouble is: all the power rests with the breadwinner. They’re taking responsibility for all the financial decisions. They’re doing the estate planning. They’re the ones that get to have the first stab at the fury the like of which hell hath not.

They’ve also got access to the good lawyers. And they can drag the divorce proceedings out until the marriage dissolution date is long past the point at which the bulk of the estate is wound up and shipped offshore and placed in trust.

Unfortunately, most marriages don’t end cleanly. They’re messy. And in the height of that messiness, you’re asking people to be fair.

Here’s a solution: better expectations

Personally, I don’t quite understand why most people think that acknowledging the likelihood of divorce is an unsound starting point for a marriage.

Perhaps that makes me a cynic.

But marriage is first and foremost an economic practice. If “love” and “commitment” were enough to see it through, then we wouldn’t need a public and sacramental institution that codifies the behaviour and consequences of deciding to shack up indefinitely. Historically speaking, the Ancient Church wreathed the couple with the crowns of martyrdom during the wedding ceremony. If that’s not a statement of the cost involved, I’m not sure what is.

Which is not to say that marriages can’t be beautiful and edifying and filled with love. But I’m pretty sure that most of the time will be spent just being normal people trying to deal with married life and the responsibilities that come with it.

So in my mind, there is nothing wrong with saying “Hey – we’re human. I have the potential to be attracted to someone else, as do you. I could get bored. You could get bored. We’re committing to this – but failure is an inherent possibility, if not a likelihood. So let’s decide how we would deal with our failures right now, while we’re still fresh and happy and capable of being rational.”

In some ways, it’s probably irresponsible to avoid that conversation. In centuries past, the conversation was unnecessary because the divorce option didn’t exist. Today, the option is there – and to deny its existence before you marry seems, well, naive.

Also, it’s good for the relationship to establish rules of engagement. Because you only really need the rules when the engagement is difficult. But if you wait to have that conversation until after both parties have already started fighting dirty, then it’s too late.

So have that conversation and then put it in writing.

And make sure that the family trust has a good balance of trustees.

PS: also, make friends with the planning people. We can be equally inventive from the other side.

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.